In the latest installment of their ongoing webinar series, SGS Société Générale de Surveillance), the Geneva-based inspection, verification, testing and certification company, warned participants of the serious dangers of neglecting supply chain sustainability.
SGS representatives stated that companies that are not taking charge of their supply chains and confronting social and environmental issues risk substantial damage to their carefully-constructed reputations. According to SGS, companies that lack awareness of their supply chains cannot be in control of them, and not having control means a very real risk of reputational damage. The nature of the digital media today (particularly social media) makes it easy for information about damaging social or environmental practices in developing countries to quickly reach customers in developed nations.
Furthermore, the presenters asserted that silence alone can damage a reputation. In the current business environment, companies are expected to tell a strong and consistent story that extends well beyond their own operations. The stakeholder community increasingly views organizations that are not telling this kind of story with suspicion and mistrust. Staying under the radar is simply no longer a viable option; a proactive approach is the new expected behavior.
We agree with all of that. But while these broad assertions about risk have become widely accepted amongst supply chain experts, what is often lacking from the current discussion – including the SGS webinar – is substantial data or evidence that can back up and quantify the contention that environmental and social externalities in companies’ supply chains constitute a specified economic risk. While few doubt the presence of risk altogether, without detailed evidence the economic weight of the consequences cannot be fully understood. Additional research must be undertaken that provides tools to quantify supply chain economic risks in order to convince companies to commit time and resources to understanding and engaging more deeply with their supply chains.