How you can decrease your ESG risks in the agricultural value chain
Environmental, Social, and Governance (ESG) risks are among the most impactful risks facing businesses today. Research shows that 85% of investors consider ESG factors in their investments and 70% of consumers make purchases based on ESG concerns. Furthermore, companies are also expected to demonstrate their commitment to United Nations’ Sustainable Development Goals. Because of this, it is imperative that companies mitigate their ESG risks in agriculture.
ESG risks in agriculture
ESG risks permeate the agricultural supply chain. From deforestation to child labor to unfair labor renumeration, companies that source from downstream suppliers are at risk. Most companies invest enormously in managing and mitigating these risks. For large multinationals, this investment does not significantly impact the company’s bottom line. However, for other companies, the cost of doing business can be enormous. To reduce these costs, it is important for companies to have a better understanding of their downstream suppliers.
Thorough data can lower risks and costs
To gain a deeper understanding of their suppliers, a company can use SCOPE data. Every SCOPE assessment contains over 200 data points, and you can use many of these data points to highlight the potential for ESG risks your suppliers face. For example, we collect data about the sustainability practices of agribusinesses, which can provide insight into their environmental risks. We also collect data about forced labor practices, as well as a great deal of information about various other aspects of agribusiness governance. This in-depth data analysis can lead to you identifying and addressing risks your suppliers face before your consumers or investors identify them.
Through SCOPEinsight’s Business Intelligence Platform, you can benchmark on a local, international, and global level to see how your suppliers compare to others, both generally and in your specific sector. You can easily compare one assessed agribusiness to another to see which ones are the least risky. Since the assessments are sector-agnostic, this data can be collected for any sort of agricultural supplier.
Predicting future risks with analytics
As well as using SCOPEinsight data to glean insights on the likelihood of ESG risks, you can use SCOPEinsight’s Business Intelligence Platform to predict future risks, thanks to the predictive analytics in the BI Advanced package. By analyzing datasets and creating machine learning models, we can assess the likelihood of future risks for an agribusiness. Currently, we have a model for living income, but in the future, we intend to create more models for risks like climate adaptation. This will give a clearer view of the likely risks for an agribusiness, which will allow you to take step to mitigate or eliminate them.
Creating stronger, more transparent supply chains
The global focus on ESG risks is not going away. However, companies that take a more proactive stance can address these risks more easily. If your company is equipped with thorough data that provides a deep understanding of your downstream suppliers, then you are better prepared to avoid potential risks those suppliers face. This leads to strong, sustainable, and transparent supply chains.
Are you interested in using data to reduce your ESG risks? Contact us today for a free demo.Back to news