Responses to questions provided by portfolio companies will vary significantly based on the extent of existing supply chain management, as well as the resources available to contribute to the engagement.
The box below runs through the initial responses that might be received from a portfolio company following initial engagement.
Example question and response
Explain how your company has an adequate and competent resource to identify and manage supply chain ESG risk and opportunity
- The procurement director is a member of CIPS. The chief sustainability officer is a member of IEMA. Both report to the CFO. They work together and incentives are aligned through the same KPIs.
- The procurement director and CSO are jointly responsible for the company fs Sustainable Procurement Policy and Practice, including the company fs Supplier Sustainability Code.
- KPIs aligned with the code are monitored monthly and reported to the board on a quarterly basis.
To assess the level of information that has been provided and to consider engaging on the issue further, the following can be considered:
A response limited to the following:
- Listing suppliers by tier.
- Identifying material ESG issues (at least in tier one).
- Outlining the approach to managing and monitoring supplier performance.
A response including features from a basic response in addition to:
- Providing evidence of policies and systems being implemented.
- Describing the metrics used to measure supplier performance.
A response including features from a basic and adequate response in addition to:
- Demonstrable and pragmatic action plans, focused on material ESG risks in the supply chain, irrespective of tier.
- Evidence of monitoring performance with metrics.
- Evidence of third party review.
- Case studies and examples.
In the case where a response is deemed insufficient, or more clarity on a particular issue is required, the list of engagement questions above can be used to obtain more in-depth information.
Managing ESG risk in the supply chains of private companies and assets
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Assessing robustness of responses