Which metrics are best? The science of supply chain sustainability

  • Written by Peter Needle
  • Published on 28 March 2019
  • Our Voice

With so much competing research and statistics on sustainability in global supply chains, what information can we trust, and how can we ever compare or analyse the results?

The KPMG Survey of Corporate Responsibility Reporting 2013provides a snapshot of recent global trends in corporate social responsibility. This research looked at over 4,000 companies across 41 countries, and found that more than 90% of the world’s largest 250 companies now publicly report on aspects of their sustainability performance.

The role of Cr reporting in modern business

Yvo de Boer, KPMG’s Global Chairman for Climate Change & Sustainability Services, admits that corporate responsibility (Cr) reporting is not without its critics. Reports can potentially drain resources with an unclear return on investment, with a risk of the reports being ignored by the company once compiled, or simply used as corporate greenwash.

In the 21st century, as a variety of stakeholders become more conscious than ever about supply chain ethics, de Boer argues that Cr reporting is an essential business management tool – not something produced “simply to mollify potential critics and polish the corporate halo.”

The 2013 KPMG Survey shows signs that many major global companies are bringing Cr and supply chain sustainability into the heart of their business strategy, in order to understand the consequences of environmental and social changes on their business.

  • Almost all the world’s largest 250 companies were found to report on Cr. Of these companies….
  • 90% use their reports to identify environmental and social changes that impact the business and its stakeholders
  • 80% report that they have a strategy to manage the risks and opportunities
  • 70% state that these changes bring opportunities for innovation of new products and services
  • Roughly 30% (and counting) also report opportunities to grow their market share and cut cost

Which metrics are best?

The three pillars of supply chain sustainability (economic, environmental, and social) are a little more complex than you might first expect. Which metrics are most important, and how can companies properly track them?

Following their latest survey, KPMG concluded that “supply chain reporting needs more focus”. There are currently very few mandatory reporting requirements on supply chain sustainability, leaving companies to choose what metrics they report on. 

A recent study in the Journal of Cleaner Production examined 445 different academic articles on sustainable supply chains. A total of 2,555 different metrics were found, and even more worryingly, 93% of these metrics were only used 3 times or fewer!

Prioritising for your business

This lack of consistency does come with some benefits – namely, companies have the freedom to focus on the sustainability issues most relevant to their supply chain, and to their broader corporate aims and ambitions.

Context-based metrics could potentially help companies to determine whether their core activities can be sustained by the particular environmental and social resources that they use. However, two factors pose a barrier to achieving this.

Firstly, to report on supply chain performance, a company must consider every single supplier and manufacturer. Naturally, this can become extremely difficult for global supply chains with hundreds of players involved. Secondly, data must be consistently monitored throughout the entire supply chain and transparently communicated back to the company. In order to monitor and influence sustainability standards, companies must achieve supply chain transparency and control.

In order to collect context-based metrics within a supply chain – or any metrics at all, for that matter - there is a need for a coordinated strategy to enable information sharing. Software solutions (such as Segura) can automate otherwise labor-intensive processes, helping to make this possible.

Originally published 10/10/2014

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