Today’s modern enterprise is making its latest shift. Just as SaaS platforms, cloud computing, and digital transformation have changed how enterprises sell, hire, and invest, we’re on the cusp of similar changes within sustainability. With the rising demand to track and prove ESG commitments, digital solutions are now being built into the fabric of enterprise sustainability reporting. Importantly, these solutions will help scale progress on climate change.
Enterprises have come to a similar tipping point in their need for sustainability software today. Over the last decade, data-first sustainability efforts have helped major consumer brands like Nike and VF Corp take inventory of their environmental impact and then inform key decisions to transform their footprint. But we’re moving past the stage of early adopters to businesses of all shapes and sizes beginning to take a serious look at their environmental impact. Given the building consumer and investor demand, we can expect sustainability technology to be the next wide-scale enterprise investment.
Recently, Higg’s CEO Jason Kibbey had the chance to explain this shift with the readers of InformationWeek. In the article, he shared two must-haves for any enterprise-level sustainability program.
#1: Collect Holistic Impact
To accelerate progress at the rate demanded by climate change, enterprises must reduce their entire impact across the supply chain. Consider the consumer goods industry, for example. These organizations often measure and manage their direct impact, such as carbon emissions produced at corporate offices. Subsequent decisions to switch to energy efficient light bulbs or install solar panels are laudable. However, by only evaluating from the corporate level, organizations are addressing a fraction of the impact they’re truly responsible for.
In apparel, sometimes 90% of a brand’s emissions lies in their supply chain. Enterprises must move towards measuring and reducing impact that occurs throughout the process of making, shipping, and selling their products.
The Brand and Retail Module (BRM) helps businesses gather and measure a comprehensive view of their impact from stores and offices, to the packaging and transportation of goods across the value chain. With this step-by-step data in-hand, businesses can take action on hotspots, leading to significant environmental and social progress.
#2: Take a Bottom-Up Approach
This brings us to a second lesson: the power of a collaborative bottom-up approach with one’s supply chain partners. While top-down approaches — for instance, using advanced algorithms to estimate carbon emissions based on generalized datasets — are appealing in their ease, this approach will ultimately lack the resolution needed to help leaders know if they’re moving the needle.
Instead, businesses must take a more granular approach, reaching across the value chain to collect data from materials providers to contractors and vendors. When manufacturers complete a facilities assessment using the Facilities Environmental Module (FEM), they pass off key information to help brands gauge their partners’ progress on sustainability. The assessment helps measure whether a factory operates under basic sustainability awareness, or is perhaps more aspirational in their practices. Assessments serve as a key starting point for discussions around improving impact between an enterprise and its partner.
With expectations and demands rapidly evolving, digitized sustainability solutions will become the new normal, particularly for consumer goods manufacturers. Enterprises that demonstrate proven commitment to and progress on sustainability goals will reap the rewards from consumers and investors.