By: Louis Coppola, Partner and Executive Vice President, The Governance & Accountability Institute
Companies are increasingly asking their supply chain for data on Environmental, Social and Governance issues. This data is important and can have huge impacts on supplier relationships, the sustainability of global economies, the environment and society as a whole. There are existing globally accepted frameworks that have been used by companies for decades. So, why are organizations creating their own new and unique frameworks and questionnaires for collecting this data? Small and medium size companies are overwhelmed with hundreds of individual requests and have every limited resources to respond to each and every unique survey.
If customers would utilize these existing standards to collect data from their supply chain then the same responses could be used by multiple customers and other stakeholders including investors, employees, NGOs, government, academia, raters and rankers and so on. Let’s start getting efficient when it comes to asking for ESG information from suppliers so we can all be more effective and utilize our resources for real world impact and change.
Sustainability Maturing – Supply Chain Footprints
Many large companies have integrated Sustainability programs throughout their organizations. These companies have typically established ambitious goals for their organizations around important issues like diversity, water, carbon, energy, biodiversity, human rights, and many other social and environmental issues. In Governance & Accountability Institute’s 2013 study on the S&P 500 we found that for the first time ever the majority are now publishing sustainability reports and that companies not publishing a report are in the minority (and it’s a shrinking minority).
As these companies mature in their sustainability programs they are now asking their suppliers for sustainability data, recognizing that they are part of the companies’ footprint. Leading companies like Microsoft, Wal-Mart, McDonald’s, Dell, Ford, Cisco, Procter & Gamble and many others are creating their own metrics to measure and engage with their supply chains.
Overall this practice is creating a wonderful cascading of sustainability into many more companies and helping to move the practice from large multi-national organizations down to small and medium size businesses. It is causing new mutually beneficial relationships and synergies to be found between customers, suppliers and other stakeholders that otherwise would not have been possible.
Growing Pains – A Growing Problem – “Survey Fatigue”
However, the maturing of sustainability comes with some growing pains along the way. Many companies are now complaining about what I like to call “Survey Fatigue”. The problem comes into play when each of these companies or other stakeholders collecting environmental and social information creates their own unique questionnaires, forms, or surveys.
On a recent Social Investment Research Analyst Network (SIRAN) conference call, members of the Coca-Cola Sustainability team stated that they received over 300 questionnaires to fill out and each is unique and overwhelming. From our conversations with other companies this is not uncommon at all and the numbers can be even much higher than this.
The same large companies that complain of Survey Fatigue from other stakeholders like NGOs, Media, Government, Academia, Media, Investors, Raters and Rankers are now doing this same thing to their own suppliers by creating their own questionnaires, surveys, and systems. The overwhelming number of questionnaires is often insurmountable by most organizations with limited resources for responding to these requests for information. Individuals in these organizations with small budgets and stretched resources must often make difficult decisions on who they will respond to and who they will not respond to. It is just not possible to respond to every one of these surveys even though much of the information sought after is on the same topics just requested by other parties in different methods and formats.
Globally Accepted Standards Are The Solution
This is an unnecessary problem. There are already many standardized frameworks for reporting on Environmental, Social, and Corporate Governance (ESG) data which cover the topics organizations are looking to measure in their supply chains. For example the Global Reporting Initiative (GRI) framework for sustainability is used by over 3,000 global organizations to report on various ESG issues and has been around for over a dozen years. The GRI framework is being used by the majority of these large companies to report on their own sustainability journey.
We need more efficiency in our Supply Chain Sustainability practices
as we all become more mature in how we manage our company’s own initiatives.
The large companies going out to their supply chain already use GRI to report publicly, so it would make sense to request the data from their suppliers in the same format so that all of it could be seamlessly rolled up into their own existing systems. We need more efficiency in our Sustainability practices as we all become more mature in how we manage our company’s own initiatives.
Companies could be using GRI and other standardized frameworks to request this info from their suppliers. This would lead to one report (or “survey”) that could answer the requests of all customers / stakeholder in the supply chain. The key is standardization so we can make the process for all parties involved much more seamless and less resource intensive.
There is a gap here that needs closing and a simple solution to the number one problem that companies and their suppliers are facing right now. The solution would enable collaboration and results that have real impacts for all stakeholders by freeing up the time of sustainability professionals in these organizations to enact new programs, initiatives, strategies and actions rather than worrying about answering the 300+ surveys. We need action on this now.
Let’s Get Started – Efficiency in Supply Chain Sustainability Data
The Governance & Accountability Institute’s solution for this is a 3 day workshop for large companies that are actively pursuing data from their suppliers. The concept for this workshop is to work with the customer company to develop a supplier data collection system that utilizes the globally accepted and tested GRI framework for Sustainability reporting. The company will invite their major suppliers to take part in this 3 day event either virtually or on-site. The suppliers will receive certification following the training event and take part in a variety of team-building and brainstorming breakouts with management of both the customer and suppliers – working together to find common mutually beneficial solutions. For further details: Contact me at email@example.com.
So let’s stop this madness right now and utilize what’s already tried and tested so we can concentrate our resources on impactful actions and initiatives instead of wasting our time filling out surveys.
About the Author: Louis Coppola is a Partner and Executive Vice President of the Governance & Accountability Institute. He provides advice to clients related to disclosure, transparency and Global Reporting Initiative (GRI) activities and serves as a member of the Sustainable Investment Research Analyst Network (SIRAN) research steering committee.
Lou coordinates the Institute’s research studies including the annual “Does It Matter?” report on the S&P 500, and the Institute’s study of Sustainability Assurance Practices in collaboration with GRI, Bloomberg, and the big four accounting firms. To learn more about G&A Institute: http://www.ga-institute.com