The Crucial Role of Sustainable Supplier Collaboration and Selection

In the age of heightened environmental awareness, businesses are being increasingly pressured by multiple stakeholders in the economy to adopt sustainability across their operations. In order to successfully implement a sustainable supply chain, businesses must set clear sustainability goals, employ the latest and most innovative technology into operations, setup a skilled and efficient compliance function, involve employees in sustainability initiatives, and most importantly, should have sustainability as a key criteria while selecting and engaging with suppliers and business partners. Selecting suppliers that comply with your sustainability standards is highly crucial, not only to increase your business’s credibility, but also to make production a less cumbersome and more cost-efficient task. In this blog, we will delve into how to establish an efficient sustainable supplier collaboration and selection system, and its immense importance.

The reason why sustainable supplier collaboration and selection is necessary can be highlighted by the following statistic: around 80% of emissions originate from supply chains and organisations’ supply chain often account for more than 90% of their greenhouse gas (GHG) emissions. In order to implement a sustainable approach to supply chains, businesses must take supplier identification and selection into careful consideration prior to engaging with them. Suppliers contribute greatly to how sustainably inclined your business is, and working with suppliers who do not comply with your sustainability requirements can be detrimental to that goal. Choosing suppliers who comply with your sustainability requirements does not only contribute to your sustainability agenda, but also increases innovation, development and research that leads to higher consumer/stakeholder satisfaction and future success. It also demonstrates your commitment to Sustainable Development Goals (SDGs) and Agenda 2030 and builds and strengthens your reputation as a responsible business.

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The implementation of a sustainable supplier collaboration and selection is a simple yet effective four-step process.

Ensure the suppliers you choose to work with comply with your sustainability goals, reach the product quality requirements, are consistent with their supply, and do not pose as a risk to your business. In order to successfully onboard such suppliers, creating and internalising robust evaluation criteria is necessary. These evaluation criteria will possess the mandatory requirements of your business in the pre-qualification process. These will consist of ESG imperatives and management systems to action and sustain them. For example, under social standards, complying with the UN Global Compact can be a potential requirement. This is an effective way to disqualify the non-compliant candidates.

Inform your suppliers about your sustainability ambitions and expectations. Inquire about their own sustainability progress and success, and periodically ascertain whether they align with your own. Study their certifications (for example, ISO) and their recorded past. This serves as a great indicator of how sustainably inclined they are. Also, conduct desk research/grey literature review to identify any adverse media reports/negative publicity about them in the public domain.

In order to track your business’s progress on sustainability, you must set out well-defined KPIs and share them with your suppliers. KPIs such as carbon footprint and sustainable supply chain metrics, are pivotal in guiding a business to be more sustainably inclined. Carbon footprint indicators quantify the impact of an organisation towards climate change and help set reduction targets. The number of compliant suppliers is converted into a percentage which gives businesses an idea of how well they are achieving their sustainability targets and ensures ethical sourcing practices. Ensure your suppliers are also implementing these KPIs to embrace a truly sustainable supply chain. Additionally, it aids a company in aligning with the increasing demand for sustainable business activities in the global marketplace.

ESG consultants play a pivotal role in fostering sustainable supplier collaboration by conducting exhaustive ESG assessments including supply chain risk assessments, employing ESG due diligence processes, and developing thorough policies and procedures. They ensure suppliers adhere to the business’s sustainability standards. Moreover, ESG consultants provide training for suppliers, record their progress, and facilitate seamless communication between stakeholders. Additionally, ESG consulting services can aid your business to align with the industry sustainability benchmarks.  

In summary, sustainable supplier collaboration and selection plays a vital role in today’s environmentally conscious business milieu. In order to engage with sustainably inclined suppliers and build an effective and conscientious supply chain, businesses must filter out non-compliant suppliers, implement KPIs in the organisation, urge suppliers to replicate by handholding, seek help from ESG consultants better their performance. Moreover, this successfully helps businesses meet the expectations of consumers, investors, and other stakeholders.

At AKW Consultants, we provide exceptional consulting services to help your business achieve a sustainable supply chain. Get in touch today: info@akwconsultants.com