For many consumer goods businesses, navigating climate change is becoming a growing priority. Buyers are demanding incontestable sustainability disclosures, and investors are evaluating environmental social and governance (ESG) claims with greater scrutiny. Businesses need to respond to these trends, and approach sustainability just as seriously as any other corporate department.
First, what does it mean for your business to be “sustainable”? While carbon offsets or one tree planted for every purchase programs feel eco-friendly at face value, they don’t help companies take control of their real impact. At Higg, we define corporate social responsibility and sustainability as the ongoing management of your environmental and social impact. It means understanding the full picture of your supply chain – from factory to store shelf – and systematically analyzing and improving that footprint.
Gathering a holistic view of one’s supply chain is admittedly complex and can take time. However, technology can play a critical role in helping businesses collect credible, contextualized data to track, manage, and improve impact. As the adage goes, what isn’t measured can’t be managed.
Improve your sustainability with baseline data
It can feel daunting to peel back the layers of one’s own supply chain and calculate a comprehensive baseline. Rather than trying to put together the full puzzle of your impact all at once, focus on one piece at a time. Take your carbon footprint, for example: we recommend that you begin by collecting emissions data from your largest suppliers. And it may be simplest to start with core product lines – gather impact data related to the most persistent elements of your product portfolio, and those that you’ll be producing for the foreseeable future.
There are many ways businesses will approach the mechanics of measuring impact. A decade ago, performance baselining and management happened manually, through various spreadsheets collected from partners. Perhaps others even built custom software. Today, there are an increasing number of software tools to help you with product lifecycle management and mapping your supply chain. Whichever you use, this general framework can get you started.
It’s common practice for businesses to measure their emissions from corporate offices and vehicles, known as Tier 1 or even Tier 0 emissions. But to look holistically at your impact – and ultimately drive results that meet consumer and investor demands – you’ll need to go deeper, measuring emissions in Tiers 2 through 4.
You can start assembling an accurate view of your carbon emissions by collecting data on a few typical indicators of sustainability at each tier:
- Energy sources at each factory, and if they’ve purchased renewables
- Emissions from refrigerants
- Emissions from waste (incineration or disposal)
- Emissions from transportation
Take this one step further by determining your share of responsibility for each factory’s emissions. Calculate their total annual production compared to your own purchase orders to give you an idea.
This hard work up front will pay dividends. As you continue to build out a baseline, it will serve as a strong foundation for measuring your sustainability performance. With a data-collection system in place, you’re ready to set goals grounded in quantitative findings. And as you gather and update data over time, you’ll have accurate intelligence to shape your goals.
Your baseline should also help you determine which levers to pull to accelerate your progress. Your data collection system should help you identify hotspots – the risks and opportunities in your supply chain. While collecting emissions data, it may become clear that many of your factories are reliant on coal, for example. You now have credible evidence to inform discussions of adopting clean energy sources, such as solar or wind power.
Use data to tell the story
With this new understanding of your impact, you are better prepared to publicly communicate sustainability goals and progress. Use impact data, in whatever area you’ve elected to focus, to support the narrative. Take, for example, H&M’s apparel collection that features data-backed sustainability disclosures. They’ve posted carbon emissions and water data for a subset of pieces, allowing the public to compare products with one another. Ideally, your data collection system should support you in this way – helping you surface and share insights about your progress.
Finally, although sustainability and ESG is becoming increasingly valued by the C-Suite, your efforts will no doubt be subject to budget approvals. Your sustainability data should help you report on any investments and initiatives implemented over the last year.
When it comes to navigating climate change, there is no one-size-fits-all strategy, but the framework will be similar for businesses manufacturing consumer products. Gathering a data-driven view of the supply chain will help you accelerate progress for the planet and people, and effectively communicate your efforts to stakeholders. Building these systems opens the door for today’s business leaders to bring a sustainability-driven point-of-view into all parts of their corporation. Embrace the technology solutions available and meet the ever-increasing expectations of sustainability.