How to Ensure ESG-Conscious Suppliers: Tips to Empower Suppliers in Your ESG Journey
Engaging your suppliers with your company’s environmental, social, and governance (ESG) practices is an important step in meeting regulatory compliance and stakeholder expectations. However, many suppliers in international supply chains may lack the ability to uphold your company’s ESG standards.
This article provides actionable strategies on how to engage, educate, and empower suppliers with the knowledge and resources to meet your organization’s ESG standards.
Extending Your ESG Initiatives by Knowing Your Suppliers
By extending ESG standards to suppliers, businesses not only reduce the risk of compliance violations – which can result in fines and supply chain disruptions – but also uphold their brand reputation. Thorough supply chain mapping is a prerequisite to extend your ESG goals to your suppliers. Mapping your supply chain allows you to understand who your suppliers are, how they operate, and their existing ESG practices. This includes having a comprehensive understanding of your suppliers’:
Locations
Facility contacts
Facility operations
Sourcing practices
History of ESG compliance violations
By mapping your supply chain and identifying your suppliers, businesses take the first step in equipping their network with the knowledge they need to meet brand and legislative standards.
Learn more about how to thoroughly map your network with our step-by-step guide to supply chain mapping.
Empowering Suppliers to Meet ESG Compliance Expectations
To ensure ESG compliance across a supply chain, businesses need to actively engage and empower their suppliers with the knowledge they need to succeed. Many suppliers may be unaware of a brand’s ESG objectives, or may lack the resources necessary to achieve compliance. Bridging this gap is possible through enhancing communication, training, building capacity, and employing digital resources to foster continuous improvement.
Facilitate Effective Communication
A major hurdle in ensuring ESG compliance is a lack of communication between buyers and their suppliers. While mapping your supply chain is the first step in identifying suppliers, you must also establish clear communication channels with suppliers to discuss ESG goals, expectations, and progress.
Discuss expectations: Have discussions with your suppliers about your organization’s ESG standards and what you require from them to meet compliance and stakeholder expectations. These discussions should include:
Detailed summaries of your organization’s ESG standards and long-term goals
Suppliers’ ability to meet ESG standards
Potential adverse impacts on production from changes in ESG practices
Work collaboratively: Upholding ESG standards is a joint effort between you and your suppliers, so discuss methods of collaboration that will benefit you both. This can include methods of remediating adverse impacts on production, or identifying areas of improvement that your company can facilitate.
Perform follow-up: Regular check-ins and feedback sessions can help identify areas of improvement and reinforce the importance of ESG compliance, as well as keep suppliers up-to-date with changing ESG goals and expectations.
ESG Supplier Training
Once you’ve communicated your expectations to your suppliers, make sure they have the necessary resources to make changes to their operations. Supplier training is key to ensuring they have the knowledge to uphold standards.
Preliminary assessments: An initial ESG self-assessment questionnaire (SAQ) for suppliers can give you insights into how your suppliers conduct their operations and identify immediate areas of improvement.
Educational programs: Consider educational and training initiatives that empower your suppliers with the knowledge and resources necessary to meet your ethical standards. This can be done through workshops, seminars, hands-on training, and certification programs that ensure ESG standards are being met.
Perform regular audits: Conduct regular check-ins and audits to keep tabs on your suppliers’ progress. This oversight is instrumental in maintaining your ESG goals, as well as reducing risk from potential compliance violations.
Provide Supplier Assistance
Some suppliers may lack the capacity to meet all ESG objectives at first. Increasing the capacity of your suppliers can be a significant contributor to ensuring they have the ability to meet your standards.
Identify priorities: Determine the primary focus areas of your organization and decide which are most important to your brand, stakeholders, and regulatory agencies. This may include ensuring fair wages and ethical labor practices in lieu of sustainability practices or prioritizing legislative compliance ahead of carbon neutrality goals.
Collaborate with suppliers: Discuss which non-negotiable ESG goals are currently out of reach to your suppliers and what resources your company can provide to make them possible. This may come in the form of loans to update infrastructure, environmental remediation from suppliers’ pollution, or workers’ voice programs.
Develop actionable goals and timelines that will help you and your suppliers collaboratively work towards your ESG goals, and maintain regular discussions about their capacity to reach your expectations.
Implement Digital Solutions
Despite technological advancements in recent years, many companies underutilize digitization methods. A QIMA survey revealed that the majority of companies rely on manual methods for product traceability, exposing a major gap in technology usage that can lead to challenges in data accuracy and supplier collaboration.
Utilize centralized platforms: With digital platforms like test, supply chain managers can centralize their monitoring practices and simplify the process of overseeing global networks. Utilizing digital tools gives you access to critical insights that help you understand where compliance may be lapsing, including:
Monitoring ethical scores
Tracking lab failure rates
Comparing supplier benchmarks
Encourage your suppliers to adopt these tools as well, letting you and your network stay up-to-date with changes in operations, expectations, and auditing schedules at the push of a button.
Learn more about automating your supply chain operations: QIMA Real-Time Dashboard Demo
By empowering suppliers with the necessary resources and expectations, can ensure their suppliers are ESG-compliant and foster a culture of ethical responsibility throughout their supply chain. QIMA offers a wide range of ESG solutions that help supply chain managers identify and monitor their suppliers, and ensure ESG-compliant suppliers across the board.
For more information on how QIMA can help you manage your ESG goals, contact us today.
Related Articles
