How Can Companies Improve Sustainability Efforts?
Key Highlights
Centralizing information like audit reports and risk assessments allows procurement and sustainability teams to collaborate using the same verified data, enabling them to make more informed decisions, improve risk mitigation, and align on shared goals.
Companies benefit from cross-region reporting processes because global regulatory expectations are complex and change at different speeds with advancements in technology and evolving trade policies.
Sustainability and the supply chain sector's responsibility in ensuring it, are actually two sides of the same coin, as both are key to reducing risk and improving performance, explains Indrani De Silva, Global Sustainability Solutions Consultant at Sphera.
MH&L talked to De Silva, whose experience in auditing and designing sustainability programs across a number of companies, including Patagonia, Target, and West Elm, about responsible sourcing and risk reduction.
AS: As you have worked with a number of companies, what has changed over the past few years in terms of how companies are viewing sustainability through the lens of forced labor?
IS: In recent years, I’ve observed companies shifting their view of sustainability to include social factors like forced labor, which are now seen as central to overall brand reputation and long-term strategy.
This change is driven by increased supply chain scrutiny, regulatory pressure (such as the U.S. Uyghur Forced Labor Prevention Act), and rising consumer and investor expectations for ethical practices.
As a result, companies are integrating forced labor prevention into core policies, developing more robust due diligence for supply chains, and setting specific goals to mitigate risk.
For example, companies address social factors like forced labor through actions such as implementing supply chain audits, creating sourcing policies, and investing in programs like Fair Trade certification and migrant worker support via local civil society and NGO partnerships.
A classic example is Patagonia - it has a large percentage of its products manufactured in Fair Trade Certified factories and has a program to eliminate unethical recruitment fees for migrant workers.
AS: How can companies and their suppliers use data to gain more visibility into this issue?
IS: Many companies and suppliers relying on spreadsheets and outdated reports face significant problems such as poor data accuracy, lack of real-time visibility, scalability issues, and security risks, which makes it difficult to understand ground-level operations.
Manual processes are time-consuming, prone to human error, and create inconsistent versions of data, ultimately hindering decision-making and growth. Centralizing information like audit reports and risk assessments allows procurement and sustainability teams to collaborate using the same verified data, enabling them to make more informed decisions, improve risk mitigation, and align on shared goals.
This shared foundation supports strategic planning and efficiency by reducing redundancies, eliminating the propagation of errors, and providing consistent, comprehensive information for both departments to use.
AS: How should companies approach verifying and reporting sustainability data in an era where regulatory rollbacks in one region contrast with tightening rules in others?
IS: Companies benefit from cross-region reporting processes because global regulatory expectations are complex and change at different speeds with advancements in technology and evolving trade policies.
Building flexible reporting that holds up across regions helps companies stay compliant, manage risk, and gain a competitive edge amidst this complexity. To ensure the most reliable data, companies need to directly confirm information with suppliers and maintain clear, reusable documentation for different reporting standards.
This approach uses supplier verification to validate data and creates a central record that can be adapted for various reporting frameworks, enhancing accuracy and efficiency.
AS: What best practices, including processes, have you seen companies employ to align data with strategy?
IS: The foundation of a successful data strategy is alignment with a company’s business objectives, ensuring data quality, accuracy, and consistency. Partner with your value chain to create and define shared goals based on clearly defined key performance indicators and metrics to ensure a successful and productive collaboration with suppliers.
Establishing a supplier baseline is crucial for managing relationships and risks because it provides a clear, objective starting point to measure and monitor performance against key criteria like quality, delivery, cost, and sustainability performance.
Companies can empower suppliers by providing an organizational framework for data collection to monitor and track progress while promoting continuous improvement and shared responsibility.
I’ve observed companies that embed sustainable practices into core operations and procurement, supported by measurable, material-focused key performance indicators (KPIs), achieve stronger supply chain sustainability.
This approach, which integrates environmental, social, and governance (ESG) factors into purchasing and contract negotiations, leads to greater efficiency, cost savings, and enhanced brand reputation, while also helping to mitigate risk.
When all departments have access to relevant data, they can make more cohesive decisions, leading to optimized resource allocation, reduced waste, and improved efficiency. This approach ensures that sustainability initiatives are not isolated but are integral to the company's success and long-term strategy.
AS: How do you see artificial intelligence shaping the future of sustainability and responsible sourcing – both in terms of opportunity and risk?
IS: AI presents both significant opportunities and risks for sustainability and responsible sourcing, with opportunities lying in enhanced supply chain visibility, optimized resource management, and data-driven decision-making, while risks include the high energy consumption of AI systems themselves and the potential for biased data leading to inequitable outcomes.
AI can support the creation of transparent digital passports for products, optimize logistics to reduce emissions, and help manage risks by monitoring suppliers in real time. The true power of AI lies in its ability to integrate sustainability data into strategic decision-making. Responsible use of AI requires fairness, transparency, accountability, privacy, and security, while putting people at the center of designing sustainable solutions.
About the Author
Adrienne Selko
Senior Editor
http://mhlnews.com
Adrienne Selko is also the senior editor of EHS Today and a former senior editor of IndustryWeek.