Manufacturers Need to Act Now to Close the Sustainability Demand Gap
By: Jared Connors, Director, Sustainability at Assent
You wouldn’t start training for a marathon one week before the big race, so why do so many organizations put off ESG management until the last possible minute? The demand for sustainable and transparent supply chains is at an all-time high, but multiple recent studies have shown that nearly three-quarters of manufacturers rate themselves as being at the beginning or foundational stages of supply chain sustainability program maturity. There is a huge gap between customer and investor ESG expectations and what organizations actually deliver. We’re seeing it today with upstream labor rights concerns, climate impact reporting, and more. Every day we’re hit with stories of massive environmental disasters or gross negligence with regard to the human rights of workers, and it’s all happening in our own backyards, including child laborers in McDonald’s and in an Alabama Hyundai-subsidiary factory. These issues have a big impact on customer trust in corporate ethical practices.
Per- and polyfluoroalkyl substances (PFAS, also known as forever chemicals) are another serious concern. The global market is pressuring companies to eliminate these substances from products over health and environmental concerns: previous studies from the Centers for Disease Control and Prevention estimate that PFAS can be found in 95 percent of Americans’ bloodstreams. We urgently need to address how these harmful chemicals are used in manufacturing processes, which is why you’re already behind if you don’t have a supply chain ESG program in place right now.
Few manufacturing issues have caught the public’s attention like PFAS. These pervasive chemicals do not degrade in the environment and accumulate in the human body, causing potential health concerns like thyroid disease and decreased fertility, amongst several other health risks. PFAS is a perfect example of where product compliance, supply chain transparency, and ESG intersect.
It’s not uncommon to see companies making claims and commitments around environmentally-friendly, healthy, or safe products. Yet their manufacturing process or products make use of PFAS. Regulators are paying attention and amping up PFAS restrictions in laws like the U.S. Toxic Substances Control Act (TSCA) and the Registration, Evaluation, Authorization, and Restriction of Chemicals (REACH) Regulation.
To protect their market access and avoid disruptions as PFAS are phased out of the market, manufacturers need to know if products in their supply chain contain PFAS and where in the supply chain they originate. Companies will have to work closely with suppliers to create the transparency and accountability needed to effectively manage change.
The market is cracking down on greenwashing. Rarely these days do we see marketing that doesn’t make promises about a company or product’s sustainability impact, but these claims often don’t hold water under scrutiny and don’t have data to back them up. Every day there is news coverage of unethical business practices, environmental disasters, industrial pollution’s health impacts, and forced labor — and the court of public opinion, investors, and regulators are taking action.
If your stakeholders ask about the breadth of your program, can you explain how you’re measuring your impact and the impact of your supply chain on the environment, human health, and labor rights? Do you have measurable goals that have been communicated to suppliers? Are you educating suppliers and helping them by providing constructive feedback to address their gaps? By bringing them on that journey with you, everyone benefits. Their operational improvements boost your collective ESG footprint.
The only way to avoid greenwashing and fraud accusations is to have a program in place that gives you deep and defensible product data. For complex supply chains, supplier outreach and data collection can take months — considering the rise in greenwashing enforcement across North America and the EU, plus mandatory sustainability reporting requirements on the horizon, the time to act is yesterday.
Evolving regulations and growing scrutiny from investors and consumers suggest that manufacturers need to start accelerating their supply chain ESG program right now. The ESG marathon has already begun — are you setting the pace or falling behind?
About the Author:
Jared Connors is the Director of Sustainability at Assent. In his role, he supports and analyzes the market and engages standards, makers of frameworks, and regulatory agencies to help understand what companies will face and how they can comply.