The availability and reliability of crucial supply chain data is preventing organisations from operationalising their corporate purpose and meeting their environmental, social, and governance goals, according to new research from Coupa Software.
Coupa's research confirmed Australian businesses want to improve ESG practices and reduce risk exposure, including: reducing greenhouse gas emissions (92%); improving supply chain diversity (89%); improving energy efficiency (88%); reducing deforestation (87%) and eliminating modern slavery (80%).
However, this research also points to a lack of sufficient visibility into supply chain data and inadequate technology for businesses to fully realise ESG targets.
According to the research, nearly all (94%) Australian respondents agree that accurate ESG data of their suppliers is important to understand supplier risk, while more than half (60%) said that data on their suppliers ESG credentials is only somewhat available or not really available.
A third (34%) said they do not have strong enough technology capabilities to assess ESG risk and compliance. More than half (51%) of Australian businesses say they can only assess ESG risk and compliance of Tier 1 (third-party suppliers) to some degree and 10% say they cant accurately assess at all. As for Tier 2 suppliers (the suppliers of their third-party suppliers), 54% can only assess to some degree or not at all.
Practically all (97%) wish to speed up responses to external disruptive events, yet three in five (60%) lack access to data that enables this type of agility, while the majority (92%) said it would take weeks, months or longer to find new suppliers that meet their ESG standards.
"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," says Donna Wilczek, senior vice president of product innovation and strategy at Coupa.
Overcoming the Data Problem: A Defense Against Disruption
There are ways to overcome companies ESG data gaps, with Coupa's research finding businesses calling for greater industry-wide data sharing and collaboration:
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.
The research shows 96% agree that 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," says 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," he says.
"With this type of data collaboration, organisations can confidently make choices that reduce costs and carbon, as well as risk."
Wilczek adds, "It's reassuring to know that Coupa's research also found more than two-thirds (64%) of businesses globally, and more than half (51%) of Australian organisations, plan to invest in new technology to help them achieve ESG goals.
"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."