No Match Found
In the race to build a cleaner, sustainable and more measurable energy future, the industry at the heart of it all is working to sync up supply chain and sustainability strategies. Energy, utilities and resources supply chain executives and management teams surveyed for PwC’s 2023 Digital Trends in Supply Chain Survey tell us they’re making progress building supply chain capabilities to help the supply chain integrate with sustainability and environmental, social and governance (ESG) efforts. While there’s still a long way to go toward full adoption, industry executives say they’re developing capabilities that will contribute to building a circular economy and reducing carbon emissions as well as measuring, verifying and reporting supply chain contributions to sustainability.
Most (92%) agree that supply chain strategy and operations are important to executing the ESG strategy and that digital investments in this area have also benefited the supply chain (82%). This suggests industry leaders recognize the importance of linking operations and ESG as they are intertwined. Of course, like other industries surveyed, supply chain leaders say increasing regulatory, investor and customer pressure to expand ESG disclosures poses challenges today. From coordinating ESG investment across the enterprise to establishing oversight and controls, and defining process and governance steps, ESG-related challenges commonly require collaboration and long-term strategic planning to confirm both that the right tools are in place today and that sufficient agility and flexibility exist to adapt to unexpected demands in the future.
While efforts to build capabilities are underway, more than three-fourths (78%) of those surveyed are still assessing EGS-related regulatory requirements, which continue to rapidly evolve for US companies and those with operations in Europe. The European Union’s Corporate Sustainability Reporting Directive (CSRD), the SEC’s proposed climate disclosures and state-level emissions requirements have made it increasingly important to develop thorough and granular reporting that satisfies new requirements around supply chain traceability and expectations around non-financial reporting. This necessitates both a detailed review of technologies currently in place and a detailed assessment of the data management systems and tools required to collect and measure emissions data into the future.
With ESG needs and requirements continuing to evolve, how can you make sure your next supply chain moves are the right ones? Our survey results hint at three key questions that energy, utilities and resources leaders should answer to take today’s progress even further:
Energy, utilities and resources leaders surveyed report a higher level of investment in technologies that can enable supply chain and sustainability efforts. As you invest time and money in processes and technology, your people can be left behind. Most of those surveyed recognize that the workforce will need some or significant levels of training or upskilling because of the ongoing digitization of the supply chain. It may be especially needed in areas related to sustainability. Digital skills — or the lack of them — are the top challenge to integrating ESG into the supply chain according to 84% of respondents, a higher proportion than in any other industry.
Still, despite digital upskilling being the top challenge, it may not be prioritized enough. Just 20% named digital upskilling of employees among their top three priorities. In fact, it fell well behind other top priorities which included increasing efficiency and automating processes and analytics — notably, all areas that could benefit from a digitally upskilled workforce.
Cross-functional planning, collaboration and risk assessment are common practices within parts of the industry, particularly when faced with severe weather or other emergencies. But this type of cohesive integrated planning can be newer territory when it comes to climate-related supply chain risks or other ESG priorities. Proposed or enacted global, US or state regulations — including California’s Climate Corporate Data Accountability Act and Climate-Related Financial Risk Act and others that may evolve at the state level across the country — have elevated the need for a unified approach across your supply chain and company.
From increasing supplier diversity to assessing scope 3 emissions, it’s increasingly urgent to take a holistic approach to technology that can accurately measure and verify the supply chain’s contribution to ESG. However, more than half (62%) of industry leaders say the biggest ESG-related challenge today is coordinating investments across the company instead of separate spending by individual groups. This may suggest that while progress is underway in terms of tech investments and adoption, there could be room for more collaboration. Also, there may be a reason today’s efforts seem siloed across the organization, as very few executives and management teams expect to prioritize integrated planning soon. Just 10% call it a top three priority for the next 12 to 18 months.
Due to the diverse nature and far-reaching use of the products that energy, utilities and resource companies produce, Scope 3 emissions disclosures represent a unique challenge for the industry. From gathering private vendor data to determining whether those vendors even have the information required, success in this area requires collaboration, the right technologies and a dynamic data strategy capable of reading, cleaning and analyzing data from multiple sources.
While some are turning to digital capabilities to support efforts to reduce emissions, the availability of digital tools and data is a gap for most. Over three-quarters (76%) of industry executives cite their company’s lack of data and digital tools as a challenge to integrating ESG into their supply chains. Finding the right measurement tools and performance criteria also proves to be especially difficult. These challenges can be made more difficult by the speed at which the highly complex landscape of digital offerings and capabilities is evolving today.