21 Sep 2021

The importance of ESG data in improving sustainable development goals

Guest Blog: Dave Mitton, Government Senior Relationship Director at Dun & Bradstreet #LTW

The sustainable development goals were setup in 2015 by the United Nations General Assembly as part of the 2030 Agenda for Sustainable Development. They form a 15-year plan made up of 17 interlinked goals and 169 targets, which act as a universal blueprint for the framework needed to protect the planet, end global poverty and improve the lives of everyone.  

When these goals were introduced six years ago, no one could possibly have foreseen a global pandemic. And, in light of the events of the last year and a half – made all the more complex with Brexit and various natural disasters – a more ethical and sustainable approach in supply chains is more important now than ever before.

Why supply chains need a review  

In the last few decades, the rapid rise of globalisation has meant that corporate supply chains are bigger and more widespread than ever.  

Due to these wide-open markets, the growth of a company now relies on the thousands of third parties in their network, which often comes with a level of risk that can be difficult to understand and assess.  This is often due to factors such as disconnected supplier data, disparate systems, and inadequate data sources. 

While a hands-off approach to managing supply chains may have worked in the past, it’s no longer sustainable in our current economic and environmental climate given the impact of the pandemic, Brexit and natural disasters around the world.  

Instead, recent supply chain disruptions have led to a heightened awareness of the importance of supplier relationships and their influence on a company’s ability to remain agile, no matter the circumstances.  

The importance of ESG data  

In a rapidly changing world, traditional financial data and sourcing strategies of the past are no longer adequate. So, this is where ESG data comes in as a strategic metric to drive efficiency, profitability, and risk avoidance in supply networks.  

ESG data intelligence is a powerful tool for identifying ESG risks and understanding key data to help companies mitigate those risks effectively.  The benefits of ESG data can include enabling organisations to:

  1. Gain visibility to risks when onboarding new third parties and suppliers  

  1. Evaluate third-party ESG ranking against industry benchmarks 

  1. Identify delays in services, goods, or a reputational incident related to specific suppliers 

  1. Develop assessments to uncover issues with the highest environmental impact 

A resilient supply chain backed up by ESG data can help organisations to quickly anticipate, adjust and respond to the growing number of unexpected events that arise around the world, thus putting ethical supplier relationships are at the core of their supply chain network, and in turn improving the sustainable development agenda.

For these reasons, procurement officers and supply chain leaders should be considering strategic ESG data investments that provide greater transparency into their network of suppliers to create a more agile supply chain that can navigate an ever-changing environment.

In the long run, an improved supply chain can lead to successful product and service delivery, increased customer satisfaction, and increased opportunities for long-term growth. A 2020 study by Dun & Bradstreet found that companies with the highest ESG performance experienced growth of about 16%, while those with the poorest ESG performance experienced a negative growth of 9.6%.

In addition to all, of the above, strategic investment in ESG data has the potential to deliver a further benefit which may turn out to be the most important one from a corporate leadership perspective.  In supporting the worthy goals of the 2030 Agenda for Sustainable Development, companies with strategic ESG investments may ultimately be better placed to protect the crucial competitive asset which is their organisation’s reputation.

This article was written by Dave Mitton, Government Senior Relationship Director at Dun & Bradstreet