“How to collaboratively track, measure and improve Environment, Social and Governance performances across industrial supply chains”
A collaborative webinar organized by ANIE
On Friday, September 17th 2021, ANIE– i.e. the Italian National Federation of Electrotechnical and Electronic Companies – organized a webinar on “How to collaboratively track, measure and improve ESG (Environment, Social, Governance) performances across industrial supply chains” with the collaboration of SupplHi and ANIMP, the Italian National Industrial Plant Association.
The webinar, attended by more than 100 viewers, created the perfect opportunity to deep dive on several hot topics regarding ESG assessment and improvement in the industrial supply chain. The testimonies brought forth by both “Buyer” and “Supplier” companies, were instrumental to the discussion, during which they illustrated their own experience towards sustainability, needs and critical issues faced, as well as actions taken.
THE NEED FOR AN INDUSTRY-SHARED TOOL TO MEASURE SUSTAINABILITY
In the last few years a new trend has been spreading all over the globe, requesting companies, both large corporations and SMEs, to implement sustainable business models. The growing attention to sustainability is recognized and sought after by companies, that are increasingly requested to play a leading role in achieving new models of development based on a careful use of resources, on circular and low-emission production processes, and on the optimization of logistics and supply chains.
Moreover, ESG sustainability is being more and more identified as an added and distinctive value by end users, banks and institutions, who are equally aware of the urgency of favoring and rewarding sustainable practices and behaviors. This attention to sustainability results in turn in a growing need for pragmatic tools that can allow companies not just to measure their performance, but also to understand the margins and actions needed for improvement, as well as to compare themselves with their competitors.
To add even more complexity to the goal, it is important to keep in mind that in the procurement of goods and services, purchases account on average for more than 50 percent of revenues, and corporate ESG Sustainability is heavily dependent on the ESG sustainability performance of its suppliers and sub-suppliers (all the way down to raw materials): as a consequence, the need for a tool that can be shared and used across all layers of the industrial supply chain, based on commonly defined settings and parameters, grows ever stronger.
THE ESG METER, THE OUTCOME OF THE ESG SUPPLY CHAIN GUIDELINES
The workgroup created by ANIMP in 2019 took it upon themselves to develop standard industry-shared Guidelines and to apply them within a shared tool in an easy and transparent way. The initiative shown in taking the matter into the workgroup’ hands reflects the importance, as ANIE General Manager Maria Antonietta Portaluri pointed out during the webinar, for industry associations to create value in ESG monitoring and to bring a competitive advantage of their supply chains. The tool was thus developed by ANIMP and SupplHi – an innovative digital platform that streamlines the connection between buyers and suppliers, and that easily integrates with industrial qualification processes industry – and was called “ESG meter”.
The ESG meter was created using the first revision of the ESG Supply Chain Guidelines to define the questions, the answers scores and the improvement actions related to each area – Environment, Social, Governance – and to each category of industrial supplies. The tool is updated with every new release of the Guidelines, to reflect the latest state-of-the-art described in the document (read more about the second revision of the Guidelines here). The ESG meter allows companies to assess their own level of ESG sustainability and to compare it with the average level of their industrial category (e.g. electrical panels, cables, motors,….), and it offers pragmatic and useful indications on recommended ESG initiatives for improving the companies sustainability level. In the words of SupplHi CEO & Director Giacomo Franchini, “the SupplHi SaaS ESG meter solution allows buyers and vendors to monitor their ESG performances and to understand how to improve their capabilities”.
During the webinar, two testimonials narrated their experience as companies in the industrial plant engineering sector that faced the need to “quantify” the level of ESG Sustainability of their supply chain and that did so using the ESG meter, which allowed them to measure their ESG performance, assess their sustainability level (obtaining a score for each aspect) and obtain customized improvement actions. Giancarlo Reschigna Venturini, Head of Sustainability Reporting at Maire Tecnimont, brought forth the point of view of a large international buyer organization committed to satisfy the growing ESG requirements of its Customers, while Elisabetta Bragagni, CEO at Tratos, delivered the point of view of an international Supplier that started its path on ESG Sustainability years ago, aiming to differentiate from competition and to answer the growing Customer requirements.
MEASURING CO2 EMISSIONS IN THE SUPPLY CHAIN: CARBON TRACKER BY SUPPLHI
The ESG meter, as the name itself suggests, focuses exclusively on the Environmental, Social and Governance aspects of sustainability. A major factor missing in the equation needed to calculate the sustainability of a business model is an estimate of a company’s carbon emissions.
Carbon Emissions and the fight against Climate Change are a global imperative embraced by all main governments and large corporations, and the reduction of greenhouse gas (GHG) emissions is one of the most important. In the industrial B2B (Energy, Shipbuilding, Construction, Manufacturing, …), characterized by a long, fragmented and complex Supply Chain, Scope 3 emissions – also known as value chain emissions – can account for up to 90% of a company’s total carbon impact.
Therefore, it is necessary to exert a Supply Chain-wide effort to measure and reduce Carbon emissions as – much like it happens with the ESG aspects – Buyers are becoming more and more responsible for the CO2 emissions of their suppliers and need monitor their suppliers and sub-suppliers and stimulate them to develop carbon emissions inventories and set challenging reduction targets.
This is where SupplHi’s distinctive expertise, together with that of its large, international and industrial-specific network of Buyers and Vendors, intervened and created the recently introduced “Carbon Tracker” module to support the supply chain effort to set reduction targets and track the carbon footprint of industrial B2B Suppliers.
Carbon Tracker aims to become a solution to the main requirements a company faces when trying to assess its carbon impact:
- How to collect trusted Primary data(including realistic reduction targets) on CO2 beyond the top 10% of Suppliers
- How to encourage a fast and solid adoption of CO2 metrics in a fragmented supply chain made of SMEs and several layers
- How to monitor and collaborate on CO2 reduction targets and Performance Improvement across the years with one’s Suppliers and Sub-Suppliers
These are the challenges tackled by Carbon Tracker, which allows companies to achieve an effective carbon measurement and monitoring of large and fragmented global supply chains, being a smart and collaborative digital tool to engage suppliers on carbon emissions.
Carbon Tracker – which is still under development – was presented by SupplHi’s CEO & Director Giacomo Franchini during the ANIE webinar, receiving praises and stimulating further reflection on the importance of creating a sustainable Industrial Supply Chain.
A few important considerations came from the webinar, regarding both the B2B industrial supply chain per se and the importance of ESG monitoring:
1. Nowadays, ESG Sustainability is a must-have value for any organization
2. Buyers are as ESG Sustainable as the last of their critical supplier is
3. The ESG Sustainability of an industrial Supply Chain is a journey that requires a collaborative approach by all players
4. “If you can’t measure it, you can’t improve it”: ESG Sustainability in Supply Chain requires pragmatic metrics for easy monitoring
5. An independent, collaborative and industry-shared ESG Guideline filled a gap in an industry that requires metrics that are specific for its needs
6. ESG-meter and Carbon Tracker digital solutions by SupplHi are built on the world’s most trusted frameworks declined on industrial B2B needs
7. Stimulate CO2 measurement by Vendors (Scope 3 of Buyers) is one of the biggest gaps to be filled by the industry together with more Circular Economy approaches and an increased adoption of Health & Safety Management System
8. Suppliers require support by the right consultant for the delivery of ESG improvement actions, coupled with the gradual internalization of more competences around ESG.