Supply chain emissions are on average 11.4 times higher than operational emissions[1], so businesses are increasingly encouraged to set supply chain emission reduction targets. Supply chains also come with human rights and societal risks, especially the less traceable they are.
To align supply chain activities with wider sustainability goals and regulations, businesses should implement comprehensive tracking and reporting mechanisms. Here are some essential steps to consider, using ECOM (a Luminous client) as a best-practice example:
- Supply chain mapping
Mapping the supply chain involves understanding the entire flow of materials and products from their origin to the final product. This helps identify all stakeholders involved and ensures that each stage complies with sustainability criteria. This is also a helpful step towards fulfilling the requirements of the Corporate Sustainability Reporting Directive (CSRD) for companies in scope.
See page 8 of the ECOM Group Sustainability Report 2023 for a straightforward and succinct value chain summary page.
- Origin tracking
Tracking the origin of raw materials and components is crucial for responsible sourcing. It ensures that materials are obtained from ethical sources and that the entire supply chain upholds environmental and social standards. Regulations such as the EU Deforestation Regulation (EUDR) lay out criteria to ensure goods meet certain environmental conditions when being procured. Companies should adhere to the appropriate regulations while being mindful of stakeholder needs and supporting farmers who may be impacted by the regulations.
See pages 48 and 49 of the ECOM Cocoa Sustainability Report 2023 for a best-practice example of attaining 100% traceability to farmer organisations, detailing the methods and strategies used. Page 38 of the report also provides a summary of the EUDR and ECOM’s balanced response.
- Due diligence
Implementing due diligence processes is vital for ensuring that suppliers meet sustainability standards and regulations. This involves regular audits, certifications and compliance checks to verify that suppliers adhere to your company’s procurement criteria.
See ECOM’s Supply Chain Due Diligence Policy, which outlines how ECOM identifies, prevents, mitigates and addresses potential adverse human rights and environmental impacts.
- Regular risk assessments
Conducting regular risk assessments (with an emphasis on human rights) helps identify potential sustainability risks within the supply chain. Businesses can then develop strategies to mitigate these risks, ensuring a more resilient and ethical supply chain.
See page 18 of the ECOM Cocoa Sustainability Report 2023 for a detailed summary of child and forced labour risk assessments, including the methodology and results.
If your company has a long and complicated value chain, Luminous can assist with supply chain mapping and strategy to enhance sustainability. Perhaps you do not have a complex supply chain, but instead you are a part of someone else’s supply chain – you are important! Get in touch so we can help you achieve your sustainability goals and become part of a bigger change.
For more information on supply chain tracking and reporting, please reach out to: anokhi.kalayil@luminous.co.uk
[1] https://www.cdp.net/en/research/global-reports/transparency-to-transformation
