Building a Responsible Supply Chain: A Case Study on ESG-Driven Supplier Vetting

Project Background

Recently, I worked with a client—a mid-sized manufacturer—who was at a pivotal point in their sustainability journey. They wanted to elevate their supplier vetting process to ensure that their partners aligned with the company’s Environmental, Social, and Governance (ESG) principles from day one. This led us to develop a tailored ESG questionnaire aimed at quickly identifying the suppliers who were best positioned to support the client's long-term goals.

The ESG Questionnaire Design

The questionnaire was structured around the three core areas of ESG, with each area containing specific criteria that potential suppliers needed to meet:

1. Environmental - The focus here was on policies related to environmental management, greenhouse gas (GHG) emissions, and adherence to regulatory standards for waste, materials, and packaging.
2. Social - This section centered on the supplier’s labor policies, covering crucial points like the absence of child and forced labor practices, non-discrimination policies, and employee safety.
3. Governance - Governance questions looked at the supplier’s anti-corruption measures, governance structures, and ethical standards.

We segmented requirements into three categories, each with a unique function:

1. Must-Have / Non-Negotiable - These requirements, like anti-child labor policies and anti-corruption measures, were baseline standards. No scoring was needed for these items because if a supplier lacked any must-have criteria, they were automatically disqualified from consideration.
2. Highly Desirable - These items reflected standards that went beyond the basics, like reporting ESG metrics to global platforms such as EcoVadis or the Climate Disclosure Project (CDP). While not disqualifying, these factors were weighted heavily—double the weight of the nice-to-have items—signaling the client’s preference for suppliers actively engaged in broader sustainability initiatives.
3. Nice-to-Have / Stretch Goals - These optional criteria included advanced certifications, such as ISO 14001 for environmental management, which weren’t required but added points if present.

Scoring and Weighting System

With the Must-Have items serving as a gatekeeper, scoring was only applied to the Highly Desirable and Nice-to-Have categories:

• Highly Desirable responses were weighted double, reflecting their importance. Suppliers excelling in this category were given a boost in the overall scoring, which aligned with the client’s commitment to engaging partners who were proactive in sustainability.
• Nice-to-Have items were assigned a standard score. While these were not deal-breakers, they added incremental value and differentiated suppliers with additional certifications or exemplary practices.

Implementation and Follow-Up

After designing the questionnaire, we tested it with a pilot group of suppliers. Responses provided valuable insights, revealing both strengths and areas where certain suppliers needed additional development. For the client, this was a win: they now had a streamlined system to select partners who met all essential criteria, with the option to engage with suppliers excelling in highly desirable areas.

Outcome

Within a few months, the client had a well-defined list of preferred suppliers who aligned with their ESG standards. By focusing on pre-existing qualifications, they avoided bringing on partners who might require substantial improvement efforts. This system saved the client both time and risk, helping them establish a resilient, responsible supply chain.

For clients looking to integrate ESG principles into their supply chain, an ESG questionnaire with clear non-negotiables and targeted scoring can be a powerful tool, helping to select suppliers who will be reliable partners from day one. If you'd like to learn more, or get a copy of the questionnaire, please contact me at [email protected]