What are the best practices for collecting ESG data from suppliers and partners?
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ESG data, or environmental, social and governance data, is becoming increasingly important for businesses that want to measure and improve their sustainability performance and reputation. However, collecting ESG data from suppliers and partners can be challenging, as there may be different standards, formats, methods and expectations involved. How can you overcome these obstacles and ensure that your ESG data is reliable, consistent and comparable? Here are some best practices for collecting ESG data from suppliers and partners.
Before you start collecting ESG data, you need to have a clear idea of what you want to achieve and what you want to measure. What are your sustainability objectives and priorities? What are the key ESG indicators and metrics that align with your goals and values? How do you plan to use and report the data? You also need to define the scope of your data collection, such as which suppliers and partners are relevant, how often and how deep you want to collect data, and what level of detail and quality you need.
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Jonathan Weitz
Sustainable Growth Strategy | Climate Tech Commercialization | Digital Marketing | Decarbonization | CMO Advisory | Go-To-Market
I have seen Corporate Sustainability teams increasingly demand their suppliers align with their own sustainability goals. Asking for ESG indicators including Scope 1, 2, and 3 emissions, as well as requiring a plan for reduction in these emissions over a specific time period, and demonstrating progress against those goals. Importantly, leading companies are designing support programs to help their suppliers accomplish the sustainability supplier requirements. As you plan for the data collection, remember this is an on-going operational process, so a system of workflow, data integration, and performance tracking is essential.
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Theofania Chatzi
In order to get fruitful results you, first, need to clearly define your ultimate goal. What is your end game when all is over? How does that look like? Defining your goal and will give me a good understanding of what you need to do next. Then you need to check that your ESG values and goals align with the ones of your suppliers. That is the best way to choose your suppliers and build an effective channel of communication with them. Finally, identify which suppliers are linked with your organization and what kind of data will you be needing of them. Knowing exactly what you want to achieve is the most crucial, yet complicated step.
Once you have your goals and scope defined, you need to select the tools and methods that will help you collect ESG data efficiently and effectively. There are different options available, such as questionnaires, surveys, audits, interviews, certifications, ratings, benchmarks and software platforms. You should consider the advantages and disadvantages of each option, such as the cost, time, accuracy, completeness and comparability of the data. You should also look for tools and methods that are aligned with widely accepted standards and frameworks, such as the Global Reporting Initiative (GRI), the Sustainability Accounting Standards Board (SASB) or the Task Force on Climate-related Financial Disclosures (TCFD).
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Jamie Sands
Group Operational Support and Systems Manager at Welch's Transport Ltd
This article adeptly underscores the critical role of strategic tool selection in ESG data collection. Highlighting alignment with set goals and established standards like GRI, SASB, and TCFD is vital for credibility. I'd suggest emphasizing flexibility to adapt to evolving ESG standards and the integration of tech-driven solutions for scalability and automation in today's dynamic digital landscape.
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Theofania Chatzi
What you need to pay close attention to is financially-grade and auditable ESG data. To achieve that you need to use digital tools and platforms that mostly eliminate the possibility of human errors. The bottom line, if you ask me, is to gain an understanding of what platforms exist and identify the one that best suits your needs. It gets easier from that point on.
Collecting ESG data from suppliers and partners is not a one-way process. You need to communicate and collaborate with them to ensure that they understand your expectations, requirements and benefits of providing ESG data. You should also provide them with clear guidance, support and feedback on how to collect and report ESG data. You should also seek to establish trust and transparency with your suppliers and partners, by sharing your own ESG data, goals and challenges, and by recognizing and rewarding their efforts and achievements.
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📗 Tamás Mehlhoffer
Sustainability Communication & Reporting || Head of Communication @ Integrity Authority, Hungary II Certified GRI Professional
On one occasion I was witness to a very bad example of lack of communication in ESG demand toward a supplier. The supplier was actually the company I worked for, and one of our customers, a big industrial company just sent us a note that we need to have an audit and provide ESG data. When asked why, the answer was: 'Otherwise we are not buying anything from you'. Well, yes, this is the bottom line, however sharing the goals and the strategic efforts behind them could have been much more partner-like, and could have resulted in a more proactive contribution from our side with potentially more positive outcomes. This way, only the bare minimum was submitted just to keep the business.
After you collect ESG data from suppliers and partners, you need to validate and verify that the data is accurate, complete and consistent. You can do this by checking the data sources, methods, assumptions and calculations used by your suppliers and partners, and by comparing the data with other sources, such as industry benchmarks, third-party audits or external ratings. You should also look for any gaps, errors, discrepancies or anomalies in the data, and ask for clarifications or corrections if needed.
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Alec Turnbull
Climate Tech Ecosystem Builder | Product & Engineering Leader
Validating the data is always worthwhile, and doesn't necessarily require a full audit (unless you're the auditor). Always check the sources – if you can't find them, it's a red flag. You should be able to evaluate the quality of the sources fairly quickly. Most will use governmental benchmarks, while top companies will provide access to directly measured data and real sources. Wherever possible, prefer real data to estimates. New companies (including my current one - Thalo Labs) are making high quality verification available with direct, realtime measurements. Always look for transparency.
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Theofania Chatzi
In my experience, benchmarking and third-party assurance are what is going to keep you ahead in this corporate sustainability game. Validating your ESG data sources using an external assurance is what will bulletproof your company from any future regulations and therefore, compliance costs.
The final step of collecting ESG data from suppliers and partners is to analyze and act on the data. You should use the data to evaluate the sustainability performance and risks of your suppliers and partners, and to identify areas of improvement, opportunities and best practices. You should also use the data to inform your own sustainability strategy, decisions and actions, and to communicate your ESG impact and value to your stakeholders. You should also monitor and track the progress and changes in the ESG data over time, and update your goals, scope and methods accordingly.
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Theofania Chatzi
After analyzing your data, the next step would be to communicate them with your share- and stakeholders in an understandable way. Keep in mind here that you are probably addressing to a diverse audience. And that is when you start planning. You start planning your strategy on how, when and what will you be doing exactly to better your sustainability performance and tackle the pain points and emission intensive stages of your supply chain.
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Dr Reji Kurien Thomas
I Empower organisations as a Global Technology & Business Transformation Leader | CTO | Harvard Leader | UK House of Lord's Awardee |Fellow Royal Society & CSR Sustainability |Visionary Innovator |CCISO CISM |DBA DSc PhD
Bespoke Supplier Engagement Programme - At a multinational beverage company, we developed a tailored engagement programme for suppliers, focusing on their specific ESG aspects. This approach led to a more nuanced understanding of each supplier's unique challenges and strengths in sustainability practices. Collaborative ESG Workshops- In a pharmaceutical company, we organised collaborative workshops with suppliers, creating a platform for shared learning and exchange of best practices in ESG reporting. This initiative fostered a sense of community and collective responsibility towards sustainability.