Facilitate Supplier Progress Reporting

Ensuring that your company’s suppliers report progress towards your GHG emissions reduction targets is crucial for several reasons. It allows your company to identify potential risks and opportunities within its supply chain, which in turn enables you to take necessary steps to reduce your overall carbon footprint. By understanding suppliers’ sustainability practices and progress, companies can identify areas for improvement and support suppliers to drive down emissions across their supply chain. 

Also, reporting on supplier sustainability performance is important to meet the expectations of customers, investors, and other stakeholders who are becoming more concerned about the environmental impact of products and services. By providing transparent reporting on supplier sustainability performance, your company can build trust and demonstrate its commitment to sustainability. This can enhance the company’s reputation, increase customer loyalty, and attract investors who are looking for socially responsible investments. 

Encourage and Ensure Supplier Progress Reporting

1. Define performance metrics and reporting: Defining clear performance metrics and reporting requirements for suppliers can help ensure consistent reporting and enable benchmarking of your suppliers’ performance. Performance metrics can be aligned with sustainability targets and can be monitored regularly to track progress. You can make these performance metrics clear through sustainability clauses in your partnership agreements, requiring your suppliers to report on their sustainability performance regularly.¹ You can also outline performance targets and the consequences of non-compliance in your partnership agreements.² 
2. Provide training and resources: Training and resources can help your suppliers track their progress effectively and understand the importance of sustainability reporting. You could share these resources through webinars, workshops, or online platforms. 
3. Verification and audit: To ensure the accuracy and reliability of supplier data, it may be necessary to conduct audits or use third-party verification services. This can help identify any areas where suppliers may be falling short and take corrective action to address these issues. Even when you believe suppliers are fully complying, conducting a small number of random audits can incentivize suppliers to stay honest. 
4. Regular communication: Another important tool to support your suppliers’ progress is setting up regular meetings or calls with suppliers to discuss their sustainability progress. This can help build relationships with your suppliers and encourages them to prioritize sustainability in their operations. 
5. Incentives and Rewards: You can offer incentives such as discounts, bonuses, or recognition to suppliers that report their progress timely and accurately. Incentives can also be used to encourage suppliers to adopt sustainable practices to meet/exceed sustainability targets. 

Manage Supplier Performance Data

As you collect supplier performance data, it is essential to manage this information effectively to track progress and identify areas for improvement. You should assign accountability for tracking activities within your organization. Although tracking can be done manually, explore options to automate the process using a data management platform to reduce inaccuracies and streamline the process.³ You can use a range of tools and software to manage this data, including centralized supplier performance management (SPM) systems,^{2, 4} sustainability reporting software, and data analytics tools. 

SPM systems allow you to track supplier performance across a range of metrics, including sustainability, quality, and delivery. These systems can provide real-time data and alerts, allowing you to identify potential issues early. Sustainability reporting software can help you streamline the reporting process and automate data collection, making it easier to track progress over time. It’s important to establish data quality controls for accuracy and completeness. 

Communicate Supplier Performance

Including supplier performance in your company’s sustainability reporting can create a more comprehensive understanding of your supply chain’s sustainability performance. When communicating supplier performance in your company’s sustainability report, you should be transparent and comprehensive:  

1. Provide context: It is important to provide context for the reader to understand the significance of the reported supplier data. Explain the importance of the sustainability metrics being reported, how they relate to the company’s sustainability goals, and any industry standards or regulations the supplier performance is being benchmarked against. 
2. Highlight successes: Highlighting supplier successes can help reinforce the importance of sustainability performance and showcase examples of best practices. Share success stories of suppliers who have made significant improvements in their sustainability performance. 
3. Acknowledge challenges: It is equally important to acknowledge areas where suppliers may be facing challenges in improving their sustainability performance. Highlight areas where suppliers are struggling to improve their sustainability performance and explain what the company is doing to support suppliers in addressing these challenges. 

Footnotes:

1. SBTi | Best Practices in Scope 3 GHG Management
2. TXM.com | Five Ways to Improve Supplier Performance  
3. Exponential | Supplier Engagement Guide
4. Ecovadis | 5 Key Factors When Choosing Supplier Sustainability Monitoring Solution 

Other Sources: 

• HBR | A More Sustainable Supply Chain
• EPIQ | Supplier Performance Management