Sustainability Evaluation: Assessing Supply Chain Impact on Company Performance

Environmental, social, and governance (ESG) aspects have a growing relevance in the corporate world where the objective for sustainability becomes an essential point. The supply chain (SC) is a buyer’s responsibility and accounts for a large part of their ESG footprint. Since ESG performance extends to SC, poor ESG practices in the SC can negatively affect the sustainability of the Anchor Company (AC). Therefore, AC, the buyer, needs to go through a complex, expensive, and time-consuming process to assess their SC. The objective of this work is to develop an ESG assessment model for companies to receive a quantitative score of their footprint by considering both their operations and the SC. The model is verified by considering different scenarios that are designed by testing two different cases with different interactions between two ACs and two SCs with different ESG maturity levels. Results show that the SC has a significant impact on the final ESG score of the AC, highlighting the need for considering the SC to evolve in ESG aspects. In all tested cases, the SC accounted for more than 50% of the final consolidated ESG score. Despite differing ESG maturity levels, two ACs received the same consolidated score due to the influence of their SC scores. Results emphasize that achieving a strong consolidated ESG score is important, and advanced corporate sustainability is not possible without integrating the SC into the strategy. The novel methodology proposed contributes to sustainability, expanding the scope of ESG assessments to include SC and developing a standardized and adaptable model with practical applications.