Home / data / ESG reporting: Companies are struggling to access and collect data from supply chains

ESG reporting: Companies are struggling to access and collect data from supply chains

Despite progress on ESG reporting and data capture, supply chain monitoring remains a major challenge, according to new research by Health, Safety and ESG risk management provider , Alcumus.

In its inaugural research, Alcumus analysed ESG adoption among businesses in the UK, US and Canada. The survey revealed that accessing and collecting data from its supply chain is one of the most significant challenges for businesses when it comes to ESG reporting, named by two in five (38 per cent) respondents.

Currently, over half (60 per cent) of the companies surveyed are monitoring their supply chain and try to collect ESG data and performance information, covering crucial areas like compliance with modern slavery and forced labour legislation, Scope 3 carbon footprinting, safety permits and the creation of social value. Nearly as many already invest in technology to support their supply chain management (56 per cent) and over a third (37 per cent) have plans to do so.

Yet, relatively few say they currently have or plan to have a comprehensive third-party data visibility and tracking system in place for ESG – 11 per cent for environmental, 14 per cent for social and 15 per cent for governance performance. The reasons are two-fold. Firstly, most companies don’t monitor the full supply chain (84 per cent); and secondly, the vast majority (73 per cent) find it challenging to determine which data to track.

Among those that have systems in place or plan to establish these, only 17 per cent are looking at all suppliers when it comes to capturing and verifying data. For the large part of companies, however, supply chain verification is restricted to main suppliers and those of large size, named by 39 per cent and 33 per cent respectively.

Helen Jones, COO, Enterprise at Alcumus, commented: “ESG has become a major concern for many organisations. To be truly sustainable, supply chain operations must be assessed appropriately. Visibility through the full supply chain is not only key to combat rising greenwashing accusations which now threaten companies of all sizes and sectors. The ability to manage these risks will determine which companies will have customers, investors and staff in the future.”

The survey found the most prominent challenges when it comes to supply chain monitoring are that suppliers themselves are not able to report performance data (46 per cent) and don’t have the systems in place to automate data collection (42 per cent). This is predominantly down to the fact that those suppliers who don’t report don’t collect such data (78 per cent). However, what is also hindering progress is that 54 per cent of suppliers are not willing to disclose their data.

David Picton, SVP of Sustainability at Alcumus, said:As businesses and other organisations start to recover from the disruption of the past few years, they are facing significant risks and ‘blind spots’ across supply chains in areas like brand impact, climate action, ethics and operational disruption. Effective information intelligence and data visibility will be key for organisations to demonstrate progress on ESG and prove that they take their responsibility to protect their people and our planet seriously.”

About Sarah OBeirne

Leave a Reply

Your email address will not be published. Required fields are marked *