Supply chain management is a key factor for many companies — growing in sophistication and scrutiny. I recently used AlphaSense to look at supply chain in context with ESG (Environmental, Social and Governance) / Sustainability, in order to identify how companies and investors may be connecting the dots between these operations and investor communications positioning.
What immediately struck me minutes into my AlphaSense queries, is what I’ll call the interconnected 3 C’s of Sustainability and Supply Chain: Commerce, Compliance and Capital Investors.
The results of this exploration lead me to conclude that there is enough evidence to suggest that practically every company executive leadership team should be actively looking at sustainability and supply chain in context with broader company competitive positioning.
I used AlphaSense to guide my exploration, and my results are broken down below by competitive positioning and approach, to provide a snapshot of current trends and support of this conclusion.
Before sharing my AlphaSense query process, let’s look at a few examples of developments in the ESG / Sustainability field important to companies across the 3 C’s competitive positioning considerations.
Commerce and Compliance
For the purposes of this blog, I will divide commerce into two pieces: B2B (including government) and B2C, and focus on the former.
The trend in corporate purchasing expectations of suppliers to demonstrate ESG / Sustainability practices continues to expand.
Early leaders well known for ESG / Sustainability expectations and compliance by their suppliers include:
A few examples to show that the trend spans across sectors include: Munich Re ($ETR: MUV2), Mars (Private), ConocoPhillips ($COP), Lockheed Martin ($LMT), Johnson & Johnson ($JNJ), Cisco ($CSCO) and Westpac ($WBK).
On the government supplier side, federal mandates for government departments and agencies to include ESG / Sustainability evaluation of suppliers have worked their way into various pieces of legislation and by Executive Orders (EO), such as EO #13514, “Federal Leadership in Environmental, Energy and Economic Performance,” in October 2009, which was superseded in March 2015 by EO #13693, “New Sustainability Goals Across Federal Supply Chain.”
As I indicated in a previous blog post, there is growing evidence of attention to ESG / Sustainability in mainstream investing and discussions are finding their way into company earnings calls and related disclosure.
Since then, back-to-back announcements by two key suppliers in the investment world, Morningstar and MSCI, are bound to accelerate this trend and lead to increased investor expectations to include supply chain in these discussions.
A “supply chain” of sorts has been developing across the investment management and asset owner world for ESG / Sustainability investment considerations, from institutional through retail investor levels, which I will save for another blog.
I predict there will be a growing trend in the number of company executives who will be managing Supply Chain in context with ESG / Sustainability, as they realize it is to the company’s competitive advantage across the board (including with Investors) — time will tell!
I took a three-step query approach: AlphaSense – Google – AlphaSense
First, I made a simple query in AlphaSense — “Supply Chain and ESG” and “Supply Chain and Sustainability” for one year, garnering 27 results and over 1,000 results, respectively. Among the ESG search results was a particularly interesting find:
Second, I conducted Google searches on “Supply Chain + ESG,” “Supply Chain + Sustainability,” “Supply Chain + ESG / Sustainability.” There were a lot of results, so I will highlight just one result from each search (in order above):
– Jessica Alsford, Executive Director and Head of Morgan Stanley’s Sustainable + Responsible Investment Research Team
– Ian Liftshitz, “Sustainable Supply Chains and Bottom Lines – The Two Are No Longer Mutually Exclusive,” Supply & Demand Chain Executive (SDC), January 2016. Ian is Sustainability Director for the Americas for Asia Pulp & Paper Group (APP).
– Mike Wallace, “Shift Happens – Sustainable Supply Chains: The New Information Highway,” Green Biz, January 2016. Mike is Managing Director for Brown Flynn.
Third, I returned to AlphaSense to quickly check whether the Top 25 Supply Chain companies, as rated by Gartner from 2012 – 2016, include supply chain in context with ESG / Sustainability in communications aimed at the investment community. I excluded proxy statements from the outcome using the search filter, as references in this communications forum are often instigated by activist shareholder items.
Very likely, if we run this same check a year from now, the Alpha Sense search results will be much higher.
Pamela Styles is principal of Next Level Investor Relations LLC, an Investor Relations consultancy with dual IR and ESG / Sustainability specialties.
1. Walmart: Sustainability Index Leaders
2. Unilever: Sustainable Sourcing for Suppliers
3. Mars: Our Strategy and Priorities
4. Lockheed Martin: Sustainable Supply Chain Management
5. Johnson & Johnson: Supply Chain Management
6. Cisco: Focus Area: Supply Chain – Multiplying impact by setting high standards for suppliers
7. Westpac: Sustainable Supply Chain
8. Munich RE: Sharing responsibility with suppliers
9. ConocoPhillips: Supply Chain Sustainability
10. Federal Leadership in Environmental, Energy, and Economic Performance
11. Taft/: President’s Executive Order Announces New Sustainability Goals Across Federal Supply Chain
12. ESG / Sustainability — Is the Topic Coming up on Earnings Calls? Pam Styles, AlphaSense blog November 18, 2015
13. Eco-Business: Mainstreaming sustainable investing
14. Fund Strategy: MSCI launches ESG fund ratings
15. Gartner: Introducing a Score for CSR and Sustainability Performance to the Gartner Supply Chain Top 25
16. Gartner: Gartner Announces Rankings of the 2016 Supply Chain Top 25
17. Morgan Stanley: Jessica Alsford – Head of Sustainable and Responsible Investment Research
18. Supply & Demand Chain Executive: Sustainable Supply Chains and Bottom Lines—The Two Are No Longer Mutually Exclusive
19. GreenBiz: Sustainable supply chains – The new information highway
20. the Guardian: Can Amazon’s new ‘dream team’ fix the company’s sustainability reputation?