Introduction to Sustainability

To account for the large and growing number of sustainability reporting standards and certifications in use in the global marketplace, Stibo Systems’ Sustainability Data Management solution seeks to streamline and simplify the process of managing environmental, social and governance (ESG) assessments, and then apply that process to product, supplier, or location data to help satisfy compliance requirements.

In a rapidly changing world, organizations aiming to maximize the value of their global operations are being asked to comply with ever-evolving assessments and certifications. This requires companies to track these assessments to ensure regulations are correctly incorporated into the organization’s policy, practices, and processes. Sustainability master data management (MDM) of the kind administered by the Sustainability solution enables customers in the manufacturing, retail, and distribution sectors to effectively meet regulatory policies, directives, laws, and measures defined by both national and international standards. Failure to adhere to compliance standards can result in heavy fines, brand damage, and weakened relationships with suppliers and consumers, which makes implementation of an effective sustainability solution an important part of a robust growth strategy.

Compliance Focus Areas

Sustainability standards are wide-ranging and can be applied to many aspects of organizations, big or small, regardless of industry. They can be standards that require compliance with regulations backed with legal force, or optional standards prioritized by customers who reward companies that comply with them. Listed below are some examples of ESG compliance types the Sustainability Data Management solution can assist with:

  • Regulatory compliance – Ensures compliance with statutes enforced where the organization conducts business.

  • Product compliance – Ensures factual declarations are made about products created by the business, either in whole or in part. Examples of Sustainability standards relevant to product compliance are those that relate to GMOs, allergen information (like gluten), organic claims, biodegradation, and Forest Stewardship Council (FSC) certification for timber-related industries.

  • Human Resource compliance – Ensures the ethical treatment of the workforce based on various metrics and standards.

  • Data compliance – Ensures organizations are collecting, organizing, storing, and managing data in compliance with regulatory standards set by, for example, the General Data Protection Regulation (GDPR) law applicable in the European Union (EU), Extended Producer Responsibility (EPR), and others.

  • Health and Safety compliance – Ensures the safety of working environments by applying standards that reduce work–related accidents, exposure to hazardous chemicals, and electrical and fire hazards.

Challenges in Compliance Management

Companies that are subject to one or more of these types of compliance but have not yet implemented a standardized central compliance data management system can face various challenges caused by one or more of the following drivers:

  • Multiple and often complex standards

  • Conflicting standards for compliance reporting

  • Time-consuming audits

  • Changes in compliance criteria and regulatory requirements

These challenges can be mitigated by implementing the Sustainability Data Management solution as it provides improved visibility into evaluated business data, simplifies business processes, and helps build a durable competitive advantage by improving:

  • Administrative efficiency

  • Reduction of manual data maintenance activity

  • Sustainability -compliant supplier management and procurement strategies

  • Efficient location planning

  • Sustainability goal-oriented product / assortment planning

  • Ability to quantify Sustainability standards compliance progress

The Sustainability Data Management solution also allows organizations to integrate with sustainability databases like ‘HowGood’ to do sustainability reporting, track carbon emissions, assess marketing and label claim validations, and ingredient validations. Integrations with organizations like ‘Transparency-One’ enable organizations to gather data on corporate social responsibility (CSR), compliance management, supply chain transparency, and traceability for raw and finished goods.

Sustainability for Suppliers

As previously described, it is important for organizations to establish and maintain compliance with the sustainability requirements vital to their goals. Critical to that aim is procuring verified and verifiable supplier assessments that help ensure the organization's sustainability standards for quality, sustainability, ethical behavior, and other criteria are met.

There are several reasons why verifiable supplier assessments are necessary for organizations to meet their sustainability goals:

  • Compliance – Suppliers must comply with a range of legal and sustainability-related regulatory requirements, such as adherence to labor laws and environmental regulations. If these requirements are not met, the organization may not be able to comply with their sustainability assessment requirements.

  • Risk management – Ensuring that suppliers adhere to requirements pertaining to ethical sourcing, due diligence, and regulatory permissions can help identify potential risks, ensure suppliers are managed effectively, and mitigate potential impacts on an organization’s sustainability goals.

  • Quality control – Because organizations rely on their suppliers to provide high-quality goods and services, validated assessments of suppliers can help ensure that suppliers are meeting the organization’s quality standards.

In many instances, the best method to procure high-quality sustainability assessments is through a neutral third party for whom measuring business metrics against sustainability requirements is a core competency. Integrating the Sustainability Data Management solution with third-party vendors can provide timely and accurate information to the organization about the supplier’s processes and practices as they relate to sustainability.

The information received from both third-party data sources and the organization’s own STEP Sustainability Data Management can help users create meaningful workflows that enable users to approve, review, or reject supplier inputs. This data can also enable organizations to send relevant and informative notifications (to internal and external audiences) based on business requirements. Further, automating these integrations allows organizations to establish standard supplier audits starting from when a supplier is onboarded.

The Sustainability Data Management solution supports the ability to store a supplier’s certification and compliance adherence data. As examples of ESG reporting standards the Sustainability Data Management solution can help with are the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board’s (SASB) international financial reporting standards (IFRS). Integration with standards like these can be done with multiple standard data sources; underlying data can be validated and unified to create a single source of truth for better regulatory readiness.