Picture this. You are in the midst of contract renewals with a customer worth a not insignificant part of your revenue. You are confident in your relationship with them. You have worked with the point of contact for several years at this point, and you have been able to address concerns and issues before. There is a fair amount of goodwill between the companies, and so this contract renewal is expected to be fairly routine. Then, your point of contact comes out with a new request: disclosure of greenhouse gas emissions.
Supply chain management is one of the most pressing sustainability issues for companies today. Throughout the value chain, regulatory and customer-required disclosures are popping up. More and more companies are facing the reality that sustainability progress relies on systems thinking, and they will not achieve full impact without looking beyond their doors. And as the world shifts with climate change and other wicked problems, supply chains will reflect those changes. Thus, businesses must be prepared.
Even if you are not in an industry where sustainability is an open concern, you may still be asked to disclose some aspect of your impact, likely your Scope 1 and 2 greenhouse gas emissions. Your customer may be concerned about their own sustainability metrics or need to meet some sort of regulatory or certification disclosure expectation. As this is your customer, you likely will feel disinclined to say no or take a long time to deliver on the question. It is best practice to have your own impact reporting and documentation in order so you can easily deliver answers. This is particularly helpful if you are worried about confidentiality or complexity. You may not want to disclose absolutely everything either due to privacy concerns or because the information would be overwhelming. If you already have the reporting sorted and know what to disclose and what not, then the question becomes routine instead of a major customer ask.
Who should be answering the customer questions? This could go to several different functions, so pick wisely. If you have a customer advocate, support, or success role that is the main interface with your customers, then they will be the one that receives the question. They should be prepared to either answer or properly redirect the request. If you have a sustainability manager, they will likely hold the documentation that is relevant, but they may need to work with the customer success team to make sure the information is communicated properly. A compliance professional is another role that may participate, particularly if regulatory compliance is the end goal. HR and accounting may end up being involved if there are labor or revenue percentage questions. The many functions involved are a reflection of the interdisciplinary nature of sustainability work.
You will have the most success wherever the question ends up when you have a company culture that values sustainability and collaboration. Even if the customer success manager redirects the question to your sustainability team, they should still be able to interface with the customer on the relevant impact areas. Each role should have a basic familiarity with sustainable business concepts and how they apply both to the business and specific function. This will enable smoother response to customer inquiries.
You can start out by tracking much of this information in a spreadsheet and producing an annual report that can be distributed to customers by request. Depending on your industry, customers may expect a product-level impact breakdown. You will have to decide the level of disclosure you are comfortable with. No matter the depth, a strong, comprehensible organizational system is key. Do you have documentation on your greenhouse gas emissions? The status of labor rights in your company? Water and air pollution? In some cases, you may need to bolster your internal confidence and awareness. Do you actually have a reporting structure for environmental concerns, and are you confident that leadership would be aware of an issue?
If you eventually want to move beyond a spreadsheet, there are many business management systems available that will generate compliant impact reports. There are also services like EcoVadis that you can use to manage supply chain impact. EcoVadis and the like are particularly helpful when the other members of the value chain are using the same program, and you may have customers who ask that of you.
Hiring an outside consultant to create the organizational system and create the report-generating mechanisms can be very helpful, particularly if you do not have an internal sustainability professional who has the time and knowledge to take this on. This person can act as both project manager and subject matter expert, guiding you through a particular standard or assessment program and ideally helping you improve your impact as well. It is best to bring this person in before you are pressed for time to answer a client question, so that you are not charged for a rushed project.
You may also benefit from a sustainability assurance specialist who can verify your claims. Your customer might ask to audit your practices or bring in their own assurance team. Have conversations internally about how much you are wiling to disclose so that you are not caught off guard by such requests and know how to handle them, including if you deny the ask.
Sustainability in supply chain management creates a domino effect, and you may end up having to ask your own suppliers for information on their impact. This is often the intended effect of such work, increasing transparency and accountability while improving the environmental and social conditions throughout the value chain. Having strong relationships with all the stakeholders involved with make this easier, especially when your business lacks leverage in the value chain.
The earlier, the better when it comes to getting into sustainable supply chains. As Scope 3 becomes standardized and expected, end user expectations rise, and regulatory standards are tightened, it is inadvisable to be caught off guard. The how-to of much of this work is available knowledge. It is the implementation that is the sticking point and where true competitors will emerge.