Supply Chain Benchmarking Can Assess Success

It’s tough knowing exactly how well your organisation is performing when it comes to environmental and social sustainability, especially when looking along the supply chain. The value chain of any business varies wildly depending on the sector, the size, the complexity of operations or the geography from which the raw materials are being procured.

One useful way of determine just how well (or not) you are getting on is to rely on a sustainability ranking or rating system. In fact, 60% of respondents to SustainAbility and Globescan’s ‘Rate the Raters’, an initiative designed to extrapolate and analyse the huge number of different sustainability ratings mechanisms out there, said that benchmarking will only get ‘more important’.

But it’s not easy. And that’s because the dizzying array of surveys asking more or less the say questions about your environmental, social and governance strategies, policies and implementation is a complex business, resulting in many different and varied ways to measure so-called ‘sustainability performance’. A lack of consistency and transparency continues to threaten the landscape of sustainability ratings mechanisms.

Against this backdrop one could be forgiven for decrying the launch of yet another initiative designed to do the same thing. The latest incarnation is the World Benchmarking Alliance (WBA), a new system which has been financially backed at launch by the insurance and investment house Aviva.

So, how does it differ from what’s gone before, if at all?

Well, at its core is a significant difference, according to Aviva CEO Mark Wilson. The WBA aims to turn the UN Sustainable Development Goals (SDGs) into a “competitive sport”. You see, rather than asking to measure progress in how they manage their water or energy, or maintain that human rights abuse isn’t going on in their supply chain, for example, it will make corporate data on progress towards meeting the SDGs public. Each company will be ranked as to how well they are doing against the 17 SDGs, hopefully encouraging a race to the top.

To arrive at its league table results, the WBA will use both publicly available information published in annual sustainability reports, for example. Like many others, it will also ask companies to complete a survey.

By using both methods, all companies will be ranked even if they do not respond to the survey; those that do are much more likely to rank better.

The WBA’s key objectives are two-fold: To encourage the investor community to care more about sustainability performance in their deciton-making process by making better use of such league tables; and to reach out to the mass market of consumers that are yet to care too much about where the products they buy come from or how they are made.

But the use of the SDGs as an underlying framework is significant too. The SDGs have gained broad support from the business community and governments across the world. They are discussed every year at a UN-level and slowly but surely the colourful boxes that simply illustrate each of the 17 goals are beginning to resonate with the general public. By aligning progress against these, as opposed to individual corporate targets, progress is much more visible and easy to understand for a range of stakeholders. In fact, there is much more chance of CEOs, board members and shareholders alike actually worrying about where their business sits on this ranking because of that raised public consciousness. At least that’s the theory.

The support that has been garnered for the WBA – not least the $2.7 million year-one budget of $2.7 million, and further $20m a year required to run it – suggests overall dissatisfaction with the plethora of benchmarks and ratings systems that already exist. By focusing on measuring the relative sustainability performance of a company within a specific sector often misses the point, often encouraging a race to be ‘least bad’.

As companies continue to find ways to align with the SDGs – and find value in that alignment – the WBA should be an interesting addition to a crowded market. Watch this space.