Sustainability is a growing focus and responsibility for all organisations. Environmental, Social, and Governance (ESG) reporting is a growing requirement, with providers developing tools to produce the required reports. Similarly, organisations are under increasing pressure to trace products throughout their supply chains, to provide confidence in the quality of their products and in the ways the inputs and outputs are produced.
Underpinning any value of these reports is the data.
Organisations put in significant effort to report on their own business and their suppliers. For Scope 3 emissions, organisations are required to include consideration of those they are indirectly responsible for up and down the supply chain. Traceability requires providing evidence of your suppliers’ supplier (and so on down the chain).
Given how hard it is to manage high quality data about your own organisation and direct suppliers, how much confidence can you have to meet these demands? The news regularly cover reports on problems in the food supply chain and questions about producers of raw materials in from mining and agriculture impacting a wide variety of segments.
Government objective for net zero by 2050 is pushing the need to understand where and what is causing usage of energy and carbon as a way to troubleshoot solutions and alternatives.
This POV will explore Retail related sustainability regulations, how organisations are currently reporting, and how Responsiv is contributing to sustainable data management
These are some of the regulations that underpin the requirement to report on supply chains, production, and sustainability.
Green House Gas Protocol (GHG)
First appearing in 2001, the Green House Gas protocol outlined what is now the basis for ‘scopes’ and mandatory GHG reporting in the UK.
These scopes are ways of categorising where emissions are produced in relation to an organisation:
Emissions created directly by an organisation, for example, using fuel in commercial vehicles (logistic fleets, company cars).
Emissions created indirectly by an organisation, including energy generation for office and commercial buildings.
Emissions created throughout an organisation’s value chain. These are difficult to identify and report on the further up a chain you get, and include buying, using, and disposing of supplier products. Scope 3 also includes emissions created through employee commuting, and consumer use and disposal of products (see EPR).
Extended Producer Responsibility (EPR)
The Extended Producer Responsibility is a green policy intended to incentivise supply chain members and partners into being mindful about the materials they use for packaging their products. This is done by making businesses responsible for the full net cost for collection and recycling of any packaging waste.
EPR piggybacks on and supports the 2018 Circular Economy Package that sought to make the UK committed to circulating and reusing resources for as long as possible to promote sustainable packaging practices by reducing single-use resources.
EPR will support the collection and recycling of packaging by subsidising the costs for local authorities to improve their recycling infrastructure, including facilities and roadside collection capabilities.
This financial responsibility will largely be placed on a ‘single-point of compliance’, namely the brand owner, to fulfil (i.e., the incentive to find sustainable supply chain partners).
Initially, EPR policies began influencing industries including Packaging, Electronics and Batteries, but is now spreading into other sectors such as textiles. Due to the relative immaturity of this regulation, the requirements vary across national boundaries and within US states, and are expected to change further as EPR matures.
Effort Sharing Regulation (ESR)
Adopted in 2018, the Effort Sharing Regulation (ESR) sets national targets for reductions in environmental impacts from road transportation, agriculture, heating, waste management, and more.
Streamlined Energy and Carbon Reporting (SECR)
Introduced in 2019, the Streamlined Energy and Carbon Reporting (SECR) policy requires large UK companies to disclose their energy use, carbon footprint, and greenhouse gas (GHG) emissions in their annual financial reporting. This applies to all UK companies that fit the criteria.
It Is Already Being Done – At a Cost
Large organisations have the power to dictate data feeds from their suppliers.
Supermarkets in the UK use assurance schemes for food, and their supply chains make significant effort to supply the necessary data. The challenge then moves to these suppliers who must comply with multiple schemes and partners to provide similar, but different, data to downstream organisations, all of whom have specified their needs with no considerations of others. Departments emerge to handle these disparate reporting requirements, which is costly and inefficient
Underpinning these regulations and reporting requirements is data.
Much of this data is captured as part of operational processes, but often in functional or system silos. For example, product CO2 emissions are calculated with data from suppliers and customers, fuel usage from internal and partner logistics, electricity consumption from facilities and specific machines. All these areas may be instrumented for their own needs, but little thought or capability exists to bring these disparate sources together.
When data is brought together in a solution, it will often be to answer a specific set of questions, be that logistics optimisation, or ESG reporting. Typically, the data will have been through multiple stages, hopping between systems and being transformed in various ways. Different consumers may then have differing views of events, or a logistics optimisation system reports truck CO2 emissions that don’t tally with the ESG regulatory report.
Understanding these differences and evidencing their legitimacy to stakeholders is hard to do and often requires forensic investigation to understand the whole story.
Ensuring supply chain partners are confident sharing their data to enable end-to-end reporting adds further complication. They are concerned about exposing their own operational processes and worry about what competitive advantages can be gleaned from the data they are sharing.
Addressing These Challenges
Responsiv specialise in integrating data and automating business processes. These experiences are well suited for securely accessing, integrating, and streamlining data collection from various systems of record across large enterprises and their supply chain for input into a broad range of use cases.
This may include integrating into a specific ESG system to provide dashboards of information for monitoring and pulling reports, or for automating the process of data gathering to fill a predefined report template for audit purposes.
Our involvement and investment in defining a circular textiles supply chain in the UK has reinforced our understanding of the domains, standards, and regulations within the textiles and waste industries. This context and foresight into the future of the data management underpinning circular textile economies in the UK empowers us to provide trusted advice to organisations seeking to integrate and visualise data internally and throughout their supply chain.
Case Study – Circular Textiles Testbed
Responsiv, in partnership with UKFT and Innovate UK, is investing in developing a platform to gather and provide supply chain insight for the management of discarded textiles.
This project seeks to define and uncover industry standards for textile categorisation and disposal, finding optimisations to improve the viability of the new supply chain whilst maintaining security of competitive information.
Central to the project is a testbed that captures data from across the supply chain which then provides a secure sharing capability to allow other supply chain partners to gain controlled access to data. This may be original data, aggregated datasets across partners (e.g., all logistics partners), or anonymised data.
Data is captured once and then transformed and used for multiple purposes in auditable ways, without the need to touch the source systems again for the same information, and to ensure data providers are confident in the use of their data.
Responsiv contribute expertise knowledge and experience of enterprise integration and automation, making us critical to accessing and securing the necessary data from a broad range of systems.
Read more – Circular Textiles Testbed
Case Study – Financial Services Data Health
For an international financial institution, we reviewed their internal policies against regulatory needs and re-implemented and extended their data monitoring capability to ensure and demonstrate compliance.
Responsiv Consultants completed a data health check as part of a service migration project. Engaging with functional leaders and technical partners. The health check identified a range of activities that were prioritised to ensure effective support of their transformation to a new service.
Whilst this is not strictly for sustainability reporting purposes, this case study highlights our ability to map policies against regulations and access and secure the required data for reporting purposes.
Full Case Study
Reporting on energy and carbon usage, extended producer responsibility, and other UK sustainability regulations is not new, but it is being thrust into the spotlight as sustainability gains momentum towards net zero goals.
Understanding what data, in what format, from which system is required is challenging and costly enough, but extending this through every regulation applicable to UK industry is multiplying this effort and cost. Sourcing and presenting this data in an efficient and secure manner, whilst supporting a disparate supply chain with a multitude of IT systems and data sources is critical.
Responsiv is well placed to create and enable the capability to share data across the supply chain, and support the variety of use cases (regulatory and sustainability reporting) the data is needed for.
Get in touch for more information about improving data management for sustainability and regulatory reporting