Katie Martin is director of sustainability and innovation at Avetta, a global supply chain risk management software company. Views are the author’s own.

Historically, managing sustainability and ESG risk in the supply chain has been a reactive exercise for companies. Rather than identifying and strategizing around potential issues before they occurred, teams were left scrambling to respond whenever a new regulation emerged or a supplier controversy became public. Through that lens, sustainability was treated as a compliance exercise rather than a tool that could help organizations anticipate and manage supply chain risk — or even create competitive advantage.

This approach was more manageable when ESG requirements were less developed and supplier networks were easier to track. Today, however, supply chain organizations are managing complex, global networks against a backdrop of shifting regulations and significant reputational risk.

In this evolved environment, reacting quickly is simply not enough.

For example, a business recently faced citations for unsafe working conditions and wage violations at supplier facilities in a manufacturing hub. An independent review concluded that the retailer’s supply chain monitoring was inadequate and reflected weaknesses in corporate governance. The allegations triggered significant reputational and financial consequences: the company’s shares lost roughly one-third of their value in a week, a major institutional investor sold most of its stake, and several large retailers removed the company’s products from sale.

As a result of challenges like this and increasing regulatory requirements globally, companies are beginning to approach sustainability and ESG differently. Instead of addressing sustainability only when a problem makes itself known, they’re building risk management practices into daily operations and overarching strategy conversations. It has led to procurement, sustainability, legal and compliance teams coming together to build shared visibility into supplier and operational data in order to successfully implement these tactics.

The risk of managing ESG in silos

For many organizations, ESG responsibilities have traditionally sat within a single department, often sustainability or legal. While that structure may make sense in an operational flow chart, supplier risk rarely falls neatly within one team’s responsibilities. The teams handling day-to-day supplier risks may be missing a large piece of the puzzle.

These siloed workflows ultimately lead to inefficiencies. It typically leads to either duplication of effort resulting in resource waste or rising operational blind spots with no singular owner that can often morph into full-blown crises. A procurement team could secure a contract without realizing a crucial compliance mismatch that sustainability or legal is already tracking. Without collaboration between procurement and legal and other key departments, this issue could take a substantial amount of time to identify and address, wasting resources and compounding risk.

Stakeholders are also taking note and increasingly expect companies to showcase their ESG performance with evidence. They not only want to see these outcomes in an annual report but also expect continuous updates for high-risk cohorts and activities. An organization that can only show a snapshot of ESG and supplier risk once a year can miss crucial risk developments and reporting requirements, both internal and external.

The move to shared ESG responsibility

The companies creating long-term competitive advantage are those that are investing in shared visibility to manage ESG continuously and utilize data to reduce total cost of ownership, avoid reputational risk and connect with the highest value, most efficient suppliers. As a result, they’re better positioned to identify risks earlier and stay ahead of evolving stakeholder and regulatory expectations.

Day to day, this shared responsibility can show up in tangible ways. Teams can agree to use shared definitions — such as what counts as a "high-risk" supplier — so that when compliance flags an issue, it means the same thing to legal and procurement. Additionally, cross-departmental reviews could happen regularly rather than only occurring when an incident occurs. This also means that when a regulatory shift happens or a new risk emerges, there’s a clear path for that information to reach the right people quickly rather than being siloed within one team.

A perfect example of this is a large-scale retailer that is currently implementing a cross-functional ESG governance model, in which sustainability was integrated across sourcing, operations, merchandising, real estate, finance and public policy. Such a model would also include executive and board-level oversight, with climate risks incorporated into enterprise risk management. This business worked with suppliers on energy, packaging, waste, transportation, product design and nature issues and saw massive supplier response and adoption that resulted in quantifiable cost savings.

This shift to shared responsibility allows ESG oversight to evolve from just a tool to measure compliance after the fact into a strategic advantage with tangible impact, resulting in an infrastructure that allows an organization to act on risk before it escalates.

Why visibility is the advantage

With shared responsibility comes shared visibility into the supplier and operational data organizations rely on. That increased visibility can lead to concrete results, including strengthening organizations’ abilities to:

• 以信心展示进展 – 当所有团队都使用同一套底层数据时，组织可以用证据而非轶事来支撑其 ESG 主张。这为企业向利益相关者和客户展示进展提供了更有力的方式。
• 预判不断演变的期望 – 当团队对风险有共同的理解，并且能够看到相同的信息时，他们就能更快地响应不断变化的法规和利益相关者的期望。

治理结构很重要，但真正的差异化因素在于共享的 ESG 责任模型所提供的可见性。

当然，这种转变并非一蹴而就——它需要众多部门的投入，并打破阻碍采购、法务、可持续发展与合规部门基于同一信息基础开展工作的数据孤岛。虽然这是一项需要时间和实践的操作能力，但其收益超过所需的努力。

停留在被动应对模式的公司将继续为供应链意外付出代价。然而，通过将 ESG 视为日常运营中跨部门的一部分，而非偶尔履行的义务，组织可以降低风险、更快适应、展示进展和效率提升，并建立组织准备度，以更好地预判和管理未来的中断。