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The term Environmental, Social and Governance – better known as ESG – has become synonymous with a global movement towards a better world, a world of greater diversity and inclusion where there is wealth and opportunity for all.
Within the UK, there has been particular momentum in the climate change agenda, where the government has its Net Zero Strategy and the Green Finance strategy, an approach to greening the financial system, mobilising finance for clean and resilient growth, and capturing the resulting opportunities for the sector. In order for the financial sector to be truly optimised to deliver these long-term sustainable outcomes and to fully embrace the push for ESG, firms must aim to bring every part of their business, including their supply chain environment along on the journey.
The supply chain sustainability agenda
The push for sustainability for financial services has recently seen a focus on third party and supply chain arrangements. This looks at the importance of ensuring those providers consider the impact of their services on the environment, what it means to be sustainable and puts governance at the forefront of the discussion. This focus has become crucial as dependencies on third party and supply chain arrangements across the financial sector continue to become a significant part of how we operate.
As we continue to evolve our thinking on sustainability in our supply chain arrangements, we have identified some of the key challenges that may be stumbling blocks to long-term success in the collaborative push on ESG in the supply chain:
Many organisations across the sector have initiated a supply chain ESG programme to progress action on sustainability in supply chain arrangements, working closely with UK Finance on what needs to be done to identify better behaviours as well as to define what good looks like for the financial sector.
The growing ecosystem of science-based standards, frameworks and data providers must be considered, and harmonisation sought where possible. This is an opportunity to bring the ESG agenda to the forefront of technology innovation and supply chain relationships, leveraging existing frameworks and standards. We welcome industry collaboration with ESG specialist data providers, aggregators, rating agencies and assurers and look forward to where this journey takes us as firms respond to the urgent ESG challenge.
Oge Udensi, Principal, Cyber Security, UK Finance