How Consumer Demands Drive ESG Reporting & Innovation Across the Supply Chain

Today’s consumer products businesses are competing on many fronts. Customers are changing the way they buy items, as well as the reasons they purchase them, and rapid product development is playing a role in this evolution. Increasingly, environmental matters and brand purpose are firmly in that mix, with consumers expecting businesses to commit to improved levels of sustainability.

Central to changing customer expectations for consumer products businesses is that people have indicated a great willingness to vote with their wallets (and indeed their clicks) if they feel a brand isn’t stepping up to the mark. A Hotwire survey in 2019 found that almost half (47%) of internet shoppers switched product because of moral or ethical values; protecting the environment topped a list of reasons to switch.

Meanwhile, institutional investment decisions are now being made with these considerations front of mind. Over three quarters (76%) integrate ESG data into their thinking, elevating the role and significance of ESG reporting in consumer products even further.

Clearly, ESG is now business critical, as well as ethical. And this shift is driving a new way of looking at, and reporting on, ESG across the consumer products supply chain.

The question to businesses in the sector is how well prepared are they for modern sustainable business operations and ESG reporting?

Why ESG reporting and performance management matters for consumer products businesses

One of the key concerns around ESG for consumer products businesses is their supply chain. Depending on their exact business area (food, clothing, or beauty for example) there are different nuanced, multi-faceted paths a product can take from raw materials to arrival on the shelves – touching natural capital, land, communities, materials and energy.

In prior years, this was something even the businesses itself (alongside a few external stakeholders) could only monitor with difficulty. Today, however, things are very different. The end user wants to know more about that supply chain, and bases decisions on everything from labour conditions in factories around the world, to the use of water, sourcing of materials and carbon footprint.

The pressure is on to improve processes, reduce wastage in packaging, create efficiencies in distribution and enhance sustainability at every stage from production to sale. None of which can be done without a clearer view of business operations – from pollution, energy consumption and waste management, to labour and the supply chain.

The path to improved operational visibility

For businesses within the consumer products space, this all reinforces the point that sustainability performance management and ESG reporting is not simply a PR exercise. Rather, it’s a critical commercial matter – because without high quality, trusted reporting and management of ESG performance, the risk is loss of revenue and reputation.

However, many consumer goods businesses have complex supply chains that even they don’t fully understand, meaning it’s difficult to measure impact at every point of the operation. Complicating matters further, current ESG reporting capabilities are often some distance from ideal. Whether that’s because of a reliance on manual processes leading to human errors, the need to collect and integrate data from multiple disparate systems, the complex modelling requirements, the multiple reporting standards, or even that their intentions have run a little farther than their capabilities.

Countering that requires a fuller understanding of where consumer products businesses can make clear and consistent gains. For instance, with greater transparency businesses can make a better case to investors and consumers that they are improving – and implementing good practices. While more automated digital solutions can transform how reporting is managed, providing clearer outcomes against KPIs as well as identifying areas where businesses can make efficiency or cost gains.

Of course, every business will require a solution that’s specific to its needs and the unique nuances of its operations. However, there are some commonalities that most in the consumer products industry can benefit from.

To find out more about this, and how our Corporate Sustainability Reporting and Performance Management solution can help organisations move to a sustainable future: ESG reporting for the consumer products industry, read our new white paper or check out our new eBook.