Do Supply Chain Professionals Need To Know About Sustainability
Over time, large corporations’ sustainability efforts usually become broader and deeper. As a variety of companies in an industry tackle sustainability issues, it is natural for them to look for industry trade groups and sustainability associations to help in their efforts.
From a research perspective, these industry groups first foray into sustainability research often involves interviewing a variety of participants in the industry on what they are doing in the area of sustainability as a whole. Or interviewing industry participants on how they are tackling a specific sustainability issue like Conflict Minerals and then producing a report that offers best practice advice.
More recently we have seen industry groups offering industry level materiality assessments. What does that mean?
The concept of materiality in sustainability is analogous to financial materiality. Financial statement items are considered material (large enough to matter) if they could influence the economic decisions of investors. All material matters are to be disclosed. If a public corporation fails to do this, and losses occur, they open themselves to shareholder law suits.
In the context of sustainability, materiality is the notion that resources, strategy and reporting should be focused on the sustainability issues of the most significance to both commercial success (internal stakeholders) and broader set of external, societal stakeholders. The GRI provides the most widely used standards on sustainability reporting and disclosure. The GRI says that companies should use a materiality analysis as the basis for what they focus their sustainable reporting on. Company-level sustainability materiality analysis is now fairly common.
The most recent industry-level materiality sustainability report was put out by theAmerican Cleaning Institute (ACI). ACI members include the formulators of soaps, detergents, and general cleaning products used in household, commercial, industrial and institutional settings; companies that supply ingredients and finished packaging for these products; and oleochemical producers. The group includes well known firms like Procter & Gamble, Clorox, and SC Johnson.
The research was conducted by Framework LLC, a sustainability consulting firm. Alec Lager, a Director of Strategic Services at Framework, believes ACI is only the fourth industry to conduct such an analysis.