As regulations mount, companies no longer have a choice about addressing their ESG commitments. Instead of reacting passively to these requirements and treating ESG as a burden, they could proactively develop their processes to develop a competitive advantage. The burdens of a complex world and the possibilities to increase the efficiency of the supply chain form the basis of the talk that Bertrand Maltaverne, our SxM and sourcing analyst, will give at Sphera’s second annual ESG summit.
The summit, which will focus on how to drive your organization toward a sustainable future, will occur remotely from April 25 through 27. The first day will cover improving ESG through decarbonization, the second lifecycle assessments for ESG and the third ways to address supply chain ESG challenges and understanding their importance.
Bertrand’s presentation, ‘ESG, CSR and SCRM: The New Source of Competitive Advantage,’ opens the third day.
The supply chain links ESG together
When broken down, the acronym of ESG basically covers everything from environmental- to social- and governance-related compliance. Forced labor and decarbonization, for example, can seem to require their own discrete strategies. Strategies can quickly pile up like stacking chess boards upon individual chess pieces. Simply put, it can be paralyzing.
The way out of such paralysis lies not in memorizing an entire book of strategies but in developing an agile methodology. “Based on everything we have seen around risk,” Bertrand explains, “we need a convergence of supply chain visibility and internal accounting required by ESG.” Sphera has pursued this convergence by acquiring riskmethods in the fall of 2022. riskmethods is a cloud-based supply chain risk management platform that provides relevant risk information in real time by pulling from third-party data sources, such as NOAA, CIA or Transparency International. In other words, Sphera conducts product analytics from an ESG perspective while riskmethods focuses on supply chain risk management.
This lays the foundation for creating a detailed and multi-level digital twin of the final product and of the supply chain that can provide details on both the purchased components from tier-1 suppliers (what, where from, how) and the sub-components and raw materials these suppliers purchase (tier-‘x’ visibility, materials visibility and sub- materials visibility). Such a construct can provide organizations with the following:
- Control-tower-like capabilities to monitor inbound flows (beyond tier-1) in almost real-time to quickly react to potential disruptions.
- Simulation capabilities to perform stress tests of their supply chain and/or test various designs of the product or supply chain (design for supply).
- The ability to analyze and report (e.g., Life Cycle Assessment) at a very granular level and an aggregated one (sold-product level) so that organizations can comply with the due-diligence requirements of ESG regulations and have the information they need and want on products, such as its CO2 footprint or general composition.
In other words, the tools for monitoring and responding to supply chain risk bring much of the information that is related to ESG to the surface. “To be successful, to be compliant, to reduce risk, to be readier than the competition — you have to somehow have these capabilities for products and reporting as well as the supply chain visibility standpoint,“ Bertrand said.
An example of ESG risk is forced labor. In our forced labor compliance series, we noted how governments all over the world have begun to pass regulations banning the presence of forced labor in supply chains. In the United States, the Uyghur Forced Labor Prevention Act came into effect in December 2021, prohibiting the importation of any goods made with any use of forced labor in Xinjiang. Similarly, the European Commission has proposed its own broader ban on the sale of all goods made with forced labor. And again, Norway’s 2022 Transparency Act gives companies until the end of June to publish an account of their due diligence with regards to human rights and forced labor. At Sphera 2023, you can take the opportunity to learn more about what this means for qualifying companies and how to get ready for the disclosure requirements. However, it is safe to say that supply chain monitoring, like the kind developed by riskmethods, gives companies the ideal tool to confidently state that there is no forced labor anywhere in one’s supply chain.
Bertrand’s presentation serves as the jumping point for the day’s discussions. After his talk concludes, attendees can listen to a conversation between Scott Robinson, the Director of Global Supply Management at Corning, and Constantine Limberakis, Sphera’s VP of Head of Product Line Marketing. Their talk will assess the state of supply chains in 2023, the challenges that lie ahead and how industry and geography affect the building of sustainable supply chains. Afterwards, the day and summit close with a discussion between Limberakis and Heiko Schwarz, who was previously the CEO and founder of riskmethods and now holds the position of Global Supply Chain Risk Advisor at Sphera. Schwarz will reflect on his decade-plus wealth of experience in adopting SCRM technology to guide attendees in their own adoption as they address the evolving ESG and regulatory environments.
You can find further details and free registration information by visiting the summit’s page on Sphera’s website. If you want even more insights into how supply chains and ESG intersect, check out Sphera’s thought leadership piece on supply chain visibility or ‘Understanding managing and mitigating supply chain risk,’ a Sphera podcast discussion between Heiko Schwarz and Alex Studd, Sphera’s product marketing manager for operational risk management.