Achieving supply chain transparency

It is no longer breaking news for companies to get a handle on their value chains and increase their expectations of suppliers when it comes to sustainability performance. According to the Carbon Disclosure Project (CDP), as much as 86% of a company’s carbon footprint is with its suppliers. Catastrophes in the textile manufacturing sector and NGO protests associated with palm oil production have increased the attention and scrutiny placed on how companies manage these impacts.

Companies are managing their risks through supply chain mapping, audits, questionnaires, policy development, incentives and partnership programs. In a 2012 survey, CDP found that 50% of companies say they currently require or plan to require suppliers to include information on their greenhouse gas emissions management. Information platforms such as Sedex have developed to service some of the growing requests for performance data.

Hewlett Packard (HP) recently announced it is setting greenhouse gas reduction targets for first-tier supply chain partners involved in manufacturing and transporting products. The goal is for a 20% reduction by 2020 (from 2010 levels). This will be achieved through a mix of mechanisms including incentives and supporting programs. However, one of those mechanisms is “reporting on greenhouse gas emissions across the supply chain to raise awareness among suppliers and demonstrate progress”. Reports including supply chain emissions data will be available online in HP's Global Citizenship Report.

HP’s Global Citizenship Report 2012 was based on the Global Reporting Initiative’s (GRI) Guidelines, reaching a level B+ application. The new GRI Guidelines, G4, include new disclosures in supply chain performance as well as consideration of sustainability issues in parts of an organisation’s value chain where they are material. It is no longer sufficient when reporting to ignore impacts that occur outside of the organisaton’s direct control, such as human rights abuses or environmental damage caused in the manufacture of products or parts. 

This announcement from HP is not unique, but represents a significant shift. While requesting sustainability performance information from suppliers for the purposes of screening, capacity building and policy development is reasonably mainstream, reporting that information publicly in a sustainability report or demanding that suppliers publish their own sustainability report is more ambitious territory indeed. It signals a growing interest in demonstrating transparency through the supply chain and a capacity for large customers to tell their story very publicly.

If you’d like to know more about these trends and hear from some of Australia’s leading companies actively implementing their own supply chain reporting, please join us and our panel of lively speakers for breakfast events in Melbourne and Sydney in November - Reporting on Supply Chain Sustainability.

Robyn Leeson is a Director of Net Balance (robyn@netbalance.com), one of the world’s leading sustainability advisory firms. Robyn is a member of GRI’s Stakeholder Council and Technical Advisory Committee and is based in Melbourne.