Supplier.io’s New ESG Risks Report Highlights Critical Role of Supply Chain Management in CSR
A newly released analysis by Supplier.io, the market-leading SaaS provider of supplier diversity and ESG data and management solutions, shows that most businesses face significant ESG risks, emphasizing the need for greater supply chain transparency to enhance resilience and sustainability.
“Supplier intelligence is critical as increasing evidence shows that ESG risks directly impact the bottom line. Without clear visibility into supplier practices, businesses are exposed to significant reputational, operational, and financial threats,” said Aylin Basom, CEO of Supplier.io. “Our report highlights the tangible risks of environmental issues, poor working conditions, and inadequate supply chain management. By shining a light on these pervasive issues, Supplier.io provides critical insights and empowers organizations to understand and benchmark areas of supply chain risk, strengthen mitigation strategies, and make progress towards improved supply chain resilience.”
Key findings from the Supplier ESG Risk Report, based on ESG risk assessment data from over 200 companies across 11 industries, include:
Environmental Risk: Environmental risks are a pressing concern, with Greenhouse Gas (GHG) emissions standing out as the most significant threat, affecting 73% of companies. Additionally, 72% of companies face risks from lack of managing their products’ environmental and social impacts throughout the product lifecycle. Water withdrawal and consumption and air pollution pose substantial challenges, underscoring a broad spectrum of environmental vulnerabilities.
Social Risk: 54% of companies encounter worker health and safety risks, which can lead to labor unrest, strikes, production delays or disruptions.
Governance Risk: Supply chain reporting mandates like the Corporate Sustainability Reporting Directive (CSRD) mean that businesses must ramp up their supply chain oversight and report on ESG impact. Yet, 45% of companies are exposed to significant risks due to inadequate supply chain transparency and management.
The report emphasizes the critical need for businesses to apply the same rigor to ESG reporting as they do to financial metrics to reduce stakeholder and regulatory scrutiny. It also outlines several strategies procurement teams can leverage to ensure responsible sourcing, such as implementing robust codes of conduct, finding alternative sourcing strategies, and conducting comprehensive risk assessments to foster transparency, drive positive outcomes, and empower suppliers with opportunities for mutual benefit.
