Corporate responsibility professionals have nothing to fear from data. Increasingly sophisticated analysis is the key to understanding global supply chains, writes Tom Idle.
The outcome of the 2012 presidential election in the US, which saw President Barack Obama fight to win a second term against the Republican Mitt Romney, was uncertain. Obama’s record-breaking fundraising was no guarantee of success in the face of challenging domestic issues such as how the US would respond to the economic downturn or the future of the Affordable Care Act.
But one man did call the result correctly. In fact, the American statistician and writer Nate Silver – who started his career analysing and forecasting the performance and career development of Major League Baseball players – correctly predicted the winner in all US states.
How? Well, Silver is a self-professed data geek. He has built systems that give him access to all the data he needs to make the most accurate predictions – whether in forecasting election results or estimating how many home runs a specific player is likely to make in a year. And crucially, he understands how to read that data.
As famous as Silver has become as something of a data journalist, he’s not alone in being able to understand data and use it for positive results. With advances in connectivity and the power of technology to gather data, we have more information at our fingertips than ever before. According to IBM, by 2020 there will be 300 times more information available to use than there was in 2005 – a figure it puts at 43 trillion gigabytes of data.
Corporate sustainability managers are beginning to realise the benefits such information can have in supporting their environmental and social impact reduction efforts. Typically, the biggest impact a company can have on the planet sits outside its sphere of influence, along its supply chain. It is not uncommon for more than 80% of a company’s total end-to-end carbon impact to be found within the operations of its suppliers – and for its direct operational impacts to account for as little as 5% in many instances.
For these big businesses, their supply is large and complex, made up of tens of thousands of suppliers across the world spending hundreds of millions of pounds. Understanding who those suppliers are and what impact they are having on the planet is crucially important if the company is to reduce its overall impact.
But it’s not easy. In fact, without the right data and information on those suppliers, it’s very difficult indeed.
Companies have only just started scratching the surface in understanding how they can gather, process, analyse and make the best use of data that will help them save money, make money, build more resilient supply chains and ultimately become more sustainable.
More and more organisations are turning to software providers to help them get to grips with the data that will help to unlock these savings. For example, the hotel and restaurant group – and owner of Costa, the high-street coffee chain – Whitbread has been working with cr360’s supply chain software solution to help meet ambitious new sustainability targets. In May 2015, the company reassessed its CSR goals and developed responsible sourcing and commodity policies to ensure that by 2020 all of its suppliers improve their sustainability credentials and meet the standards set by the business.
The agile technology offers a centralised way to collate and manage data, and report on the sustainability performance of suppliers. By inviting suppliers to answer a series of questions, the software can automatically analyse the responses and identify any potential risks within the supply chain. Now, with a bird’s-eye-view of its supply chain hotspots, Whitbread’s sustainability team has access to clear and consistent information that allows them to work closely with suppliers to resolve any issues and to educate them about the company’s sourcing and commodity standards.
Of course, the software can also be used to encourage environmental impact reduction by asking suppliers to log carbon, energy, waste and water data – and identifying areas where improvements and savings could be made. The cr360 system allows you to collect all sorts of information – from code of conduct surveys to performance metrics for Scope 3 carbon reporting.
The use of data is also enabling companies to improve transparency. Ripples from the 2013 collapse of the Bangladesh Rana Plaza building are still being felt across the world. More than 1,100 people died in what was the deadliest garment-factory accident in history – and consumer attitudes towards supply chain issues, such as working conditions and forced labour, have never been the same. As with food that ends up on our plates, more and more people are interested in where their clothes and other consumer goods are coming from – and they want companies to be more transparent in giving up that information.
Companies are realising that having a full picture of their supply base, backed up by data that points to potential risk, will stand up to this increased scrutiny by consumers and the media – and help to protect valuable corporate reputation.
The practice of corporate sustainability and the use of advanced analytics have not always been perfect bedfellows. In the past, corporate responsibility professionals have been far happier to operate in the creative world of communicating via PowerPoint, than burying their heads in Excel documents and big, complex data.
But the landscape is changing. Complex environmental and social challenges are getting bigger all the time, particularly in wieldy supply chains which often contain companies located in parts of the world most at risk from issues such as climate change and water scarcity. As data management software gets more and more sophisticated, aiding performance management and strategic decision-making, rather than just pure reporting, knowledge is giving companies the power to effect positive change along the value chain.
It is time for today’s sustainability professionals to embrace big data, not run away from it.
Tom Idle is an editor, writer, journalist and commentator in the field of corporate responsibility. This article is republished with permission from his blog.