The Uncomfortable Truth: Suppliers Don’t Want to Share Their Data With You

Opinion Piece: The Uncomfortable Truth: Suppliers Don’t Want to Share Their Data With You

With the best of intentions, most suppliers have a deep-rooted aversion to sharing data with their customers unless the data is:

• In their favour
• Not business sensitive

On one hand, suppliers want to build a strategic relationship with you that moves beyond just the commercial aspects. But at the same time, they don’t want to handicap themselves by giving you sensitive data that could ultimately be used by procurement teams to their disadvantage.

Given that the majority of emissions lie in the supply chain, it is important to focus on disarming some of these inherent fears and concerns. Instead, use this as an opportunity to positively engage your suppliers. How we see this working in practice:

1. Build trust. Explain how the data is going to be used, and how it is not. Who will see it, and who will not. Sharing data with the whole business vs just the sustainability team might make a meaningful difference.
2. Be pragmatic. Understand what is actually possible and realistic for your suppliers to do given their size, sophistication, and location. Get a sense of where to lean in and where to lean back.
3. Emphasise commonality. Not just in vision but in expectations and standards across your company, as well as peers in the space. This will help to make the business case.
4. Show value. Is there any upside? Demonstrate why it would make sense for them to share their data, even if the positive value is coming further down the line. For example, highlight if you are planning a big PR push on this topic. Positioning them as your supplier of choice will be a great positive value signal for them.
5. Co-create value. Go one step further. If you anticipate that your customers will pay a premium for a lower-emission product, consider how you can share the value. Even if you don’t have clarity on what the numbers or magnitude are yet, it makes sense to put this on the table and co-create thinking of what is possible in the space.

The best companies understand that in addition to this sort of positive messaging, you also need to provide some coaching, educational resources maybe even software tooling to build the capabilities, because most suppliers are not going to be able to do this on their own.

This is much more than just a one-person demand…

This is a sneak preview from our latest podcast. Dive deeper into ‘The Do’s and Don’ts When Setting Up Your Sustainability Data Transformation’ below:

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Industry Insight: The Most Efficient Sustainability Teams Spread the Cost Across Departments. Here’s How.

Most sustainability teams have a budget challenge. This is true whether it’s about paying for tools, team, or transition interventions. But we’ve noticed some of the most cash-efficient sustainability teams working around this.

How?

They tap into a wider budget pool by spreading their costs across different departments. What this looks like in practice:

• Understanding and aligning with the goals of other departments: e.g., making the case for a data management system: consider the health and safety team, who will most likely need a reporting tool, the product quality team, who will want insight on supplier swaps, or the marketing team who will want assurance on claim credibility. Involve decision-makers early on to get the buy-in needed.
• Demonstrating the value in a shared approach. This requires both the qualitative skill of building a narrative (i.e., how will a single joint intervention make life easier for all), and the quantitative support of proving cost savings and impact on other metrics of relevance to internal stakeholders (e.g., revenue).
• Sharing the kudos. Sustainability benefits from being in the limelight in many organisations versus more traditional functions. Letting other functions own some or all of the credit for positive interventions (especially when interventions are paid for from their budgets) is a good way to ensure continued support.

Effective sustainability teams can triple or even quadruple their sustainability impact by leveraging advocates across the company. In essence, if you are a sustainability professional, the role is rooted in stakeholder management.

Policy Pulse | The Latest Sustainability Developments

A breakdown of the key policy updates that you and your company need to know about from the last fortnight.

Overwhelming support for TPT sees standardised decarbonisation strategies coming into play.

What is it?

The Transition Plan Taskforce (TPT) was announced at COP26 to create a standardised framework for companies to report on their decarbonisation strategies - otherwise known as “transition plans”. The TPT aim to set a ‘gold standard’ for companies sharing transition plans to ensure there’s high quality, detail and comparability.

The TPT recommends companies build a transition plan in 4 stages:

1. Baselining current position
2. Setting ambition
3. Developing an action plan
4. Ensuring accountability for delivery

Having built a plan, the TPT framework describes how to disclose it - with key disclosures being around the company’s Implementation Strategy, including:

• Business planning and operations - a roadmap of decarbonisation actions, including changes to business strategy and allocation of resources.
• Products and services - plans to change the company’s portfolio of products and services, highlighting plans to reduce high-carbon products.
• Financial planning - describe the financial implications of the above two points, including plans for investment and funding.

So what does this all mean?

We anticipate the TPT framework to be widely adopted. This is compounded by the broader regulatory movements around transition plans:

• ISSB & CRSD: The ISSB’s recently released S2 disclosures for climate-related risks and the EU’s CSRD require companies that have transition plans to disclose them alongside financial reports.
• FCA support: for the TPT in the UK, looking to adopt its recommendations to make them a legal requirement for large listed companies.
• Global shifts: Japan, New Zealand and Brazil have all adopted requirements for companies of a certain size to disclose on transition plans.

The TPT continue to develop their guidance with finalised sector-agnostic guidance due in October. Sector-specific guidance is in development, with drafts expected in November for the Finance, Energy, Metals and, Food and agriculture sectors.

What do we think?

The TPT’s work is important, giving companies an ambitious common approach to creating decarbonisation strategies.

However, there are a couple of issues worth highlighting:

• Difficulties in getting to a science-based transition plan - whereas the SBTi can validate if a target is in line with the Paris Agreement, it's far harder to verify whether the sum of a company’s planned decarbonisation actions in their transition plan will meet this target. Companies will need support in measuring the GHG reduction impact of their actions, and in getting specific guidance in actions that would be likely to be ‘science-based’.
• Likely pushback from companies - disclosures around the implementation strategy is a heavy lift for companies, and some may be reticent to share a sustainability strategy that could be commercially sensitive. The ultimate aim is to give stakeholders confidence that a company’s Net Zero plans are sound, so finding the right level of detail is important.

TPT’s disclosure recommendations:

Useful resources

• TPT framework guidance draft
• TPT implementation guidance draft
• Centrica transition plan

Sustainability Trailblazers: How Amazon is turning supplier engagement into a billion-dollar revenue stream.

Amazon recently announced a massive policy intervention, mandating all their suppliers to share emissions data and targets. As well as being a huge step towards their 2040 net zero carbon goal (given that 3/4 of their emissions are Scope 3), we have a suspicion that this is actually a brilliant business strategy. Amazon is notorious for turning cost centres into profit centres and reading the fine print of their latest Sustainability Report, it looks like supplier engagement could be their next revenue stream.

We see Amazon doing this by:

• Sharing data and targets to
• Helping suppliers transition to carbon-free electricity
• Selecting partners for decarbonisation business opportunities
• Providing products and tools to help suppliers decarbonise

Here, you can see a flavour of the “Amazon playbook”, where they are making moves to engage their ecosystem and create net value for players. By layering on new services and revenue streams, Amazon are building the defensibility of the initiative. With this in mind, interesting things to look out for are:

• How this changes supplier behaviour
• How this builds an ecosystem and increased stickiness for Amazon
• How this leads to a new billion-dollar revenue stream for Amazon

Other news

• The Commission adopts the European Sustainability Reporting Standards
• UK government reduces cost of carbon pollution in ETS scheme
• Britain commits to hundreds of North Sea oil and gas licences

Events on the Agenda

• 2nd European Sustainable Beauty Forum, 12 - 13th September 2023

Register your interest to join our State of Sustainability community events!

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