ISN: Only 18% Calculate & Report Scope 1 and 2 Emissions

ISN, a global leader in contractor and supplier information management, has published its 2024 Environmental, Social & Governance (ESG) White Paper. 

Drawing on data from more than 34,000 contractors and suppliers in industries like construction, manufacturing and oil and gas, the paper provides a detailed look at how companies are managing ESG risks and opportunities in their supply chains.

ESG risks drive businesses to focus on data

Amid increasing pressure from investors, regulators, and consumers, businesses are focusing on data to identify gaps in their ESG practices.

According to Rick Dorsett, Vice President at ISN, companies are embracing data to navigate regulatory requirements and peer expectations.

He notes, "Amid mounting regulatory requirements and pressure from investors, industry peers and consumers, companies are increasingly turning to data to help identify strengths and weaknesses in their current ESG management processes."

The report’s insights come from ISN’s ESG Assure offering, which saw a 60% rise in usage in 2023 as Hiring Clients continue to prioritise value chain transparency.

This increase signals that more organisations are integrating ESG considerations into their decision-making to create sustainable operations.

The demand for clear, data-driven strategies on sustainability is growing and ISN’s role in providing these insights has been instrumental.

According to Dorsett, ISN’s White Paper and educational efforts help businesses share best practices across industries, promoting transparency and accountability.

Environmental management and Scope 3 emissions

One of the most significant issues highlighted in the report is the growing focus on Scope 3 emissions - indirect emissions that occur in the value chain from sources not owned or directly controlled by a company.

Only 16% of businesses report having strategies to reduce greenhouse gas emissions, with 18% calculating and reporting their Scope 1 and 2 emissions. These numbers show that while some progress is being made in reducing direct emissions, there is still a long way to go in addressing the broader environmental impact through the value chain.

The adoption of Environmental Management Systems (EMS) is another area of focus, with 45% of companies having implemented an EMS. Sectors like mining, oil and gas and utilities are leading the charge in establishing these systems to better manage their environmental footprints.

These initiatives provide a foundation for tackling more complex sustainability challenges, such as reducing indirect emissions and improving overall environmental performance.

Social issues and human rights policies

In the social domain, the White Paper outlines the growing importance of policies to address forced labour and modern slavery.

The data reveals that 35% of companies have policies condemning forced labour and 53% provide workforce training on labour rights. Human rights policies are also becoming more common, with 40% of companies implementing them, especially in sectors like utilities, mining, and transportation.

The importance of these policies extends beyond the company’s direct workforce. A significant 35% of businesses also apply social screening criteria to their subcontractors and suppliers and 42% have a vendor code of conduct in place.

This practice ensures that social risks, such as human rights violations or unfair labour practices, are considered throughout the value chain, not just within the company.

Governance and supply chain transparency

In terms of governance, 70% of companies have an anti-corruption policy in place, while 50% provide training on the topic.

A well-established company code of conduct is also critical, with 81% of contractors and suppliers implementing one to help prevent legal or regulatory breaches.

Rick stresses the benefits of working with small and diverse-owned businesses, saying, "Working with diverse and small businesses is an effective way to add value to companies and communities, furthering an organisation’s commitment to social responsibility."

The approach helps expand business markets, with many ISN contractors and suppliers reporting a diverse ownership status, meaning they are at least 51% minority-owned.

Moving forward with ESG transparency

As ISN’s White Paper shows, transparency in ESG practices is not only essential for meeting regulatory requirements, but also plays a critical role in fostering sustainable business growth.

The data-driven insights provided by ISN allow companies to benchmark their performance, address risks and make informed decisions for their value chains.

By focusing on ESG practices, businesses can ensure they are meeting their commitments to both stakeholders and the environment while remaining competitive in a world increasingly driven by sustainability concerns.

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