In part two of a series on improving corporate social responsibility with ABF Journal, Brittany Hooper of LSQ shifts the focus to environmental and social governance initiatives in the supply chain and how working capital solutions like supply chain finance can provide benefits for all stakeholders.
No matter the name or acronym the initiatives take, companies across the world are investing heavily in being better global citizens. You don’t have to look too far down the organizational charts of large corporations to see titles relating to corporate social responsibility, primarily in the areas of diversity, equity and inclusion and environmental and social governance.
Customers, investors and government regulators expect companies to understand and manage the impacts their operations have on the environment, the communities they serve and society as a whole. Beyond that, there is an expectation that companies create greater value for the benefit of the collective. That is, they put more back into society than they take out. In part one of this series, we looked at a piece of the equation, examining how working capital can help improve DEI in the supply chain. In this article, we’ll examine the ESG side.
Going beyond job titles, ESG-oriented investing has experienced a meteoric rise. The fifth Global Sustainable Investment Review, published in July 2021, found that across five major markets from 2018 to 2020, global sustainable investment increased 15% to $35.3 trillion.
Few companies operate within a vacuum; they require upstream and downstream partners to do business. From the manufacturers of inputs to distributors, there are other business enterprises relying on each other to be successful. From an ESG standpoint, however, those partners can be a liability if they are not socially responsible businesses.
ESG in the Supply Chain
Increasingly, enterprises are including the companies with whom they do business in their ESG initiatives. Beyond mitigating social and environmental risks within the supply chain, there are copious rewards offered by enabling responsible supply chain partners, as sustainable supply chains can be a strong driver of financial value for a business. However, as controlling every supplier in the supply chain is beyond a company’s direct influence, supply chains can open up businesses to risks like environmental damage, human rights violations and scandals. Beyond their obvious and more direct negative impacts at a societal level, these are issues that can damage the financial viability, reputation and operation of a business.
Read the entire article at ABF Journal.