Having strong governance (G) in supply chains can improve the effectiveness of the environmental (E) and social (S) aspects of ESG. It has the potential to create a competitive advantage for Latin American companies. However, many organizations focus on environmental actions that result in bad practices such as greenwashing.
The report “Measuring Stakeholder Capitalism” identified five actions that could help organizations adopt a holistic approach to good governance. These include:
- Governance purposes
- Quality of the governing body
- Stakeholder engagement
- Ethical behavior
- Oversight of risks and opportunities
But to have a real impact, companies implementing the above actions must look not only at their actions, but those of the entire logistics chain. The World Economic Forum’s recent publication “Defining the ‘G’ in ESG, Governance Factors at the Heart of Sustainable Business” identified the key indicators that supply chains must address. These are the following:
- Compliance with contract
- Knowing the reality of the countries where operations are carried out
- Being careful at each stage, link and place in the logistics chain
- Having double verification
For Latin American companies on their journey to supply chain transformation, these are the three things they must prioritize:
- Defining a governance strategy that involves leaders of large and small companies in the supply chain.
- Measuring and understanding the level of exposure to risk
- Implementing initiatives that have supply chain collaboration at their core.