Major gap in capacity to monitor sustainability in supply chains says study

State of ESG in Manufacturing study finds just 31% are highly confident in their supply chain data and one in four of their suppliers’ ability to meet sustainability standards

A survey of complex manufacturers in North America and Europe has found that while Environmental, Social and Governance (ESG) goals are increasingly important to organisations, there is a lack of confidence in supplier sustainability and a low capacity to measure what constitutes success, leaving a major gap between stated ambitions and the on-the-ground reality.

Within the survey, a mere quarter of respondents said that they have high confidence in their partners and suppliers to help them achieve their stated sustainability goals. However, even checking whether ESG standards are being met is problematic, as just 31% said they are highly confident in the quality and accuracy of their organization’s supply chain data.

The research suggests that this obstacle will have to be addressed in order to make any progress as not only did 80% agree that they are dependent on partners and suppliers to reach ESG goals, but 59% expect their dependency to deepen in 2023.

Dealing with the visibility gap and partner capabilities will be crucial if executives are to meet their rising interest in ESG accountability and make their growing investments count.

Eighty-seven percent of the more than 150 professionals surveyed are prioritising ESG in 2023 and sustainability practices in supply chains, leading to 69% planning to invest into improving their supply chains.

The research notes that external pressure to improve supply chains from a sustainability perspective is mounting from not only investors but also from regulatory bodies, who are now phasing in a raft of measures that pertain to supply chains. They note that the EU Forced Labor Ban, the SEC Mandatory Climate Disclosure, and the German Supply Chain Due Diligence Act are important pieces for senior supply chain professionals to be aware of, especially as “non-compliance can lead to loss or lack of market access, legal ramifications and even the required destruction of non-compliant goods”.

“This new research emphasizes that manufacturers are deeply aware of the critical need for credible supply chain ESG data to sustain business growth and meet stakeholder expectations,” said Andrew Waitman, CEO of Assent. “At the same time, there is an urgent need to improve supply chain visibility to meet evolving ESG standards and requirements … Companies who are accelerating their ESG are in the lead as they will maintain market access, grow their business and deliver responsible products to the world."

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