The impact of ESG standards on sustainable supply chains

ESG standards (abbreviation for 03 words: Environment, Social, and Governance) are built based on sustainable development trends and the need for safe and effective investment. This article will explore the meaning and advantages of ESG standards in the global supply chain.

What is the ESG standards?

ESG standards are reports that gather 3 essential aspects of a business's sustainable development orientation: Environment - Society - Governance. In particular, these are also 3 main criteria that help investors evaluate the potential of a business.

ESG not only helps investors find businesses that can bring profits but is also a tool to help companies review, identify, and overcome potential risks that directly affect finances from daily production activities. From there, the board of directors can make adjustments, create reports, and build more suitable processes for the business.

Details of the 3 main pillars of ESG

The reason for ESG to focus on exploiting these 3 main pillars includes: complexity, many issues that arise and directly affect the finances and long-term development of the business. Details about each aspect are as follows:

1. Environment: Protect and use natural resources effectively

Facing the threat of climate change, the first pillar will measure the level of impact of businesses on the environment and natural resources.

These effects come from the business's daily operations, such as the production of products and the use of services. Therefore, some proposed solutions for improvement include:

• Waste reduction and treatment: Enterprises must develop waste preservation and treatment processes. Specifically, it is necessary to manage the transportation, consumption, storage, and final processing stages.
• Energy optimization: Promote and apply the use of renewable energy sources.
• Using sustainable materials: In the paper packaging industry, it is necessary to ensure the use of wood from strictly managed forests and harvested according to FSC standards.
• Highly recyclable products: This is a collaboration of the entire supply chain. Specifically, it is necessary to use raw materials from reputable suppliers to produce sustainable and highly recyclable products.

>>> FSC packaging products - Social responsibility in business

2. Social: Build a positive working environment

The second pillar is what businesses need to do internally and externally. In detail, in addition to ensuring human rights for employees, businesses also need to be equal and support customers and suppliers.

That is demonstrated through typical actions such as:

• Working conditions: Provide a safe, healthy, and fair working environment. In addition, it ensures benefits and social security for employees.
• Diversity and equality: Create equal opportunities and diversity in the workplace. Encourage equality across gender, ethnicity, and culture.
• Consumer protection: Providing products that meet standards and safety and fulfilling stated commitments.
• Sustainable supply chain: Building relationships based on sustainable development and long-term cooperation with suppliers and customers.

>>> 5 Important roles of SMETA certificate for sustainable supply chain

3. Governance: Transparency and responsible business

The final pillar comes from within the company, specifically the leadership. In other words, this is the aspect of management structures, how to operate, build, and control company processes.
In addition, this is also an aspect that shows the business's reputation for always striving to bring sustainable profits to investors. A quick review of the main ideas of this pillar:

• Information transparency (internal and external)
• Cross-functional management structure and continuous improvement
• Operate effectively and do business responsibly
• Anti-bribery and corruption
• Management builds inclusive relationships with employees

>>> Global Security Verification (GSV): Safeguarding the integrity of the supply chain
 

Benefits of ESG in the global supply chain and paper packaging industry

ESG standards not only demonstrate a business's responsibility to society, but they also bring economic benefits and are highly strategic to achieve the goal of sustainable development.

For global supply chains

Businesses that implement ESG standards have benefits such as:

• Build a positive, safe, and equal working environment
• Minimize risks in the supply chain
• Build trust with partners and enhance brand image
• Attract investors and create potential business opportunities

For companies manufacturing OEM/ODM paper packaging

What forms can ESG be applied and expressed for the paper packaging company?

• Using paper materials from FSC forest sources
• Effective waste management and treatment process
• Continuously improve production processes
• Develop technology and invest in modern and advanced machinery
• Update and comply with international laws and standards

>>> 8 Basic steps in the manufacturing process in Vietnam packaging company

Khang Thanh with International Standards

Khang Thanh, with more than 20 years of producing paper packaging for international partners from countries such as Japan, Germany, the UK, and the USA... always updates and continuously improves production processes to comply with international standards. International.

>>> Celebrating Khang Thanh packaging's latest international standard certifications
   
Overall, ESG is about more than building a perfect business. This standard helps companies identify potential risks and provide reporting and continuous improvement. This creates trust with potential investors and builds a sustainable supply chain.

With efforts to constantly transform and improve, Khang Thanh is proud to provide high-quality paper packaging solutions that meet international standards and suit customer needs.

KHANG THANH - HOUSE OF PACKAGING
Tel: +84 (0) 77 8878 222
Email: info@khangthanh.com