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Sustainalytics launches corporate supply chain ESG solutions

As businesses continue to place higher priority on ESG issues and reporting, Sustainalytics is la...


Sustainalytics has launched a new platform to help companies assess their supply chain ESG risks. (Courtesy Sustainalytics)

As businesses continue to place higher priority on ESG issues and reporting, Sustainalytics is launching its corporate supply chain ESG solutions platform. The ratings assist in identifying companies’ supply chain ESG risks.

Industries worldwide, particularly those with larger supply chains, are often exposed to risks such as labour disruptions, workforce health and safety incidents, human rights issues and natural resource shortages. As a result, corporations are under increased pressure from investors, customers and regulators to address the ESG risks in their supply chains to mitigate risks to their operations and reputations.

“Corporate executives are asking their procurement leaders to assess the ESG risks of their suppliers and partners to limit risk exposure and comply with increasing regulation in supply chain operations,” said Francesca Placa, manager of corporate solutions at Sustainalytics in a release.

“By providing a high-quality, standardized approach to assess company-level material ESG risks, Sustainalytics is well-positioned to help companies determine which suppliers may require the most in-depth evaluation on ESG issues.”

Sustainalytics assesses businesses’ ESG, sustainability issues

Sustainalytics is a Morningstar company and global provider of ESG research, ratings and data. Morningstar, Inc. is a Chicago-based financial services firm with 17 offices around the globe, including Toronto.

Sustainalytics has more than 25 years of ESG experience and has received awards in recognition of its ESG solutions and services from the Climate Bonds Initiative, Environmental Finance and GlobalCapital. Both Environmental Finance and the Climate Bonds Initiative recognize Sustainalytics as the largest second-party opinion provider.

The firm works with hundreds of the world’s leading asset managers and pension funds which incorporate ESG and corporate governance information and assessments in their investment processes. Sustainalytics helps these corporations and their financial intermediaries assess sustainability issues in their policies, practices and capital projects. The firm also provides issuers with information regarding the use of their proceeds toward sustainable finance products.

The firm can certify companies’ green financing frameworks so they can issue green bonds, green loans and other green financing vehicles.

Sustainalytics’ ESG Assessment Platform

Companies with large, globally diversified supplier portfolios and business relationships require access to fast, reliable ESG data.

Even if a company meets the highest ESG performance criteria, some of its suppliers and partners may not. Studies estimate that up to 90 per cent of a company’s sustainability impacts originate from its supply chain.

Sustainalytics’ Corporate Supply Chain ESG Solutions enables businesses to build more sustainable supply chains. The platform helps procurement and sustainability professionals assess the sustainability of the organizations they work with, including customers, partners and suppliers.

The platform:

– rates more than 13,000 companies worldwide;

– assesses suppliers’ ESG issues to understand exposure to material corporate ESG risks;

– conducts in-depth sustainability assessments to measure companies’ economic and social impact, including the activities of partners and suppliers;

– reviews potential vendors and partners prior to entering new supplier or partnership agreements;

– caters to more than 40 industries using tailored frameworks;

– identifies companies that prioritize supply chain sustainability.

Corporations can use Sustainalytics’ ESG Risk Ratings to better comprehend and promote their ESG performance with their internal and external stakeholders.

Sustainalytics’ ESG platform — benefits and methods

According to Sustainalytics’ website, the company’s ESG Risk Ratings provide insights by measuring the size of an organization’s unmanaged ESG risk using a set of material issues. The platform considers only issues which could potentially impact a company’s economic value.

The firm’s ESG Risk Ratings provide an absolute measure for assessing company-level ESG risk, which Sustainalytics says makes it unique in the industry. A consistent approach ensures ratings are comparable for companies in different industries. The ratings measure not only companies’ exposure to industry-specific material ESG risks, but also how well they are managing those risks.

Companies can also choose from multiple levels of ratings and tailor the level of ESG risk rating detail for each of its suppliers. Businesses are also able to rate both public and private companies of all sizes without surveys.

Interest in ESG issues continues to increase among investors, employees and customers, encouraging company executives to prioritize these considerations. As a result, more corporate issuers are leveraging ESG performance to reduce the cost of capital, benchmark against peers, improve shareholder engagement and demonstrate long-term commitment to sustainability.

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