Dipo Olowookere
By Modupe Gbadeyanka
A foremost financial institution, Standard Chartered, has developed a new sustainable supply chain assessment tool.
The tool can be used by companies to benchmark the resilience and sustainability of their supply chains, based on comparisons with peers across regions and sectors.
The system called Supply Chain Performance Indicator allows companies to do a “health check” on their operations and highlights which areas they need to focus on to achieve their aspirations.
The assessment is based on five indicators: environmental soundness and transparency of direct suppliers and of indirect or deep-tier suppliers; financial robustness; flexibility and adaptability; and collaboration and connectedness throughout the ecosystem.
Clients can use the results to identify their areas of weakness and seek advice and solutions from the bank to help achieve their goals.
The new tool follows the launch of Standard Chartered’s Sustainable Trade Finance proposition in March, strengthening its ability to help companies implement more sustainable practices and build more resilient supply chains.
In addition to a growing suite of sustainable trade finance products, the Bank also offers trade finance at cost to companies that meet the criteria of its $1 billion COVID-19 financing commitment, launched in March 2020.
The issues exposed by COVID-19 have prompted companies to rethink their supply chains, as the world looks to build back a more sustainable global economy.
The tool was developed based on insights from critical indicators of sustainable supply chains, the Bank’s report which surveyed close to 1,000 global companies, and looked at the resilience and sustainability of supply chains across regions and sectors based on the same five indicators – it also offers actionable insights for companies.
While 90 per cent of the respondents said sustainability and resilience are strategic imperatives, the survey revealed a significant gap: nearly two thirds of companies said their actual performance lags the importance they place on meeting each of the indicators.
Other key highlights include environmental and social practices in the supply chain may potentially be a major source of risk.
Only 40 per cent of those surveyed indicated confidence that they perform highly when understanding and monitoring environmental standards and labour practices.
In addition, it includes indirect or deep-tier suppliers appear to be the weakest link. Only 43 per cent of companies view environmental soundness and transparency of indirect suppliers as highly important.
While the findings show that there is much to be done, the report also highlighted a strong willingness among respondents to work with their financial institutions to address the gaps. They will need to expand their approach to supply chain management beyond operational efficiency, to improve their flexibility and financial robustness, while also managing ESG-related risks.
This includes enhancing access to finance for more financially resilient supply chains, particularly for lower tier suppliers who often do not get adequate financing; by making trade finance transactions more transparent and secure for better supply chain visibility; and by driving the adoption of sustainable practices across entire supply chains.
Simon Cooper, CEO of Corporate, Commercial and Institutional Banking & CEO, Europe & Americas, Standard Chartered, said: “As we try to build back to a more sustainable economy, we can help our clients with tools and solutions to make their supply chains more sustainable, more resilient and future-proof. Sustainable trade finance products are one way to ensure that complex supply chains adhere to sustainable best practices, and help companies achieve their sustainability goals as they grow their businesses.”
