ESG investors largely in dark on value chain risks, study finds

Most companies don’t disclose the climate and environmental impact of their value chains, according to a fresh study.

Roughly 60% of firms don’t report their supply-chain emissions, a review by CDP showed. Almost 70% have yet to assess the impact on biodiversity of their value chains, the nonprofit said on Wednesday. The data is based on the 18,500 companies that use CDP’s global system for reporting environmental impacts.

The findings come as market and regulatory pressure mounts for companies to account for the damage and pollution caused by their suppliers and customers. EU lawmakers are hammering out new legislation to hold firms liable for due diligence failures, while at a global level the International Sustainability Standards Board has proposed full carbon emissions disclosure to meet demand from institutional investors.

“Investors, consumers and policymakers want to see companies taking responsibility for their value chain and purchasing decisions,” the CDP report said. “The global pandemic has shown that resiliency in supply chains and business models is more essential than ever.”