Ten Things to Think About® to unmask environmental risks in your supply chain

Businesses are becoming increasingly aware of their environmental footprint. While internal operations are often under the microscope, the true impact can lie hidden within the complex web of suppliers. To truly prioritise sustainability, assessing suppliers for environmental risks is crucial. Here are ten key factors to consider.

1. Resource consumption

• Analyse the supplier's energy and water consumption patterns to identifypotential inefficiencies and opportunities for improvement.

• Explore the source and sustainability of the raw materials the supplier uses, prioritising recycled or renewable resources when possible.

• Understand the supplier’s waste generation and management practices, ensuring proper disposal and minimising environmental impact.

2. Pollution and emissions

• Investigate the air and water emission levels of the supplier, ensuring they comply with regulations and seek potential reduction strategies.

• Assess the supplier’s handling and disposal of hazardous waste to minimise risk of contamination and ensure safe practices.

• Consider the noise pollution generated by the supplier’s operations, particularly if located near sensitive areas like residential communities.

3. Environmental management systems

• Check for environmental certifications like ISO 14001 or industry-specific environmental standards, indicating the supplier’s commitment to environmental management.

• Review the supplier’s internal environmental policies and procedures, gauging their focus on minimising environmental impact.

• Evaluate the supplier’s commitment to ongoing environmental improvements, looking for evidence of past initiatives and future plans.

4. Supply chain transparency

• Check the traceability of materials that the supplier uses. Can they reliably trace the source of their raw materials, ensuring responsible sourcing and avoiding conflict minerals or unsustainable practices?

• Confirm that the supplier transparently reports on their environmental performance, providing relevant data and metrics for assessment.

• Assess whether the supplier engages with stakeholders, such as local communities and environmental NGOs, in their environmental initiatives.

5. Regulatory compliance

• Confirm the supplier’s understanding of the local and international environmental regulations applicable to their operations.

• Investigate any past instances of non-compliance with environmental regulations, assessing the severity and corrective actions taken.

• Check whether the supplier proactively identifies and mitigates potential environmental risks within their operations and supply chain.

6. Location and environmental sensitivity

• Consider the environmental sensitivity of the geographical location where the supplier operates, assessing potential risks to ecosystems or communities.

• If the supplier is involved in water-intensive operations, evaluate their water management practices and potential impact on local water resources.

• Assess any biodiversity considerations. Are the supplier’s operations located near or impacting sensitive ecosystems or endangered species?

7. Supplier size and resources

• Consider the supplier's size and capacity available for implementing environmental initiatives.

• Gauge the supplier’s openness to collaborating on joint environmental initiatives and knowledge sharing within the supply chain.

• Confirm that the supplier is willing to receive support for building their environmental management capabilities, promoting continuous improvement.

8. Cost of assessment and mitigation

• Factor in the cost of conducting a thorough environmental assessment of the supplier and potential mitigation strategies.

• Consider the potential long-term cost savings from improved environmental performance, such as reduced waste disposal fees or energy efficiency gains.

• Think about reputation and brand protection. The cost of environmental damage to your brand and reputation can be significant, making proactive risk management critical.

9. Contractual terms and partnerships

• Include environmental clauses in contracts with suppliers. Ensure clear clauses outlining environmental expectations, performance metrics and consequences of non-compliance.

• Develop collaborative partnerships with suppliers, sharing best practices and supporting their environmental journey.

• Secure the right to conduct environmental audits of the supplier's operations to ensure continued compliance and adherence to agreed standards.

10. Continuous monitoring and assessment

• Don't consider the assessment a one-time event. Regularly monitor the supplier’s environmental performance and assess ongoing risks.

• Stay informed about and adapt to evolving environmental regulations and industry best practices, keeping your supplier assessments up to date.

• Promote transparency within your supply chain regarding environmental initiatives and performance, fostering accountability and collective progress.

If you consider these ten things, you can proactively unmask and mitigate environmental risks within your supply chain. Building a sustainable future requires collaboration, transparency and a commitment to continuous improvement. By choosing environmentally responsible suppliers and fostering partnerships, you can not only minimise your own footprint but also contribute to a cleaner and healthier planet for all.