Supply Chain ESG: What is it and Why Does it Matter?

What is ESG? 

ESG is the umbrella term for three critical areas of corporate responsibility in organizations: Environmental, Social and Governance. These themes play a crucial role in an organization’s operations; both internally in terms of employee experiences, processes and partnerships; and externally, for customer experience and reputation. 

Although not directly financial in nature, ESG certainly has a significant influence on commercial growth and risk – in short, it touches every aspect of a company’s overall wellbeing.

What is supply chain ESG?

Supply chain ESG accounts for the entire footprint of your operations, end-to-end.  

Environmental aspects include operational footprint and sustainability practices, like carbon emissions, sourcing and production of materials, and waste. Social elements relate to the effect that operational policies and practices have on employees and wider society. And Governance refers to how well regulatory obligations and compliance demands are met. 

Effective supply chain ESG management empowers manufacturers to make a positive impact on society and the world around them, while also effectively mitigating risks and maintaining efficiency for the good of their company, partners and stakeholders.

Importance of ESG in supply chain operations

Put simply, the future success of your business depends on it. 

Demonstrating ESG across your supply chain helps you maintain a positive brand reputation, which is not only vital for attracting new customers but also for nurturing existing ones while attracting investors and the most talented employees. 76% of consumers will not interact with companies that treat employees, communities and the environment poorly. 

It also reduces the chances of unexpected disruption within your supply chain, by giving you the visibility and insight to understand specific ESG requirements and responsibilities so you can manage any associated risks ahead of time, before they have an impact.  

Ultimately, having supply chain ESG initiatives in place will help you win new business, attract greater investment and open the door to enter new and profitable markets: all of which is great for business growth.

Making the difference 

You can make big changes in a short time with an effective ESG strategy, in all sorts of ways. 

For example, by assessing the levels of pollution from trucks transporting your goods from warehouse to stores, you can take prompt steps to reduce emissions and tighten processes for the good of people and the planet. You can ensure that employees and third parties are treated fairly and consistently, by checking that your suppliers pay the minimum wage and working conditions comply to appropriate standards. And enforcing internal and external policies and regulations, supported by transparent, ethical practices, will nurture a culture of mutual trust. 

The potential for change is everywhere; you’ve probably already thought of a few areas of your own for potential focus. However, implementing these improvements requires time and resources, which can put pressure on already overstretched teams and make success challenging to deliver.

Automation can help

Automation can support you in monitoring, managing and optimizing your supply chain ESG. 

It can provide you with invaluable and actionable insights by offering increased visibility of your end-to-end supply chain performance, brought to life with analytics. It can update systems as ESG requirements evolve and change, so you’re always confident of being up-to-date and optimized. It can build in consistent and error-free ESG checks within processes to ensure standards are always met. And so on. 

Introducing automation across your supply chain ESG in this way will yield several notable operational benefits too. It will improve production and delivery speeds, as automating the flow of work using intelligent business rules will make processes faster, freeing up time for employees to tackle other, more strategic work. It will increase transparency, by sharing important notifications and alerts regarding progress and issues, so they can be quickly and successfully resolved. It will reduce costs, through more efficient use of available resources and materials while providing governance to ensure that the correct ESG procedures are followed. Importantly, it will enhance customer satisfaction, by driving service levels even further upward, thanks to features like timely updates about orders and deliveries, all of which manage expectations. 

Along the way, it can also share a deep level of reporting and insight, the tools you need to accurately measure performance, progress and guidance for continuous improvement.

Bizagi: your innovative supply chain ESG automation partners  

Bizagi’s low-code process automation platform gives you the capabilities you need to transform your supply chain operations, so you can start making all this happen. 

- Monitor and assess your supply chain ESG activities easily. 

- Create insightful annual or quarterly reports, on-demand. 

- Share real-time ESG performance analytics for C-level and boards. 

- Provide the right sustainability information to employees, partners, vendors and customers. 

- Identify and resolve incidents as they happen.

Indeed, many of our customers are already using automation to monitor their ESG efforts – and realizing the many benefits that Bizagi brings to their business.

Examples of how automation can enable ESG in supply chain operations

Bunzl leveraged Bizagi to create a supplier portal which more than 400 of its global suppliers now use to enter the breakdown of materials, via forms which link to a Bizagi-hosted database. To save time, suppliers can ask the database to retrieve information on products, which is then then automatically passed to the Bunzl procurement team for approval.

The supplier portal is designed to look and act exactly as an external-facing website and hosts sustainability information and legislation, FAQs and user guides explaining how to fill out the forms and make informed decisions. It also analyzes data to report on the extent to which ESG requirements are being met.

Tatweer Petroleum, the organization responsible for oil & gas exploration in the Kingdom of Bahrain, made its business operations safer by automating maintenance checks and alarms at its drill sites. This resulted in its Near Miss Reporting reflecting a notable 250% increase in the number of identified and rectified safety observations by its employees.

Isn’t it time your business started benefitting from supply chain ESG automation, with Bizagi?

Find out more at https://www.bizagi.com/en/solutions/supply-chain/esg-management.