Manage Performance (SPM)

Develop a monitoring and evaluation strategy

Develop a monitoring and evaluation strategy that aligns with what you set out in the planning stage and in the terms of the contract. This will include consistent monitoring and evaluation tied to the key sustainability risks and opportunities identified in your procurement planning, including the PREPARE and EVALUATE RISK stages. Supplier evaluation may also include additional information, such as their geographic location, newness, and past performance. Additionally, your evaluation may consider the resources and capacity of both you and the supplier, the level of trust between you and the supplier, and the availability of third-party verification.¹

Make sure to design monitoring and evaluation methods that are appropriate to the scale of the contract. For instance, simple monitoring methods for small scale contracts might include supplier questionnaires, periodic meetings, and media scanning. For larger contracts, more detailed (and resource intensive) methods include, reports, inspections, and audits involving facility visits and interviews.² It is also important to clarify monitoring and evaluation responsibilities per contract stipulations, including data collection, submission process, and timelines.

EXAMPLE: Disney audit validation

Disney is validating audit findings by getting feedback directly from employees through mobile phone surveys.³ The company is also identifying environmental violations by cross-checking supplier sites against IPE’s public database for violations.⁴

EXAMPLE: Hershey’s satellite monitoring of forests

Hershey’s is monitoring deforestation in its West African cocoa supply chain using satellite imagery.⁵

Proactively engage to monitor performance

Be proactive in monitoring the sustainability aspects of your contract and delivery to identify gaps and prevent contract failures. You can support this by equipping contract managers with a sustainability checklist to consistently evaluate performance against contract sustainability clauses, conditions, and targets. On the supplier side, look for ways to empower them with tools like reporting templates, online reporting portals, and check-in calls for regular information sharing. To help gauge supplier compliance and enable swift corrective action as needed, implement an evaluation system (e.g., traffic light indicators or star ratings). You may also develop comprehensive technical specifications for progress assessments. These can support continuous evaluation through ongoing reviews, similar to a credit score. This will benefit trusted suppliers by streamlining their assessments.

EXAMPLE: Amazon assesses suppliers

Amazon assesses suppliers’ sustainability, with findings flagged as High, Medium, or Low depending on the level of severity. If high-level issues are found, suppliers are required to remediate them before Amazon will continue doing business. For medium-level issues, suppliers are expected to show meaningful progress toward remediation within a defined timeline. For low-level issues, Amazon monitors for continual improvement. There are dedicated teams based in key sourcing countries around the globe that work directly with suppliers to identify solutions to problems and promote open dialogue.⁶

EXAMPLE: Telecom joint audit program

JAC is an association of telecom companies that have created a joint audit program specific to sustainability. Each member company is responsible for conducting a standardised audit for a portion of the group’s supplier pool and then shares the results with other members.⁷

EXAMPLE: Engaging suppliers to cut Scope 3 emissions at Bayer

Bayer introduced an accelerator program to better manage and reduce their Scope 3 emissions. The program focused on engaging with suppliers to raise awareness of Bayer's SBTi targets, gain transparency on supplier emissions, identify low-carbon alternatives to current practices, assess impacts and implications of decarbonisation on sourcing, and improve GHG emissions accounting methods.⁷

Prioritise supportive development strategies

Many standard terms and conditions apply contract risk to the supplier, but you should consider whether these will encourage better environmental and social performance. For example, if you want a contractor to actively contribute to your organisation's target for CO₂ reductions, you need to have clear contractual provisions and define how outcomes will be measured. The incentives or penalties that apply under the contract should also reflect your sustainability and innovation goals. To promote supplier development, make sure these provisions prioritise a collaborative approach to improvement; and outline a clear, incremental remediation process with timelines for when corrective actions need to be implemented and the recourse for non-action. Punishing or eliminating suppliers should be a last resort.

EXAMPLE: Nike Supplier Climate Action Program (SCAP)

Nike's Supplier Climate Action Program (SCAP) helps suppliers reduce emissions in line with Nike's 30% reduction target by 2030. It involves setting emissions targets, inventorying greenhouse gases, and public disclosure. Starting with 13 leading suppliers, the SCAP aims to expand to all strategic suppliers.⁹