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Exploring the Importance of Supplier Sustainability

By Avetta Marketing
November 10, 2022
4 minutes
Exploring the Importance of Supplier Sustainability

Over the last few years, the shift in expectations of both investors and consumers has brought sustainability reporting to the forefront of corporate strategies and board room agendas. Institutional investors are increasingly emphasizing the importance of non-financial metrics, such as sustainability data.

Understandably, the emphasis on quantifiable sustainability practices has found its way into core supply chain function – primarily, procurement. As a result, more companies, across industries and revenue brackets, have enforced their resolve to work with suppliers that adhere to sustainable social and environmental practices.

A Call for Sustainable Supply Chains

According to the CDP Global Supply Chain Report 2020, supply chain emissions account for 92% of an organization’s total greenhouse gas (GHG) emissions. On average supply chain emissions are 11.4 times higher than operational emissions. On the global stage, supply chains account for 60% of all emissions.

The simple truth is achieving supply chain sustainability is a key factor when it comes to overcoming the festering global climate change crisis. The only way for enterprises to make a difference in this regard is to implement environmental, societal, and governance (ESG) measures at each supply chain touchpoint, starting with procurement of sustainable suppliers and vendors.

But implementing a sustainable supply chain strategy involves a numerous consideration around a largely complex business ecosystem. This is often a challenge for enterprises, given the difficulty in accumulating the required data to set clear prequalifying targets and standards when onboarding suppliers. And the fragmented nature of the supplier landscape adds to the concern – especially given the possibility of non-sustainable practices being buried several supplier tiers deep.

Supplier Sustainability Framework: A Technology-led Solution

A supplier procurement framework is foundational for enterprises to create strong, reliable supply chains. And given the business relevance of sustainable practices and the critical role that supply chains play, the need for a sustainable supplier procurement framework cannot be overstated. “2019 Gartner Procurement’s Value Contribution in Supply Chain Survey data shows that 75% of participating organizations reported having a formalized sustainable procurement program in place.”

However, in most cases, the lack of end-to-end supplier visibility impedes the effective implementation of such a framework. This results in several limitations especially when enforcing compliance standards across multi-tiered supplier ecosystems.

Fortunately, the widespread digitization of supply chains has paved the way for technological intervention in the effective implementation of a supplier sustainability framework. “Supplier sustainability applications help companies assess and monitor suppliers’ ESG performance to reduce risk exposure and drive improvements.” Supplier sustainability applications have been growing in significance too. By aggregating and leveraging supplier data from across various touchpoints an interconnected ecosystem and decentralizing compliance ownerships, these applications can help enterprises eliminate non-sustainable practices from the supply chain. The result: a responsible, efficient, and reliable supply chain, safe from unprecedented risks.

To gain a deeper understanding of why supplier sustainability applications are the future of resilient supply chains, you can sign up to view the full 2022 Gartner® Report “Market Guide for Supplier Sustainability Applications” here.

*Report Source: Gartner, Market Guide for Supplier Sustainability Applications. Miguel Cossio, Laura Reiner. Published 1st June, 2022 **GARTNER is a registered trademark and service mark of Gartner, Inc. and/or its affiliates in the U.S. and internationally and is used here in with permission. All rights reserved.

Gartner does not endorse any vendor, product or service depicted in its research publications, and does not advise technology users to select only those vendors with the highest ratings or other designation. Gartner research publications consist of the opinions of Gartner’s research organization and should not be construed as statements of fact. Gartner disclaims all warranties, expressed or implied, with respect to this research, including any warranties of merchantability or fitness for a particular purpose.

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