Metrics Matter – How to measure sustainable supply chain performance the right way

Over the past decades, multi-national-enterprises (MNEs) have approached the integration of sustainability into their long- and short-term decision-making. However, this concept of sustainability is highly contextual and typically extends beyond the boundaries of any single firm. To that end, there are ongoing discussions amongst procurement professionals and bodies of academic literature that focus on sustainability integration with supply chain management (SCM) and the identification of a range of key characteristics to measure its implementation. As a result, key challenges remain relating to ‘how to approach the integration of sustainability?’ and mores specifically, ‘how progress towards the fulfilment of company supply chain commitments may be monitored and verified?’. Aggregated, these practical challenges are:

  • Traceability: Downstream companies often are unable to gather information about their direct and indirect suppliers, including producers and primary processors that are most directly linked to on-the-ground social and environmental conditions. This can be particularly challenging when sourcing from smallholders or independent suppliers, or through spot markets.
  • Local capacity: Suppliers may lack the capacity or resources to conduct Monitoring & Verification (M&V) that meets the requirements or expectations of their customers (e.g., downstream companies) and other stakeholders.
  • Detection of non-compliant suppliers and actions: Traditional M&V tools and approaches are often not able to detect non-compliant behaviour and conditions – especially true for human rights issue.

And most relevant for this post:

  • Monitoring metrics: Clarity on what to monitor and commonality in what to monitor at the supply-base level is often lacking. Companies may also receive divergent expectations or advice as to the metrics they should use.

To partially shine light onto solutions for the latter challenge, the purpose of this article is to provide a high-level introduction and general guidance to good practices for M&V of sustainable supply chains with a focus on environmental and social outcomes associated with raw material production and sourcing, and the post covers:

  • General approaches for monitoring sustainability in supply chains
  • Guiding principles for sustainability in supply chains metrics
  • Overview of suitable monitoring tools and metrics
Read the full report Metrics Matter.

Author: Christopher Schwarz, Manager at the Rainforest Alliance, Corporate Advisory Service.

(Picture by John Moeses Bauan, Unplash)

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