By Mark Miller
Auditel was invited to contribute to the CQI Roundtable event alongside NQA and ISEP, exploring why integrating sustainability, supply chains, and standards is such a significant challenge. Capturing this complexity in a short article is even more demanding. In this piece, we focus on a simplified subset of these elements and examine the relationships within that subset.
Supply chain understanding depends largely on where an organisation sits in the supply chain. Simply put, who supplies the organisation and who does the organisation supply.
The more detail that is added the less it looks like a chain and more like a web spun by an inebriated spider. Organising this in a way that attempts to manage the emerging risks resolves to measures of Trust and Verification. Unpacking this further leads to the evolution of common standards applied with transparent governance. None of this is new, bills of lading, letters of credit, test reports, assay certificates have been used for centuries as the basis for trade.
For sustainability this is more like decades and continues to develop and multiply at an increasing rate. The situation is summarised below.
- The customer will trade with the organisation if they trust that the reward is greater than the risk of doing so. However, the same is the of the customers value chain. So certain minimum conditions are imposed.
- The organisation claims they meet the conditions. This requires Trust from the customer. This is a risk as they need to accept that the organisation has the resources and competency to meet these conditions. Furthermore, they have many suppliers and so the risk is multiplied.
- So, trust comes with risk and this needs to be lower than the possible reward from the trade. The solution is for the customer to require the organisation to mitigate the risk by meeting the requirements of a standard that is transparent, and to which compliance can be demonstrated. Trust and Verify, this compromise then pass through the supply chain as all participants pass the onus for the risk, as far as possible, to their suppliers.
Examples of where this has emerged are shown below – all of these have sustainability and standards at their core.
This is not an exhaustive set. They are complemented by ratings requirement that specifically try to scope performance across sustainable ESG criteria. For example:
- Global Reporting Initiative
- CDP
- EcoVadis
- GRESB
These are adopted and promulgated through the supply chains of most of the world’s major companies.
They are all developments of a core set of Management System Standards and Verification Standards where the demands of supply chains and the commercial drivers have come together.
How can any sustainability claims be made such that they can be trusted?
The short answer is that this can only be credible if a robust accounting methodology (protocol) is applied. This may be a Measurement, Monitoring, Reporting and Verification protocol (MMRV) that is validated independently. They form the heart of most systems standards.
The use of these are underpinned by overarching considerations:
- Defined information accounting principles
- Robust Data quality supported by effective information management
- The technologies to advance sustainability are safe
- The technologies are effective
- The claims made are conservative
- The claims made are done so transparently
These are expanded upon for the respective protocols and standards applied.
Reporting supply chain sustainability performance?
There may appear to be many requirements to report sustainability performance. However, they appear to resolve common needs and standards. Understanding these gives a foundation for managing what is often standard business practice anyway.
We should manage our business to legally and effectively enable it to grow, succeed and remain viable in a world where change is inevitable and where we must change with it.
Sustainability factors are intrinsic to this – they probably always have been. Now the policy and drivers have caught up, and the tools are emerging at an increasing rate. Resource management lies at the heart of commerce, whatever label it has.
