The Role of Primary Supply Chain Data in ESG Reporting

With ESG reporting becoming a priority for businesses, due to regulatory requirements as well as sustainability motives, the question that arises is: how can companies ensure that their data is credible and robust enough for their efforts to make a genuine impact?

The answer - collecting primary supply chain data.

What Is Primary Supply Chain Data?

Primary supply chain data refers to firsthand data collected directly from suppliers across key operational aspects such as energy consumption, emissions, labour practices, water usage, and waste management.

These measurements reflect the actual impacts of the supply chain on the environment and society and gives businesses granular insights into their specific supply chain operations.

Why Is Primary Supply Chain Data Critical for ESG Reporting?

With a demand for accurate ESG reporting, companies are under pressure to provide detailed insights into their sustainability efforts. Here’s why collecting primary supply chain data is vital:

Accurate ESG Reporting

Primary data allows businesses to create ESG reports based on actual performance rather than assumptions or estimates. This accuracy shows transparency and accountability which builds trust with stakeholders, including investors, regulators, and consumers.

Compliance with Regulatory Standards

Governments and regulatory bodies are introducing stricter ESG disclosure requirements, such as the EU’s Corporate Sustainability Reporting Directive (CSRD) which requires detailed supply chain data for compliance. Having access to primary data ensures companies can meet these standards and avoid penalties.

Risk Management

Primary data helps businesses identify hotspots where improvements or corrective actions are needed, minimising environmental and social risks.

Scope 3 Emissions

For most companies, Scope 3 emissions (those generated by the supply chain) make up the majority of their carbon footprint. Primary data provides the insight needed to track, reduce, and report on these emissions effectively, driving meaningful progress towards sustainability goals.

Enhancing Stakeholder Confidence

Investors, customers, and partners increasingly favour businesses with robust ESG strategies backed by credible data. By collecting and reporting on primary supply chain data, companies show their commitment to sustainability, attracting ESG-focused investors and consumers.

Driving Competitive Advantage

Companies that prioritise ESG reporting, including gathering data from their supply chains, are positioning themselves for long-term success. This focus not only strengthens the brand but also helps in meeting the demands of eco-conscious consumers and investors who are increasingly scrutinising corporate sustainability claims.

Overcoming the Challenges of Data Collection

Collecting primary supply chain data can be challenging, as suppliers may not have the resources to accurately track their impacts and there are further complexities with global operations and a lack of standardisation.

In order to overcome this challenge, companies can leverage software that enables them to collect and measure data across their supply chain and use it to create audit-ready ESG reports, such as neoeco.

As sustainability continues to grow as a priority in corporate strategies, the role of primary supply chain data in ESG reporting will become increasingly important. By investing in this data today, companies are not only setting themselves up for regulatory compliance but are also future-proofing by gaining a competitive edge.

For businesses committed to long-term success and sustainability, collecting primary supply chain data is essential for impactful ESG reporting and driving accountability, transparency, and transformative change.

Find out more about how you can use neoeco’s ESG reporting software to collect primary supply chain data, create sustainability reports aligned with global regulations, and enable positive sustainable change. Book your demo.