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Reuters IMPACT supply chain

Reuters IMPACT: Collecting quality Scope 3 supply chain data

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Collecting quality supply chain data is essential to bettering the effectiveness of governance. The Scope of the data could vary depending on the goals a company has in a given industry, but it’s important that collecting the data is a continuous process that gets more optimized over time. Regular analysis can help companies identify opportunities and make better decisions in their supply chains.

The fashion industry is global and it is one of the most vulnerable when it comes to sustainability and collecting quality data. Multinational clothes companies that sell their products around the world, manufacture their goods in more than one country and usually work with thousands of suppliers, producers, small businesses and etc.

For example, clothes by global brands that are sold on the European market are often produced in East Asia, in countries with underdeveloped labor laws and weak institutions. At the same time, the regulators’ noose is getting tighter as the next milestone is quality reporting of Scope 3 carbon emissions.

This is no easy task and the lack of incentives and control are some of the biggest challenges and reasons why there hasn’t been quality data reporting up to this point. But the situation is shifting and new cutting-edge practices are being developed as we speak. This was the topic of the discussion Collecting consistent, comparable and quality data, part of Reuters IMPACT. The guests were Andrew Broderick, Global Director of Energy, Sustainability & Impact, WeWork, Stefan Seidel, Head of Sustainability, Puma and Marija Rompani, Partner and Director of Ethics & Sustainability, John Lewis.

ESGnews.bg was a media partner of the event.

Puma: The world is changing – a lot of suppliers are changing too

According to Stefan Seidel, the key to collecting quality data from suppliers around the world is having multiple ways of verification. The data that Puma collects goes through several independent audits, additional monitoring and comparison to similar suppliers in similar regions. The accounting itself is based on the four eyes principle – a verification process done by at least two people.

Our sustainability team has people working in the big manufacturing countries that also verify the data. They compare it to past years and average values from other suppliers to confirm that there are no mistakes or exceptions.”

He explained that a main component for collecting data is collaboration with the rest of the fashion industry. Most big brands are part of the Sustainable Apparel Coalition. Suppliers need to submit their data. So the coalition has an enormous repository to do comparative analyses with other manufacturers as well as auditing.

Finally we do our own external financial audit as part of our integrated yearly reports.”

Collaboration with suppliers

Collecting Scope 3 data is a new and largely mysterious process for many companies. According to Marija Rompani, though, these problems can be overcome through collaboration with suppliers. She pointed to a new company platform that can identify the biggest polluters. Its pilot state will be tested on her company – John Lewis in the UK.

There is no way to verify data apart from checking sales. On that basis, we can pinpoint the top 10 suppliers by emissions. After that, we can contact them and inform them that they are among our top 10 carbon emitters. Then we can offer them a partnership when collecting more precise data or developing a plan to reach net zero.”

How to incentivize supplier participation?

According to Stefan Seidel, the best starting point for decarbonizing the supply chain is to identify the biggest suppliers.

We use the 20/80 rule. We looked at our suppliers who account for 80% of the volume of our business. We have a very consolidated supply chain, which means that suppliers earn millions from sales with us. So there wasn’t any need to convince them,” he explained. “This is part of the business. The big producers get similar demands all the time, not only from us but from other companies in the sector. Also, a lot of them already have their own teams taking care of sustainability.”

Andrew Broderick, Global Director of Energy, Sustainability & Impact, WeWork, added that we need a just distribution of the responsibilities that small and medium-sized businesses have.

You can’t go and tell them “If you don’t give us the information, you can’t work with us.” It’s not right. Especially when we’re trying to maintain a network of local suppliers.”

Read more:

Examples from Europe: The different ways Italy can achieve sustainability

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