Chuka Umunna makes an important connection between risk and environmental, social and governance decision making (Market Insight, September 3). But the fallout from the pandemic has also revealed that large organisations are frequently “flying blind” in terms of the make-up of the increasingly complex global supplier networks they rely on. According to a study by Deloitte, 65 per cent of organisations have limited or no visibility of their supply chain below tier one suppliers that work directly with manufacturers. A separate study by The Sustainability Consortium found more than half of respondents didn’t have the proper transparency to determine if their supply chain had sustainability issues.
The problem comes down to data — or rather a lack of it. Today’s supply chains have evolved into highly tuned machines, but the relationship between buyers and their suppliers has barely changed in 40 years. Heavily paper-based, it’s often very difficult to track goods and materials directly back to their source.
This lack of transparency gives credence to the ESG sceptics and threatens to undermine attempts by organisations to build more resilient supply chains.
Mr Umunna is right to suggest we take the opinions of ESG sceptics with a “lorry load of salt” but until organisations can back up claims of “doing well by doing good” with sound data, there will always be a grain of truth to the reservations he highlights.
Mikkel Hippe Brun
Co-founder, Tradeshift
Copenhagen. Denmark
