Report:

Once a company has defined their goals, measured performance, and analyzed areas for improvement, the company may elect to share their information. Various forms of reporting include a company “sustainability report”, or sustainability labels or certifications.  These act as information-sharing tools to stakeholders, customers and the public.

Report on progress to stakeholders

Scope & Boundaries – Company needs to determine what they are going to communicate (and what not to communicate), who the intended audience will be, how often they will communicate and the means of communication (printed, website, social media, etc.)

Transparency - The key to sustainable supply chain management is transparency.  Developing a credible message regarding the full impacts of your operations, services and products can strengthen your brand, reinforce employee understanding of your corporate values and facilitate engagement with a broader set of stakeholders.

No matter where you reside in the supply chain – raw material / component supplier, final producer, or distributor – you will need to report information regarding your social and environmental performance to many different audiences; including government agencies, NGOs, investors, partners and customers.

To effectively help internal and external stakeholders make better decisions, there are six elements to being transparent[1]:

  • Transparency uses data to communicate and it needs to be accurate.  When stating conclusions, it is important to state what data was used and how the data was obtained.
  • The company’s stakeholders are the ones that will benefit from the information in order to make a better decision.  These stakeholders should be identified by the company and target this audience for communications.
  • The right format and means of communicating is imparative for reaching the intended stakeholder audience.  This includes determining whether print media, websites, or social media is most appropriate for effective communication.
  • Timing of communications should consider whether the stakeholder(s) is able to take action in a timely matter in order to make a decision and improve an outcome.  If the company communicates too late, they may have missed an important trend or competitive positioning.
  • Periodic communication can be effective and the company needs to determine the frequency for sharing information without being overly burdensome on the audience or appearing to not communicate effectively.
  • The company should be genuine in its communications and why the information is being shared.  Sometimes transparency is a reaction to an issue or it may be a response to a request.  The company should also consider when to not communicate and the consequences that decision may bring.

Supplier Scorecards

How to respond to customer scorecards:

  • “The way a company approaches scorecard requests and the strategy it employs to improve its score has a dramatic impact on long-term value derived from the exercise.” [4]
  • Sustainability scorecards are gaining momentum globally across supply chains for many industries.  Its no longer just in retail, where it had its origins with consumer products, but rather across nearly every industry sector. This includes electronics, paper and printing, and even food. Industry shareholders and investors, trade organizations, NGOs, and government (the largest purchasing power), are all placing requirements on suppliers across the supply chain to reduce emissions and environmental and societal impacts.  These requirements include disclosing and being transparent about the data for these impacts and any sustainability efforts in place.
  • Three best practices for suppliers that can help achieve long-term value and high scores: [5]
    1. “Understand Your Customer’s Motivations – Large buying organizations implement supply chain sustainability programs because they believe the program will result in some business value such as cost-reduction, improved customer loyalty, or risk mitigation.”
    2. “Consider Values Beyond Compliance – Suppliers that respond to scorecard requests generally fall somewhere on the sustainability spectrum between leader and reluctant complier.  Reluctant compliers generally perform a simple calculation involving consumer/buyer pressure and cost when deciding on a desired score and potential outcomes.  While this may be effective at producing acceptable scores, there is little long-term benefit.  The sustainability leader, however, understands that sustainability programs will only succeed if they provide lasting value for the company.  These companies will analyze requests in the context of their specific business environment to identify actions that can save money and improve customer satisfaction.”
    3. “Build Support from the Top Down – Implementing any kind of new business strategy requires strong support from senior leadership, and sustainability is no different.  Executives need to believe the business case behind the new initiative and support its champions over the long term.  Nearly all sustainability projects will require participation from many, if not all, company departments.  Building internal support from senior leadership will ensure teams understand the larger story behind sustainability projects and facilitate efficient project execution.” 

Scorecards can provide a means for suppliers to differentiate themselves against the competition and add true business value.  With these three best practices, “suppliers can understand the sustainability expectations of their customers and succeed in scorecard compliance.” [6]

A recent study by Renewable Choice stated, “Sustainability scorecards have become a key to success for suppliers and are here to stay.  In fact, they are becoming more prevalent, more complex, and more mainstream – the sooner suppliers understand this and get on board, the sooner scorecards will no longer be viewed as a burden but instead as a springboard for success and growth as well as a competitive differentiator.” [7]