KPMG LLP and KPMG in Canada published new research showing that small and medium-sized businesses are today working to apply environmental, social and governance (ESG) principles in their supply chain management efforts, but more than half struggle to articulate that story for stakeholders.
The firm adds that growing pressures from stakeholders are causing many of these companies to reevaluate their entire supply chain. KPMG says 64 per cent of the 503 companies surveyed say they currently factor ESG principals into their supply chain management, while 63 per cent said they have hired or plan to hire an ethical sourcing manager to ensure their suppliers are aligned with company ESG values in practice.
“Business executives are expected to have visibility upstream, that is, on all materials, people, and environmental factors that go into the product or service,” they write. “Mature organizations in the area of procurement convey their expectations.” They add that most however find it difficult to clearly communicate their commitments and demonstrate progress. In these respects, 59 per cent said they struggle to articulate a compelling ESG story and 61 per cent struggle to overcome stakeholder skepticism and perceptions of greenwashing.
The firm further states that the public, customers, investors and stakeholder are asking increasingly complex questions about social issues that relate directly and indirectly to operations. “If companies do not identify and manage human rights risks and social impacts, they risk an erosion of trust, reputational damage and potential legal and commercial risk.”
