Sustainable and secure supply chains

The ESG snapshot  research asked 800 mid-market business leaders about their ESG strategy and how close they are to achieving their ambitions. We looked across six focus areas, with sustainable, ethical and secure supply chains being a key pillar in achieving a successful ESG agenda.

The research shows that while businesses are showing an ambition to take steps with their ESG strategies, nearly a quarter are still experiencing challenges when trying to do so. Failing to prioritise ESG could mean that people won’t want to work with you or for you, and you could lose access to capital.

When asking what areas of ESG were a priority for businesses, 93% said that a secure and ethical supply chain is important to their stakeholders.

Supply chain sustainability and security are core considerations for organisations, particularly where critical aspects of the supply chain are based overseas.

You need to ensure that suppliers and partners involved in your supply chain are transparent, adhere to good international practice and legislation, and have early visibility of potential cost increases. Legislation is growing and the cost of financial and reputational consequences of not being compliant can be significant.

There’s increasing pressures to control carbon footprints

A supply chain’s impact on the environment is a concern that all global businesses face today. Understanding your direct impact is a primary focus, but considering all the GHG emissions across scopes 1, 2 and 3, upstream and downstream of your supply chain, is key for taking initiatives to control your carbon footprint and reduce energy and emissions related costs.

Raj Kumar explains how to reduce environmental and emissions related risks across your supply chain, areas you should focus on and guidance on achieving sustainability and security.

The importance of early visibility on tax changes

Increasing amounts of tax governance and risk legislation have been implemented in the UK which imposes additional compliance requirements for large businesses.

It is therefore essential that a business’s tax strategy aligns with its wider ESG strategy and that the tax strategy cascades through the supply chain. This is a key component within ‘S’ & ‘G’. Within the ‘E’ bucket, it is also necessary when trying to achieve a sustainable and secure supply chain to plan for future potential tax costs within the supply chain, and in particular carbon tax costs, that could arise due to legislative changes.

ESG is becoming an increasingly important metric for businesses, their stakeholders, investors and also international tax authorities. For example, HMRC have recently published a paper on labour tax risks within the supply chain.

It is therefore important that tax strategies align with ESG strategies and that requires businesses to comply with tax rules, whilst understanding the potential cash tax impact of carbon tax policies being introduced, such as the EU’s Carbon Border Adjustment Mechanism.

Paul Atherton discusses where to focus your tax strategy when it comes to ESG, how you can establish a carbon, tax and cost efficient supply chain, and his recommendations for businesses in the future.