Data Drives ESG Action (including deep decarbonization) — Buoyant’s Investment in SupplyShift

As we’ve seen through the pandemic, supply chains are complex and can impact the broader economy and commerce. Understanding the risks that companies face means understanding their supply chains’ context. The context is found in ESG (environment, social, and governance) data and reporting. Additionally, ESG data and subsequent actions will be required to meet corporate decarbonization targets.

While ESG metrics have been around for more than two decades, investors, customers, regulators, and employees have recently started to demand reporting and improvements. Because two-thirds of a company’s ESG footprint lies within its supply chain, companies can’t accomplish this task alone. Like risks, emissions/ESG metrics flow to the company at the end of the supply chain, making suppliers key enablers to meeting corporate decarbonization targets. Not only will companies need to collect data from their suppliers but meaningfully engage with them to achieve targets set internally and by Wall Street. Digital technologies will be vital to helping solve this and help turn it into a competitive advantage.

Data, but make it usable

Data can be powerful, but dirty data is useless, and companies are looking for ground truth insights and actions to reduce risk or improve business outcomes. Experian’s global data management report found that 95% of organizations see negative impacts from poor data quality. Raw data must be cleaned and properly analyzed to tell the whole story and support decision-making.

Digital technologies can help aggregate and clean data, to create valuable insights.

ESG metrics, but make it mean something

We as humans love simplified information, but oversimplification can cause significant issues. Like a stoplight, red and green are well understood, but yellow means something different depending on the person or the situation. Moving towards red or moving towards green matters, as does the ability to make these moves. Simplified indicators provide the context needed to understand risks and opportunities.

Digital technologies can help benchmark and contextualize ESG metrics across the supply chain to help leaders make decisions with the right level of context.

Engagement, but make it easy

Buyers can demand data or adherence to certain practices from their suppliers, but requests must be understood and achievable or risk going unanswered. Providing support during data collection and requesting actions to reduce risk and improve ESG metrics will help suppliers improve their businesses and compete for future contracts. Pre-filling known data, e.g., company name, locations, etc., and providing options to help suppliers improve their practices, e.g., partnerships with utilities and banks to support transitioning to lower emission resources or upgrading facilities, streamlines efforts and ensures that common roadblocks are removed.

Digital technologies scale ESG efforts by streamlining and standardizing processes, reducing manual administrative work, and increasing meaningful engagement.

What is next for supply chain risk management and ESG reporting?

Today the World Economic Forum reports that only 9% of companies use software comprehensively during ESG data collection and reporting. However, business leaders, especially Chief Procurement Officers, are waking up. Gartner reports that 97% of companies plan to invest in responsible sourcing software in the next 18 months to help manage this process. Deloitte estimates that responsible supply chain tools will constantly grow at 16% YoY, reaching $3.8B in 2023.

2020 brought attention to risk management and ESG issues, and 2021 reinforced the message telling us that we must find long term solutions. We expect 2022 and 2023 to be about implementing and executing solutions.

Not surprisingly, we at Buoyant see the focus on risk management & ESG as an investment opportunity that will drive significant impact for climate change solutions.

SupplyShift, a digital platform for supply chain transparency and action for ESG metrics for buyers and investors.

SupplyShift provides a digital platform that enables buyers and investors to engage with their suppliers or portfolio companies to collect, benchmark, and analyze ESG data through multi-tiered networks. The founders are Climate Ph.D. sustainability consultants turned entrepreneurs. They recognized the need for a platform to streamline efficiencies and drive desired actions across supply chain networks through effective engagement with suppliers. This approach has helped them build the largest ESG database of over 100,000 entities and 15M data points across 133 countries and in 15 different languages.

The Solution

Buoyant was introduced to SupplyShift by an industry expert while researching climate risk intelligence. We were impressed by their approach, supplier base, and depth of experience. Their modular solution maintains high supplier response rates and boasts an impressive partner network. This allows customers to start their ESG journey where they choose and solves the data and engagement gaps that companies typically experience. Additionally, they take an action-oriented approach by providing options to buyers/suppliers to help them meet their ESG goals, e.g., their partnership with Engie helps provide lower emission options to suppliers. They also avoided the “yellow stoplight” issue providing enhanced reporting and allowing buyers to build on standard assessments with custom questions to help address specific concerns.

Founder/Market Fit

Co-Founders Alex Gershenson (CEO) & Jamie Barsimantov (COO) have PhDs in climate science and a combined 25+ years of experience in sustainability consulting and knew the pitfalls of existing solutions and approaches when they started to build the SupplyShift platform. This has provided them with the expertise to identify opportunities for automation and what is truly a human value add. They also deeply understand the power and value of the network effects that can help enable actions. Buoyant is encouraged to find more climate scientists who are becoming entrepreneurs, turning their passion and expertise into impactful climate solutions.

Climate Impact

As previously mentioned, supply chains significantly impact ESG metrics, including emissions. SupplyShift has tracked over 560 Megatons of GHG emissions through their platform, equivalent to 1% of annual GHG emissions. We have often said measurement matters, and this is the first step to taking action to improve ESG outcomes.

Welcome to the Buoyant Boat!

Alex, Jamie, and the entire SupplyShift team, Buoyant is thrilled to join you on this journey to enable actions across supply chains and worldwide.

Allison & Amy

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