For sustainability and procurement leaders, supply chain visibility has become a strategic imperative, with the majority of a company’s environmental and social impact lying upstream, in the networks of suppliers, manufacturers, and service providers that enable operations.
The scale of that exposure is significant. According to the World Economic Forum, up to 70% of a company’s emissions can originate from Scope 3 upstream sources (suppliers). Besides the environmental impact, human rights risks, governance gaps, and procurement practices in the supply chain all carry real reputational, legal, and operational consequences.
The regulatory environment is reinforcing the need for transparency. For instance, in Europe, regulations such as the Corporate Sustainability Reporting Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD) require detailed disclosures on supplier impacts and mandate that companies identify and address actual and potential environmental and human rights harms across their value chains. The reach of these regulations also extends beyond directly in-scope companies: SMEs that supply to in-scope businesses may find themselves subject to stricter standards as their customers work to meet reporting obligations.
Tracking the right metrics can help companies comply with regulations, as well as identify risks early, spot opportunities for operational improvements, and build a clear picture of how supplier practices align with sustainability goals. While there is no universal set of metrics for companies to track—a materiality assessment and your specific regulatory exposure, sector, and supply chain geography will shape your priorities—the metrics below can help provide greater visibility into sustainability practices across your supply chain.
Environmental Metrics
Environmental practices across the supply chain represent one of the most material sources of risk and emissions exposure for most companies. To assess impact, key metrics to track include:
- Scope 1, 2, and 3 emissions of your suppliers, which feed directly into your own Scope 3 reporting. Companies reporting under regulations such as CSRD are increasingly required to disclose Scope 3 emissions, making supplier-level data necessary for compliance.
- Sustainable sourcing practices, including the extent to which suppliers rely on renewable resources
- Biodiversity policies, specifically, whether they address production, sourcing, or consumption from sensitive ecosystems, with the goal of reducing biodiversity loss
- Operational sites near protected areas, which carry heightened environmental risk exposure
Governance Metrics
Understanding how a company within your supply chain is governed is foundational to assessing whether it will manage sustainability risks over time. Governance structures signal how embedded sustainability commitments are in decision-making and business operations.
Some metrics to track here include:
- Whether the company has a board-level or senior management accountable for supply chain risk
- Whether a responsible or sustainable procurement policy exists
- How often governance policies are reviewed and updated
- Whether the company has a grievance or whistleblower mechanism covering conduct within its own supply chain
Human Rights and Labor Practices
Human rights due diligence in the supply chain is a legal requirement across a growing number of jurisdictions. In addition to the UK Modern Slavery Act 2015 and California’s Transparency in Supply Chains Act (2010), Canada’s Fighting Against Forced Labour and Child Labour in Supply Chains Act (2024), Germany’s Supply Chain Due Diligence Act or the LkSG (2023), and the EU’s CSDDD have introduced mandatory due diligence obligations with civil liability exposure and financial penalties.
For companies with global supply chains, identifying where exposure exists requires tracking whether suppliers:
- Publish an annual modern slavery statement
- Conduct human rights impact assessments
- Assess the risk of child labor in their own operations or supplier networks
- Disclose remediation efforts and/or any action taken if/when risks have been identified
- Operate or have suppliers in geographic areas with an elevated risk of forced or compulsory labor
- Can demonstrate that workers are paid a living wage in markets where they operate
- Provide workers with access to legitimate channels for raising concerns
Local and Diverse Procurement
Beyond risk mitigation, sustainability in the supply chain also encompasses the positive impact a company can have on the communities in which it operates. Supporting local and diverse suppliers can help reduce logistics-related emissions, strengthen supply chain resilience, and create economic benefits in local communities. Some metrics to track in this category include:
- Percentage of procurement spend with local suppliers, relative to a company’s operations
- Whether the company has a policy of prioritizing small and medium-sized companies as suppliers
- Whether the company has a formal supplier diversity program or targets
- How the company is progressing against its goals relative to its program
Assessing Supplier Data
Knowing your suppliers’ policies is a starting point, but understanding what your screening processes surface and how you use that information can yield meaningful insights for risk management. Some questions to ask internally include:
- Does your company screen new suppliers for ESG issues?
- Does your company require suppliers to adhere to a supplier code of conduct?
- What percentage of suppliers are screened using social or environmental criteria?
- What percentage of contracts include ESG requirements?
- What are the significant actual and potential negative environmental and social impacts identified in the supply chain?
- Have relationships been terminated as a result of negative environmental or social impacts, and why?
- Do you undergo audits of your supplier network across your company’s value chain?
Taking Control of Supply Chain Data
Knowing which metrics to track is only half the challenge. For many companies, the harder problem is collecting reliable data at scale without relying on incomplete survey responses, static industry averages, or manual aggregation across disconnected systems.
Turning supply chain metrics into decision-useful information requires an infrastructure that makes data collection, collaboration, and reporting manageable. Novata’s sustainability management solutions provide a structured, intuitive experience that makes it easy to collect sustainability and emissions data and build a clear, connected view of your data.
