Encompasses various dimensions seen as necessary to improve sustainability practices and standards, such as monitoring, voluntary or compliant disclosure, reporting, complaints resolution and verification. Transparency has a clear outer-looking dimension of demonstrating performance and building trust. It can include various sources of information, such as physical traceability and financial transactions in the supply chain, social and environmental impacts and risks, but also accountability aspects such as policy commitments, actions undertaken and their effectiveness.
Three different yet complementary supply chain transparency approaches can be distinguished, depending on the type of actor driving it and their objectives:
- Corporate transparency: refers to the ability of businesses not only to know internally that they are exercising due diligence but also to show externally that this is the case.
- Radical transparency: availability of new digital technologies, social and data innovations has opened the way for more ‘radical’ transparency by independent initiatives. These include the third-party disclosure of information that may be involuntarily given away by target actors and used possibly without their knowledge or consent.
- Normative transparency: regulated or mandatory information disclosure is used as a mechanism to reduce information asymmetry among actors, improve governance and support increased accountability.