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Reporting Supply-Chain Sustainability to Stay Competitive in Business

Amidst company merges and decisions to offshore for reduced costs of labor, supply chains are becoming more and more complex. But companies must learn to manage them, as pressures from stakeholders lean toward more sustainable and responsible sourcing.

Supply-chain transparency is becoming more influential for companies to succeed in competitive markets. A company’s ability to report on its supply chain operations, and indicate their impact on sustainability for workers and the environment, may help it to secure partnerships with investors, lower its bottom-line costs, and reach consumers that are holding ethical and sustainable production at higher standards.

So how can companies make sure they are keeping detailed accounts of their supply chains? Global Reporting Inc. is one of several organizations offering guidelines for small to medium enterprises (SMEs) and multinational companies to manage and measure progress toward sustainability in their supply chains. The modular layout of the GRI Sustainability Reporting Standards allows companies to organize data from suppliers and other members of the supply chain, and then use it to report progress and strategies to stakeholders. The standards are released as part of the Global Sustainability Initiative.

Further resources can be found in a study conducted by BSR and Globescan. The State of Sustainable Business 2015 presents some of the most effective strategies to create sustainable supply chains. These include monitoring supplier codes of conduct, monitoring and auditing suppliers, collecting data, and participating in collaborative initiatives for ensuring environmentally and socially responsible sourcing.

In addition to holding companies to higher standards, legislation can also provide a framework for companies to report responsible sourcing to the public and to potential customers. For example, the European Commission’s recent Conflict-Minerals Directive provides certification to suppliers that meet requirements for responsible conflict-mineral sourcing. Conflict minerals include tin, tantalum, tungsten, and gold—all of which are commonly used in electronics, but cause tensions in the areas where they are mined. By confidently reporting that suppliers meet the EC’s “globally responsible” list, companies improve consumers’ moral so that they will be more likely to purchase their final products.

SMEs and multinational enterprises should also recognize the potential for proper supply-chain management to lower their bottom-line costs. Detailed and updated knowledge of supplier conduct protects a company’s reputation and brand value, while ensuring it meets legislative measures to protect human rights and the environment. Overall, responsible management and communication with suppliers can help companies avoid future liabilities and even boost innovation by recognizing emerging potentials of their suppliers.

This article was repurposed from GRI’s website. The original can be read here.

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