To achieve real benefits, companies need to embed sustainability into their business practices and processes. Learn three ways to do it.
To remain competitive among today’s increasingly eco-conscious consumer base, modern businesses are exploring how sustainability and ESG initiatives affect every aspect of their value chain, providing an opportunity to make a positive impact and differentiate the brand.
According to a recent study, 66% of US consumers are willing to pay more to support sustainable companies and their products. In this day and age, neglecting sustainability can mean losing dollars.
Companies that are considered sustainable set measurable goals in areas like: reducing greenhouse emissions, waste, and pollution; promoting diversity and inclusion; and ensuring fair labor and wage practices.
ESG (Environmental, Social, and Governance) frameworks are used to evaluate and demonstrate a business’s commitment to sustainability. To win the trust of consumers, investors, and governments, enterprises need an effective ESG data strategy.
Fuel growth with an ESG data strategy
According to an extensive McKinsey and NielsenIQ study, consumers are shifting their spending toward products with ESG-related claims. These products averaged 28% cumulative growth over the past five-year period, versus 20% for products that made no such claims.
What does this mean for CPG brands, manufacturers, and retailers?
McKinsey states: “Companies will probably have a greater ESG impact and a better chance of achieving outsize growth if they incorporate high-impact ESG-related claims across multiple categories and products.”
These ESG-related claims, of course, must be backed by data, which requires a sound data strategy.
Tracking sustainability across the value chain
ESG initiatives influence businesses throughout their entire value chain, including sourcing and logistics. ESG data tracks sustainability across the supply chain to provide transparency and demonstrate a company’s adherence to environmental and social values.
Businesses can explore ways to reduce emissions in manufacturing practices, product packaging and product distribution and then validate their practices the implementation of ESG reporting protocols and waste management metrics. They also can discover key areas to include sustainable practices, such as ethical sourcing, limiting plastic harm and redesigning warehouse management.
Aligning their values with suppliers and other business partners through compliance with ESG standards helps sustainability-driven businesses avoid third-party risks.
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A complete view for transparency: ESG data strategy
Addressing sustainability goals isn’t easy, but it can be much more achievable with effective management of data from your suppliers and vendors across your entire supply chain.
By leveraging technology like a master data management (MDM) or product information management (PIM) system and having the support of data management experts, you can be better positioned to meet your disclosure requirements and goals.
Striving for sustainability
Find out how organizations can gain better transparency with their ESG data.
Advanced MDM systems centralize data across multiple data domains, including supplier and customers. With ESG assessment and disclosure data, they can provide a complete view of a company’s sustainability efforts.
Getting started on the road to sustainability
To develop and make progress with ESG initiatives, organizations should consider the following steps. For starters, businesses can collect and analyze customer data for a deeper understanding of what customers are searching for and their purchasing patterns.
These insights show what areas of sustainability their customers care about the most. Investing in those areas would increase revenue in the short term and boost brand loyalty over the long term.
Businesses should define specific sustainability goals in order to evaluate where they can make the most significant impact. Coffee companies, for example, may want to commit to supporting organic and fair trade harvesting around the world.
Another route is to track and research suppliers that align with their values around sustainability to optimize supplier relationships.
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Demonstrating ESG commitment through data & transparency
Tracking and measuring sustainability results is a best practice to prove how the business meets its sustainability goals. Valid data and transparency are crucial to meeting the needs of investors, regulators and customers.
An organization can then confidently promote its sustainability achievements through digital assets, packaging, social media, and beyond.