New research from Standard Chartered has found that environmental, social and governance (ESG) obligations are top of mind for corporates in Europe and North America, as the post-pandemic business recovery gets underway.
Managing supplier financial risks is also a major priority for European and North American businesses, while economic uncertainty due to the pandemic remains a top concern.
As part of its latest research, ‘Critical indicators of supply chains: More than ESG’, Standard Chartered surveyed 914 finance and procurement decision-makers headquartered in Europe and North America.
Quantitative data was then supplemented with eight in-depth interviews, and fieldwork was conducted during Q4 2020 and Q1 2021.
According to the survey, 93% of European respondents and 94% of North American respondents reported that the financial resilience of their supply chains is now a priority, with the majority (77% and 88% respectively) saying they are making extensive use of supply chain finance (SCF) programmes to shore up both their direct (tier-one) suppliers, as well as those further down the chain.
Companies on both sides of the Atlantic also indicated a strong awareness of the need to address environmental and social risks in their supply chains.
No less than 94% of European respondents and 96% of North American respondents acknowledged the importance of environmentally sound practices in their direct supply chains.
This awareness was consistent, albeit slightly lower (73% and 88% respectively), for indirect supply chains within their supplier ecosystem.
Filipe Mossmann, Head of Trade Sales, Americas at Standard Chartered, said: “The importance of sustainable supply chains and the role it plays in a company’s ESG plan will gain increasing prominence in the new world economy.
“As expectations to report tangible ESG-related improvements from their direct and indirect supply chains increase, businesses with holistic indicators of supply chain resilience and sustainability will be well placed to answer the call for greater transparency and stay ahead.”
Regulatory obligations and reputational risk are also key concerns, with 63% of North American and European respondents emphasising that failure to understand and comply with new regulatory requirements would have a very significant negative impact.
Likewise, with most European and North American companies producing goods outside their home region, the majority of respondents recognised that substantial work is needed to stay ahead of changes in regulation and stakeholder expectations, and this is particularly so within their indirect supply chains within their supplier ecosystem.
With the fragility of global supply chains being exposed over the last 18 months, and the opportunities that can be seized to build greater resilience, the study highlights that companies are looking beyond ‘just in time’ supply chains to ‘just in case’, and are expanding their focus from optimising efficiency to managing financial and ESG risks.
Victoria Claverie, Head of Trade, Europe at Standard Chartered, said: “Companies are even more focused on reducing the risk of non-compliance with ESG targets, and are increasingly looking for banking partners who support sustainable, resilient, agile supply chains.
“Global acceptance of defined standards will be essential,” she added.