Research from a performance management specialist shows that 90% of big businesses will only work with suppliers whose are transparent about their ESG credentials.
OneStream – which offers data around finance, operations and transactions – analysed the 2022 Annual Reports of all the FTSE 100 companies – those businesses listed on the London Stock Exchange with the highest market capitalisation.
When broken down by industry, it found that 100% of companies in the energy, retail, and consumer goods sector expect suppliers to align with their ESG commitments.
The banking, finance, and insurance sectors follow closely (90%), with insurance companies (85%) coming next.
The report shows the demand for supplier ESG visibility is equally high for companies with headquarters both within and outside the UK (88%).
Also, it found that the largest companies, ranked by employee numbers, all require their suppliers to report ESG metrics, while nine of the top ten companies ranked by market value expect ESG metrics to be met.
Big businesses looking for supplier ESG compliance
Among the information required of prospective suppliers by FTSE 100 companies are their commitment to improving ESG targets, including adherence to proper human rights practices, to reducing their carbon impact and to encouraging diversity in the workplace.
Matt Rodgers, GM of EMEA at OneStream, says: “We’ve seen a significant shift in public opinion towards ESG concerns, with shareholders, regulators, and customers all exerting pressure on the UK's largest companies to establish and deliver clear ESG commitments.
“In response, these firms are now pushing the ESG message down their supply chains by requesting evidence from suppliers of their ESG commitments as part of the tendering process.”
He added: “The pressure is on for suppliers to get their reporting right if they want to win lucrative contracts with large companies. However, this could be a daunting task for some firms.
“To succeed, businesses need to adopt modern software solutions that collect and unify financial, operational and ESG data and provide timely and actionable insights based on specific organisational needs.
“By implementing these solutions, firms of any size can effectively manage and report their ESG targets and metrics.”