A4S essential guide to incentivizing action along the value chain
This is a practical guide for finance teams to collaborate with their value chains and promote sustainability. The guide delves into mapping the value chain, prioritising areas of action, incentivising action, and provides useful tips, resources, and a checklist.
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OVERVIEW
Introduction
This guide offers financial professionals a practical guide to encouraging action towards sustainability within their organisations and supply chains. It aims to assist businesses in identifying key sustainability risks and opportunities and collaborating with stakeholders to find ways to address them.
Mapping the value chain and prioritising areas for action
The guide outlines an approach for mapping and analysing an organisation’s value chain, enabling stakeholders to identify key sustainability risks and opportunities. The approach includes defining the organisational value chain, identifying risk areas, considering stakeholder relationships, and reviewing key metrics. This section also suggests various external sources, such as the World Economic Forum and MSCI environmental, social and governance (ESG) Industry Materiality Map, that can help identify sustainability risks and opportunities.
Incentivising action
This section provides a framework for incentivising sustainability action. It includes several direct financial levers, such as green bonds and sustainability-linked loans, as well as strategies to influence stakeholders to take action. The framework includes strategies for information and knowledge sharing, collaboration, and a checklist for incentivising stakeholders to take action.
Resources
The guide offers a list of external resources available to assist financial professionals in identifying and addressing sustainability risks and opportunities. These resources include social and human capital protocols, scientific-based target initiatives, and the Global Reporting Initiative’s sustainability reporting standards.
Their key message is that collaboration is key to achieving sustainability goals. Therefore, it encourages finance professionals to form relationships across organisations and supply chains to achieve sustainable action. It highlights the need for financial professionals to build a deep understanding of sustainability risks, set measurable targets, and consider ways of rewarding stakeholders for sustainable action.
