In the dynamically evolving landscape of sustainability, suppliers to major corporations are at a critical tipping point. Among their many pointed business decisions will be whether to adapt to emerging sustainability standards or confront the potential threat of obsolescence.

Coca-Cola serves as a case in point, having published its inaugural TCFD (Task Force on Climate-Related Financial Disclosures) integrated report in March. This step was likely in anticipation of the International Sustainability Standards Board (ISSB)'s subsequent integration of TCFD into its new standards, the IFRS S1 and IFRS S2, released in June. As a result, corporations like Coca-Cola will begin their annual reporting period guided by these standards as early as January 1st, 2024, with preparations to be compliant well underway.

As the standards gain momentum internationally, there has been a chain reaction in the world of corporate accountability, specifically when it comes to supplier and value chains. As a result of the standards, companies, like Coca-Cola are mandating that their suppliers fall in line, or risk losing contracts in the future. This is a direct result of Coca-Cola's multiple forward-looking commitments in its integrated TCFD report, impacting its entire network of 17,000 suppliers.

Suddenly, to stay competitive and continue benefitting from Coca-Cola's €7.4 billion annual spend, these suppliers need to act quickly and strategically. To support their suppliers, Coca Cola has published a Supplier Guiding Principles document, which underscores human rights, legal compliance, ethical business conduct, and environmental sustainability.

For suppliers based in Canada, there is an added layer of complexity due to the recent enactment of Canada's Bill S-211. This legislation requires specific businesses to report on potential risks of modern slavery within their operations and supply chains. For instance, there were reports of forced labor in Brazil in 2021, particularly in the production of commodities such as sugar. In that same year, a significant portion of Canada's sugar imports ($434 million) originated from Brazil, emphasizing the pressing need for rigorous oversight and ethical sourcing practices throughout Canada’s supply chains.

Going back to the Coca-Cola case, the bar continues to rise even higher for the approximately 200 “carbon strategic suppliers.” Given that roughly 80% of Coca-Cola’s Scope 3 GHG emissions originate from these key suppliers, Coca-Cola has set ambitious sustainability targets for them, including establishing their own science-based targets and using 100% renewable electricity.

The emergence of the ISSB sustainability standards, coupled with the commitments of corporations and Canada's active stance against forced and child labor in supply chains, means that suppliers need to carefully navigate many converging pressures. This involves understanding applicable laws and standards, creating robust internal policies, implementing efficient compliance systems, training and educating staff, and fostering open communication and collaboration with all stakeholders.

If you are supplier, some basic efforts in 2023 include:

1. Actions - Document your efforts to meet human rights and environmental standards.

2. Modern Slavery - Outline your steps to eliminate modern slavery risks in your supply chains.

3. Emission Targets - Detail your progress towards science-based GHG emissions reduction.

4. Legal Compliance - Show your measures to adhere to local laws and international standards, especially around labor rights and environmental protection.

In this increasingly complex world, the key to survival hinges on adaptability, commitment to sustainability, and adherence to ethical business practices.