Transparency: The ‘First Pillar’ of Sustainability
In today’s corporate landscape, sustainability has fast developed into a necessary point of emphasis. Experts say a key ingredient to pursuing sustainability in a meaningful way is transparency in the supply chain, where much of a company’s environmental impact lies.
Gopal Iyer, supply chain delivery lead at procurement consultancy 4C Associates, said he has seen estimates indicating that 70%-75% of a company’s environmental and social impact lies in its supply chain, and David McClintock, marketing director of EcoVadis, said the typical supply chain creates far greater social and environmental costs than a company’s own operations. That makes transparency of the supply chain from end-to-end necessary. As McClintock said, “you can’t improve what you can’t see.”
Antony Lovell, vice president of applications for Vuealta, said transparency and sustainability are, to a degree, interdependent.
“Transparency increases supply chain resiliency, agility and efficiency,” Lovell said. “A transparent supply chain can also make informed decisions balancing profitability, customers and the environment. Consumers and customers will hold businesses responsible for the actions of their suppliers. Consumer choice will be made not just on the ‘green credentials’ of an organization, but on the entire supply chain. This means that companies need sustainable supply chains, not just sustainable partners within supply chains. To achieve this, businesses need to provide transparency into the full supply network.”
Joanne Strong, senior consultant, Deloitte Consulting, said transparency represents a step beyond visibility—when you can see what’s happening in your upstream and downstream—and extends to being able to share that visibility with stakeholders, consumers and potential investors.
“It’s taking it to that next step,” Strong said. “We have the visibility and now that we’re sharing it, we also have the framework and structure to maintain that and enforce our common standards. So, we are able to say, ‘I can see everything upstream and downstream, and now I can enforce that my upstream and downstream is following my company’s regulations.’”
Strong said transparency in the supply chain is a recent phenomenon spurred by both government oversight and consumer demands.
“It provides these organizations that are sustainable as well as transparent the ability to differentiate themselves, provide that extra incentive for the consumer or the investor to say, ‘This is a trustworthy company, they have the same ethical leanings as me, and this is something that I want to support,’” Strong said.
Earning that trust starts with transparency.