Modern day supply chains are complex. Their highly globalized nature places companies under increasing scrutiny – arising from consumer, media and NGO pressure. This is compounded through instances of fraud, human rights abuses and environmental malpractice. Unchecked, supply chains can become unsustainable. Due to increased awareness of supply chain issues, there are increasing pressures from consumers, NGOs, local government and the media for your business to demonstrate good supply chain practices. It’s evident that you can no longer take a backseat on supply chain management and, now more than ever, companies are faced with a growing number of supply chain reporting requirements.
Drowning in Disclosures
A number of mandatory and voluntary reporting requirements have been introduced to help businesses effectively and efficiently identify where effort should be placed to manage the most material supply chain risks. Yet companies are increasingly feeling the heat as they are faced with a growing number of requirements. Each of these requirements demands more effort in what can only be described as the most challenging part of non-financial reporting for companies; both in terms of identifying risks and deficiencies in their supply chain and preventing potential violations against the companies’ own supplier code of conduct.
Spotlight on Supply Chain Reporting
Understanding the drivers can help you to hone in on the most relevant elements. The most recent legislative and voluntary reporting requirements include:
- UK Modern Slavery Act – Businesses with a turnover greater than GBP £36million, which are either incorporated in, or carry out business in, the UK, are required to prepare and publish a statement on steps that they have taken during that financial year to ensure that slavery and human trafficking are not taking place in their business or supply chain.
- EU Non-Financial Reporting Directive – The legislation asks companies to report on supply chain risks if material, against well-established and recognized frameworks such as the Global Reporting Initiative, the UN Global Compact, ISO 26000 or ILO Tripartite Declaration.
- GRI (voluntary) – With the inclusion of value chain reporting with the GRI G4 framework in 2013, the transition to the GRI Standards includes revised elements of the Supplier ‘Social Assessment’ disclosures.
- CDP (voluntary) – CDP’s supply chain program reporting encourages organizations to speak to their suppliers to understand climate change, water and forest-risk management.
- EU Conflict Materials Regulation – Mandatory due diligence obligation that applies to importers of minerals or metals from conflict-affected and high-risk areas, and will apply from 21 January 2021.
So, Where To Begin?
Amongst the endless reporting, it’s easy to forget where the value lies. However, some of our clients have highlighted that better disclosure enables companies to identify the risks – and opportunities – in their supply chains. The reporting process acts as a lens to channel support where it is needed, and can serve as an important tool for supply chain strategy management.
Reporting can unlock opportunities to increase efficiency – in terms of cost savings, regulatory compliance, and engagement, as well as safeguarding a company’s reputation. It also provides the opportunity for your organization to demonstrate leadership, improve transparency and reinforce consumer confidence, as well as identifying means to grow your revenues or reduce your costs.
At Anthesis, we have proven expertise and experience delivering programs and support to supply chain and enterprise risk management professionals. Our combination of strategic insight, supply chain risk screening and change management provides an end-to-end solution for your entire supply chain.
Take a look at our guide on the UK Modern Slavery Act.