A new report from Supplier.io, shows that most businesses face significant ESG risks, emphasizing the need for greater supply chain transparency to enhance resilience and sustainability.
“Supplier intelligence is critical as increasing evidence shows that ESG risks directly impact the bottom line," said Aylin Basom, CEO of Supplier.io., in a statement. "Without clear visibility into supplier practices, businesses are exposed to significant reputational, operational, and financial threats. Our report highlights the tangible risks of environmental issues, poor working conditions, and inadequate supply chain management. By shining a light on these pervasive issues, Supplier.io provides critical insights and empowers organizations to understand and benchmark areas of supply chain risk, strengthen mitigation strategies, and make progress towards improved supply chain resilience.”
The report based on ESG risk assessment data spanning 11 industries, analyzed the data against sector relevant UN’s Sustainable Development Goals (SDGs) targets, while aligning with important materiality standards like the Global Reporting Initiative (GRI) and Sustainability Accounting Standards Board (SASB) to ensure objectivity and comparability.
The report provides these key findings:
Environmental Risk: Environmental risks are a pressing concern, with greenhouse gas (GHG) emissions standing out as the most significant threat, affecting 73% of companies.
Water withdrawal and consumption is a concern with 49% of companies impacted by water pollution from supply chain activities, including the discharge of untreated wastewater, chemical pollutants, and plastic waste. Furthermore, 67% of companies face risks from water usage and scarcity.
Air pollution is a major problem with 56% of companies reporting they are impacted by air pollution, primarily from supplier activities in transportation and manufacturing.
Additionally, 72% of companies face risks from lack of managing their products’ environmental and social impacts throughout the product lifecycle.
Social Risk: the report found that 54% of companies encounter worker health and safety risks.
Governance Risk: A large percentage of companies, 45%, said they face risks related to unethical business conduct, such as bribery and corruption.
Companies are required to report on the ESG impact of their suppliers, as a result of mandates including the Corporate Sustainability Reporting Directive. Yet, 45% of companies are exposed to significant risks due to inadequate supply chain transparency and management.
And 43% of companies face risks related to unethical business conduct, such as bribery and corruption.
