Advances in technology are enabling greater oversight of environmental impacts across supply chains for company management and external parties, according to Planet Tracker. Improved traceability can help firms comply with new regulations aimed at protecting nature, said the think tank in a new report, while warning of fines and reputational risk for companies that don’t invest to scrutinise their supplier networks. European legislation requiring firms to identify and minimise negative environmental impacts include the EU Deforestation Regulation and the Corporate Sustainability Due Diligence Regulation. By integrating procurement data within geographical information systems, companies can accurately trace and analyse their supply chains, linking raw materials and sourcing origins to quantify their impact on the environment, the report said. Planet Tracker also included a case study of food conglomerate Nestlé’s supply chain for key commodities, finding that fresh milk and coffee were generally associated with the highest absolute environmental footprints – particularly emissions for milk and unsustainable water use for coffee – while cocoa displayed the highest deforestation footprint per tonne sourced. The think tank recommended investors demand more in-depth supply-chain disclosures from their investees, and that lenders financially support companies in their traceability journey. “Only limited supply-chain data is needed by external observers to provide an estimate of the environmental impact of these food businesses, and to identify potential risk hotspots and locations where they are at risk of not adhering to international regulations,” said Giorgio Cozzolino, Quantitative Investment Analyst at Planet Tracker.
