Secure your place in the supplier network by being responsible

Corporate responsibility is here to stay and it plays an increasingly important role in the selection of partners in business networks, says a 2023 large-business survey made by the financial group OP in Finland. The answers of the survey are reflected widely on Finnish business field. As many as 82% of companies say that they are under pressure to tighten or renew requirements related to their subcontracting chain due to corporate responsibility commitments.

According to the survey, more than 42% of large companies say that they have already replaced subcontractors or suppliers due to responsibility obligations. The movement is still continuing, as more than 45% say that responsibility obligations will cause a change of subcontractors or suppliers in the near future. It is also noteworthy that only one out of ten large companies are satisfied with their subcontracting chain from the responsibility perspective.

The survey also reveals that companies increase their responsible operations primarily because they want to fulfill their customers` expectations. Secondly, they want to strengthen their business, as well as meet regulatory obligations and investors’ expectations. These priorities are also well suited to small and medium-sized enterprises, which have an important role to play in identifying and responding to their customers’ wishes and expectations.

Corporate responsibility must be real and measurable

Although not all directives yet apply to small and medium-sized enterprises, it is time for them to start responsibility work and keep it actively on display, and start corporate responsibility communication. In this way they will ensure their position in supply chains and their attractiveness as a network partner, as an investment target or in business mergers and acquisitions. They will also ensure their attractiveness as an employer, as more and more job seekers are paying attention to the responsibility and the credibility of communications and marketing.

Getting started in corporate responsibility work can seem like a big threshold and it can be difficult to decide on investing in things that require responsibility. It is also difficult to know when corporate responsibility can and should be communicated externally. When is a company ready enough to be able to say that it is responsible? And what to tell about?

You are never finished when it comes to corporate responsibility. Work is constant, situations and demands change. You can even communicate about small steps. You just have to start and at the same time decide to communicate it. Some obligations come directly from directives and other requirements, or from the expectations of customers. Increasingly, responsibility reporting is expected in requests for tender, environmental labels for products or other information to ensure corporate responsibility.

Obligation to verify green claims for companies with more than 10 employees 

If you start communication and marketing without  careful preparation, you risk falling into a trap called greenwashing. In a 2022 joint study by the Finnish Consumer Organisation, the Martha Association and Environmental Label Finland it was concluded that consumer trust in companies` sustainability and claims of responsibility are weak. The EU Commission has also paid attention to this, which in March 2023 resulted the Green Claims Directive. The preparation of the directive shows that it is necessary to examine green claims critically. It is increasingly important that the viewpoints and claims presented by companies are based on facts and regularly monitored indicators.

The Directive on Green Claims specifies the rules of the game for environmentally focused advertising. The aim is to provide consumers and various operators with reliable and uniform information about the environmental properties of the product or service and to reduce so-called greenwashing. This requires that the truthfulness of the claims used in marketing is proven by reliable methods. The obligation to verify green claims would apply to all companies with more than 10 employees, i.e. not just large companies. There is still no certainty about the timetable for the directive to enter into force.

Corporate responsibility in the jungle of abbreviations

Accountability can feel like a jungle of acronyms where it is impossible to figure out what should be done. What do you have to and need to follow? At the very least, sector-specific legislation, regulations and guidelines. The most important thing is to study or get help in order to understand the most important issues concerning your own company and industry, and focus on them, to ensure that you do not miss opportunities because a competitor meets the customer’s responsibility expectations better.

The sustainability reporting directive will also be extended to small and medium-sized companies in the summer of 2027. Now is the time to start preparing for it because change takes time. It does not just happen by changing the wording, but first you need an analysis and its implementation, which can extend to the properties of the products or material choices.

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Source: OP Group`s Large Business Survey 2023

Written by: Marja Keränen
Published: 22nd August 2023