We partnered with OpenESG. Here's why this initiative is essential to creating more sustainable supply chains.
Learn why ESG rankings are important in the supply chain, and get all the details of our latest partnership with the innovative OpenESG, and don’t forget to watch our podcast featuring their team's in-depth insights!
Key Takeaways:
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ESG stands for Environmental and Social Governance. ESG ratings allow individuals or other businesses to evaluate whether a company is aligned with their values on environmental and social governance.
- Customers, insurance providers, and prospective investors may also be interested in a business's ESG ratings.
- In the supply chain context, ESG ratings can also be important for product sourcing, building consumer trust, enhancing business performance, preparing for legislation, and even operating internationally more easily.
- OpenESG is on a mission to make it easier for businesses everywhere to get an ESG ranking and boost their performance if needed.
What is ESG?
Before we dive into the details of our partnership with OpenESG, let’s go over the highlights of ESG and what they mean for the supply chain.
ESG stands for Environmental and Social Governance. In the business world, ESG is a framework, or a set of criteria, which allows individuals or other businesses to evaluate whether a company is aligned with their values. An ESG score or ESG rating is a rating that is given to a company based on how well it ranks in these areas.
A company’s ESG ratings can matter in several areas. Several different parties may be interested in seeing a business' ESG ratings. For example:
Customers
First, many consumers are increasingly opting for brands that have ethical practices and standards.
Insurance Providers
Additionally, ESG scores can be useful in terms of securing better insurance rates and in proving compliance with regulations.
Prospective Investors
These scores are also becoming a metric that some investors evaluate when evaluating businesses for investment.
In many ways, the importance of ESG, and the desire for a road to net zero, is already a movement, but no one has created the infrastructure.
What is the Importance of ESG Ratings in the supply chain?
So, why does ESG governance matter in the supply chain? There are many reasons, which we’ll outline below.
Ethical Product Sourcing
Ensuring that product sourcing is as ethical as possible in the supply chain space is becoming increasingly important. Now more than ever, organizations must be able to trace their supply chain as far upstream as possible.
Consumer Trust
As we’ve mentioned above, ethical consumption is increasingly important to consumers. A good ESG rating can be something that companies use to enhance consumer trust and loyalty and to show customers that they align with their values.
Enhanced Business Performance
Increasing your ESG and monitoring your sustainability metrics can also highlight opportunities for savings. For example, reducing fuel consumption can save your business significant amounts of money.
Preparation for Legislation
In an early 2023 Wall Street Journal article, the author highlighted, that “A host of supply-chain regulations went into effect in recent years and more are on the way, exposing companies to potential penalties and public criticism if found to be negligent (...)”. For example, Canada, two bills were introduced to fight against child labour and forced labour in the supply chain.
Ease of Operating Internationally
Another benefit of ESG protocols is that, even if your region has one set of regulations, other regions where you want to operate may have different ones. An ESG metric can easily be checked or referenced when proving regulatory compliance, which can simplify operating internationally.
How does ESG work?
ESG scores. These organizations evaluate corporate disclosures and publicly available information and in some cases, conduct interviews. The result of this process is an ESG ranking.
What is OpenESG?
OpenESG is on a mission to bring accessible, standardized and democratized ESG scores to a range of companies, especially small to medium-sized enterprises.
An Easy, Accessible Way to get an OpenESG Score
Presently, getting an ESG score can be costly and time-consuming. OpenESG was designed to be incredibly easy to use.
Here’s how it works:
- You download it as a supplier to a retail chain.
- You fill out a form.
- You get a score.
- The algorithm creates a score within your category, industry, or location.
- If you’re doing well, you can easily share your ranking online and in key areas to highlight your business’ accomplishments.
- If your ESG score demonstrates that you’re not doing well, the OpenESG team has developed strategies to help businesses improve their scores, enabling them to improve their sustainability, processes, and more.
A Standardized ESG Scoring Metric
Another way that OpenESG benefits the supply chain as a whole is by providing a standardized, consistent scorecard. In this way, it can be a useful addition to self-measured ESG scores, by providing a measurement that enables apples-to-apples comparisons.
Contact Us
To learn more, listen to the full podcast for the insightful discussion. Still need more info, contact our team to learn more about enhancing your supply chain team.
