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Defining Supply Chain Sustainability Risk and How to Manage It

By Avetta Marketing
July 23, 2019
4 minutes
Defining Supply Chain Sustainability Risk and How to Manage It

As the world becomes more connected and information becomes easier to obtain, companies can no longer afford to ignore their sustainability risk. Not only is there a direct loss in terms of human toll, lawsuits, and reputation damage, but there is also an opportunity cost when it comes to investors who want to invest their money responsibly. When the world is watching, organizations must manage their supply chain sustainability risk. 

What is Sustainability Risk Management? 

To understand sustainability risk management, it’s important to first understand sustainability. Sustainability is built on three pillars of protection: environment, people, and revenue. To be sustainable, companies need to make sure that their practices are not damaging the ecosystem, that the health of employees and bystanders isn’t compromised, and that the company is not engaging in any practices that may harm revenue. While this may sound like general risk management, it’s the focus on the planet, people, and profit that brings the conversation into the realm of sustainability. 

Examples of companies practicing sustainability risk management are PG&E, DuPont, and Ford Motor Company. PG&E established a board of directors to oversee environment impact. DuPont developed an employee safety program that was so successful that it was shared with other large organizations, like General Motors. Another automobile manufacturer, Ford Motor Company, launched a blockchain pilot to ensure that their cobalt supply, which is typically used in electric vehicles, was procured ethically which is a concern for responsible investors. Organizations like these should be commended, but it isn’t enough for companies to manage their own sustainability risk; the supply chain risk must be managed as well. 

Have You Evaluated Your Supply Chain Sustainability? 

Your company may recognize the value of sustainability, but do your vendors, suppliers, and contractors share your vision? Does the rest of your supply chain have sustainability practices in place? Do you know what they are? If you don’t have that level of visibility into your supply chain partners, then you are exposed to risk that can cost you more than money; it could cost you the reputation your company has built. Before that happens, conduct a Sustainability Evaluation of your supply chain with Avetta. 

Avetta’s Sustainability Evaluations comprise three main parts: 

  1. Assessment: Ensure suppliers understand their sustainability responsibilities with a configurable questionnaire that enables them to highlight efforts toward meeting your sustainability requirements.

  2. Verification: Verify that supplier-reported answers comply with your sustainability requirements with a thorough review of suppliers’ policies and procedures. If deficiencies are identified, Avetta sustainability professionals will assist suppliers in closing those gaps.

  3. Demonstration: Confirm that suppliers follow documented sustainability practices by evaluating their ability to effectively implement policies and procedures. If requirements are not met, Avetta sustainability professionals will provide guidance and coaching on how to implement best practices. 

Build a Sustainable Supply Chain with Avetta 

Sustainability Evaluations are just one of the many services that Avetta provides supply chains. These evaluations can be customized to suit your specific focus on any aspect of sustainability, including: corporate social responsibility, anti-bribery and corruption, labor and employment, environment, and occupational health and safety.  

For more information about Avetta's Contractor Management software, Contractor Prequalification or Supply Chain Risk Management, visit avetta.com, email [email protected] or call 844.633.3801.

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