Investment in supply chain traceability is now ‘essential’ for businesses amidst heightened regulations, technological advancements and increased consumer scrutiny, Planet Tracker has said.
Planet Tracker’s latest report, Tracking Nature Impacts, developed in partnership with Vizzuality, highlights the importance of supply chain transparency in the business world, with firms no longer able to brush supply chain discrepancies under the carpet.
According to Planet Tracker, the growing availability and effectiveness of external traceability systems have the potential to expose corporations to heightened risks if they fail to adapt.
Risk hotspots
“We are reaching a point where only limited supply chain data is needed by external observers to estimate the environmental impact of these food businesses and identify potential risk hotspots and locations where companies are at risk of not adhering to international regulations,” commented Giorgio Cozzolino, quantitative investment analyst at Planet Tracker.
The EU Deforestation Regulation (EUDR) is a case in point, with businesses required to invest in advanced traceability solutions and integrate procurement data with geographical information systems to fully understand their environmental and social impact.
Analysing Nestlé’s supply chain
As an example, the Tracking Nature Impacts report analysed Nestlé’s supply chain disclosures for key commodities, including coffee, cocoa, fresh milk, and palm oil, revealing several important insights.
Fresh milk and coffee are associated with the highest absolute environmental footprints, it found, with fresh milk linked to significant greenhouse gas emissions and coffee production raising concerns about unsustainable water use. Cocoa exhibits the highest deforestation footprint per tonne sourced, highlighting its environmental impact and contribution to habitat loss and biodiversity decline.
In contrast, the disclosures regarding palm oil are of much higher quality compared to the other commodities. According to the report, Nestlé has provided the capability to geo-locate over 80% of its palm oil suppliers, enhancing transparency and traceability within the supply chain.
“Corporates that implement advanced traceability systems and improve their environmental disclosures will not only mitigate risks but also gain a competitive advantage,” added Cozzolino. Find out more here.
