Supply chain blindspots hinder ESG progress: Coupa

The availability and reliability of crucial supply chain data is preventing Australian organisations from fully realising their environment, social, and government (ESG) goals, a new study from Coupa has revealed.

Coupa’s study confirmed that Australian businesses are seeking more transparency in their ESG data, with 94 per cent of respondents agreeing that the ESG data of their suppliers is important to understand supplier risk.

Almost all large enterprises expressed care about ESG concerns and said they are committed to achieving several major objectives across many areas.

Respondents said they want to improve ESG practices and reduce risk exposure, particularly in: reducing greenhouse gas emissions (92 per cent); improving supply chain diversity (89 per cent); reducing deforestation (87 per cent) and; eliminating modern slavery (80 per cent).

However, the research highlights a lack of sufficient visibility into supply chain data and inadequate technology for businesses to fully realise ESG targets.

“Even with all the will in the world, no business can fully realise their ESG goals and make a meaningful difference if they do not possess accurate and timely data on which to make decisions,” said Donna Wilczek, senior vice president of product innovation and strategy at Coupa.

More than half (60 per cent) said that data on their suppliers’ ESG credentials is only “somewhat” available or “not really” available.

A third (34 per cent) said they do not have strong enough technology capabilities to assess ESG risk and compliance.

More than half (51 per cent) of Australian businesses said they can only assess ESG risk and compliance of Tier 1 (third-party suppliers) to some degree and 10 per cent say they can’t accurately assess at all.

Related: Coupa turns business insights into action with artificial intelligence

As for Tier 2 suppliers (the suppliers of their third-party suppliers), 54 per cent can only assess “to some degree” or not at all.

Practically all (97 per cent) said they wish to speed up responses to external disruptive events, yet three in five (60 per cent) lack access to data that enables this type of agility.

The majority (92 per cent) said it would take weeks, months or longer to find new suppliers that meet their ESG standards.

Overcoming the Data Problem: A Defense Against Disruption

To solve these ESG data gaps, businesses are calling for greater industry-wide data sharing and collaboration.

The research found that all Australian respondents agree that, if key ESG supplier data were shared openly and instantaneously with prospective buyers, it would help them more accurately assess their ESG risk and compliance.

Nearly all respondents (96 per cent) said greater cooperation on key ESG data is needed between businesses and suppliers.

“Organisations are rightly making ESG a priority and have begun to make changes to their supply chains to become more sustainable,” Steve Banker, vice president of supply chain services at ARC Advisory Group.

“While many are still early in their journey and marching towards net zero goals, it’s clear that quicker access to supplier information can aid supply chain planning and help businesses better respond when disruption arises,” Banker said.

He continued that with this type of data collaboration, organisations can confidently make choices that reduce costs and carbon, as well.

“It’s reassuring to know that Coupa’s research also found more than two-thirds (64 per cent) of businesses globally, and more than half (51 per cent) of Australian organisations, plan to invest in new technology to help them achieve ESG goals,” Wilczek added.

“However, if they truly want to operationalise their ESG strategy and corporate purpose, they need transparency technologies that go beyond mere reporting, and enable buyers and suppliers to collaborate and exchange data as a community for a common cause,” she concluded.