Unlocking the Power of ESG Data for Supply Chain Transparency and Trust

Environmental, social, and governance (ESG) factors are taking centre stage for investors, large organizations, and small medium enterprises as across the world.

Decisions on the provenance of goods and business operations are under growing pressure to provide high-quality, transparent ESG data so that ESG policies can be trusted to reflect the work of a business in its day-to-day operations and comply with governmental and supranational regulations. This is aligned with general pressure on businesses to show they are taking steps to be responsible and sustainable in their business decisions.

Managing ESG data presents, however, unique challenges that go beyond traditional financial reporting. Weak data management practices can undermine the integrity of ESG disclosures, causing problems from investor trust to issues with reputation management.

Businesses are facing a growing number of new restrictions and regulations on the materials they use, the by-products they produce, the safety of their facilities, and all other facets of their operations – unstructured data from various sources can be unreliable and difficult to compare, making it challenging for businesses to ensure their products comply with regulations.

Lack of visibility and transparency in operational data are of course hindering organisational ability to report efficiently, with upcoming reporting for European Union Deforestation Regulation (EUDR) supply chain policy an example of this. The EUDR regulations will see companies have to monitor their supply of seven restricted products to make sure they are not only compliant with their internal ESG policy, but legal requirements also that will be imposed on EU businesses soon – pending the new deadline approval from European Parliament, if approved the new deadlines will be:

• Large companies: from 30 December 2024 to 30 December 2025
• SMEs: from 30 June 2025 to 30 June 2026

On the other hand, sustainability leaders are struggling to demonstrate progress and impact due to lack of data. This limits industry collaboration to find effective methods, processes and generate investment for sustainable initiatives as well as promote relevant policies. To address this sustainability leaders must first establish clear KPIs and then provide comprehensive, data- driven frameworks for measuring and reporting. Transparent and regular reporting against these KPIs will promote ongoing support from stakeholders. This requires supply chain focussed tools to get accurate and verified data on ESG performance across complex supply chains, to derive actionable insights.

“Businesses today face a daunting challenge – they must not only achieve their sustainability goals, but also provide transparent, data-driven proof of their progress to an increasingly discerning public. By mastering the complexities of ESG data management with innovative, digital supply chain focused platforms, companies can unlock a powerful pathway to build trust, drive meaningful change, and future-proof their operations in a rapidly evolving landscape.” said Tobias Grabler, Chief Operating Officer

To improve ESG data management, businesses should implement centralized systems, adopt structured processes for new sustainability solutions, leverage advanced analytics, enhance supply chain traceability, and promote cross-functional, data-driven decision-making. These integrated strategies can help organizations unlock the transparency and insights needed to drive meaningful progress on their sustainability goals.

Effective ESG data management is no longer an optional add-on but a must have. It is time for supply chain leaders to prioritize ESG data management as a key focus area, investing in the right technologies, expertise, and cross-functional collaboration to drive tangible results. The path to a more sustainable and responsible supply chain begins with embracing the data-driven approach to ESG.