It is apparent now more than ever that social and environmental issues are influencing business strategies, especially when it comes to supply chains. An organization’s success is determined not just by the financial metrics (which can sometimes provide a limited view of a company’s value), but also the non-financial metrics, such as Environmental, Social and Governance. These metrics can provide deeper insights into the inner workings of a business and better demonstrate the value created when investing in things such as the quality of human capital, innovation, and technological advancement to improve performance. ESG metrics can give investors a more holistic view of a company’s operations, including investments in reducing its environmental footprint and improving the quality of its supply chain.
ESG’s & The Supply Chain
One study suggests that meeting the seventeen “sustainable development goals” identified by the UN and embraced by 193 countries will create $12 trillion worth of new business. These opportunities emerge at varying rates in different industries. In some industries, it’s easy to see the damage that climate change is likely to have on supply chains, as well as the ways in which new technologies could help solve critical problems (or the fact that consumers are likely to care deeply about sustainability). But in other verticals, things move at a much slower pace.
Lipton Tea, the largest tea brand in Unilever’s portfolio , controls nearly 30% of the branded tea business and buys about 12% of the world’s tea. This means Lipton Tea has a responsibility to the tealeaf supply chain. The harvesting of tea drives causes deforestation, soil degradation, and water retention. In addition, tea workers are often poorly paid, have no access to education or health benefits, receive no protection for illness or pregnancy, and rarely have housing.
To fight this, in 2010, Lipton committed to using only sustainably sourced tea by 2015. Unilever admirably abandoned the one-dimensional notion of what the “bottom line” is and sacrificed some of its revenue to improve the conditions of the workers in the company’s supply chain and address the environmental problems it is creating.
Sustainability Central to Competitiveness
As consumers are becoming increasingly concerned about sustainability, and supply chain risks are unfolding due to climate change and conventional tea growing practices, it is seeming more and more likely that the tea industry will adopt the “green goes mainstream” mindset. In fact, all of Lipton Teas’s major competitors have followed suit with announcements that they, too, will move to sustainable production.
Crowdsourcing ESG Supply Chain Management
The Sustainability Accounting Standards Board (SASB) created materiality maps at the sector and industry levels to show which metrics are most relevant to different industries. Through crowdsourcing, we can build cooperation across stakeholders and transform the entire supply chain. Crowdsourcing has the power to develop a framework for what an ESG certification means and can raise the bar for all standards. Businesses can now rely on a variety of partners and stakeholders to hold this standard accountable.
At Premise, we’ve built a crowdsourced data insights platform that allows people (otherwise known as Contributors) across the globe to make money from gathering data on behalf of our clients. Premise’s app offers a global task marketplace to 3 million people across more than 125 countries in 37 languages. Our Contributors monitor aisle end caps to ensure compliance with brands’ expectations across global markets. They verify the presence (or absence) of operations with on-the-ground, real-time reporting to ensure goods are getting where they need to go when they need to be there.
Global brands are increasingly using Premise’s Contributor network to help them better understand the landscape where the materials used to create their products originate.
One manufacturer client, for example, is using Premise Contributors in Indonesia to map the origin points of palm fruit collection sites. Palm fruit, for those unfamiliar, is a critical ingredient in food and personal care products, but has been associated with dubious environmental practices. In the past, this particular brand couldn’t effectively understand this ecosystem well enough to do anything about it. Today, the crowd is mapping the tentacles of the client’s supply chain, allowing the manufacturer to more effectively influence those that cultivate palm fruit.
Another client – a manufacturer of chocolate dependent upon cocoa from a particular region within Africa – uses Premise Contributors to track regional labor conditions in order to identify instances of forced labor. This allowed the firm to incorporate ground truth data into their decision-making process for improving labor conditions.
In these examples, as well as many others, we find that companies are investing to do right by their supply chain when given the option.
Bringing the world’s largest consumer goods companies together through crowdsourcing is only the first step on the road to a sustainable supply chain. It quickly became clear that the only way to change the entire industry was to involve a much wider range of “stakeholders” in the effort; including governments, non-governmental organizations (NGOs), and members of civil society. Premise is the key to doing so.