New report from Supplier.oishows that most businesses face significant ESG risks, underlining the need for greater supply chain transparency to enhance resilience and sustainability.

“Supplier intelligence is key as growing evidence shows that ESG risks directly impact the bottom line,” said Aylin Basom, CEO of Supplier.io, in a statement. “Without clear visibility into supplier practices, companies face significant reputational, operational and financial risks. Our report highlights the tangible risks of environmental issues, poor working conditions and poor supply chain management. By shining a light on these common issues, Supplier.io provides key insights and enables organizations to understand and assess supply chain risk areas, strengthen mitigation strategies and make progress toward improved supply chain resilience.”

The report is based on ESG risk assessment data covering 11 industries. The data is analyzed in the context of the UN Sustainable Development Goals (SDGs) relevant to each sector, while also aligning with important materiality standards such as the Global Reporting Initiative (GRI) and the Sustainability Accounting Standards Board (SASB) to ensure objectivity and comparability.

The report includes the following key findings:

Environmental risk:Environmental risks are a growing concern, with greenhouse gas (GHG) emissions being the biggest risk, affecting 73% of businesses.

Water collection and use is a concern for 49% of companies affected by water pollution from supply chain activities, including discharges of untreated sewage, chemical pollutants and plastic waste. In addition, 67% of companies are exposed to risks related to water use and scarcity.

Air pollution is a serious problem, with 56% of businesses saying they are affected by air pollution, mostly from suppliers in the transport and manufacturing sectors.

Additionally, 72% of businesses face risks arising from a failure to manage the environmental and social impacts of their products throughout the product lifecycle.

Social risk:the report found that 54% of companies face risks to the health and safety of their employees.

Management Risk:A significant percentage of businesses (45%) admitted that they are exposed to risks related to unethical business practices, such as bribery and corruption.

Companies are required to report on the ESG impact of their suppliers, as a result of mandates including the Corporate Sustainability Reporting Directive. Yet 45% of companies face significant risk due to insufficient transparency and supply chain management.

43% of companies face risks related to business unethics, such as bribery and corruption.