Key Takeaways
- 1Top-quartile APAC supply chains outperform bottom-quartile peers by 3.4x on composite ESG score
- 2Supplier capability building — not auditing — is the primary driver of sustained improvement
- 3Carbon intensity in Indian manufacturing supply chains fell 18% between 2022 and 2025
- 4Labour practice transparency remains the lowest-scoring dimension across all four markets
Study Methodology & Scope
MindEarth conducted a structured ESG benchmarking study across 520 supply chain nodes in India (180 nodes), China (140 nodes), Vietnam (110 nodes), and Indonesia (90 nodes) between Q1 and Q3 2025. Nodes were selected across six manufacturing sectors: textiles and apparel, electronics, automotive components, food processing, chemicals, and building materials.
Each node was assessed across four ESG dimensions: environmental performance (energy intensity, GHG emissions, water consumption, waste generation), social performance (labour practices, health and safety, community impact), governance (supply chain transparency, anti-corruption, data quality), and supply chain management (Tier 2 and Tier 3 supplier engagement, audit processes, capability building programmes).
Scores were normalised within each sector to control for inherent differences in environmental intensity across industries. The composite ESG score represents a weighted average across all four dimensions.
The Performance Gap Is Widening
The most significant finding of the 2025 benchmarking study is the widening performance gap between top-quartile and bottom-quartile supply chain nodes. The composite ESG score differential between the top and bottom quartiles has increased from 2.1x in 2022 to 3.4x in 2025 — indicating that leading companies are improving faster than laggards.
This divergence is not primarily driven by capital investment in cleaner technology. Analysis of the performance improvement drivers shows that the single most important factor distinguishing top-quartile performers is systematic supplier capability building — structured programmes that provide training, tools, and technical assistance to Tier 1 and Tier 2 suppliers — rather than increased audit frequency or contractual compliance requirements.
Top-quartile companies in the sample spend on average 1.8% of supply chain procurement value on supplier capability building programmes. Bottom-quartile companies spend 0.3%.
“Top-quartile APAC supply chains outperform bottom-quartile peers by 3.4x — a gap that is widening, not narrowing.”
Country-Level Findings
Indian supply chain nodes showed the most significant improvement in environmental performance, with carbon intensity in manufacturing falling 18% between 2022 and 2025 — driven by rapid renewable energy adoption, increasing energy efficiency in steel and cement production, and expanded solar procurement by large manufacturers.
Chinese nodes continued to lead on environmental metrics in absolute terms, benefiting from national carbon market incentives and regulatory pressure under China's dual carbon policy. However, governance and transparency scores for Chinese nodes remain structurally lower than Indian, Vietnamese, and Indonesian peers, reflecting limited third-party disclosure and audit access.
Vietnamese nodes showed the most improvement in social performance, driven by government-led minimum wage reforms and increased investment by EU and US buyers following CSRD and supply chain due diligence legislation. Indonesian nodes showed improvement in environmental scores but continue to lag on deforestation-related metrics in the palm oil and rubber supply chains.
Recommendations for Buyers and Suppliers
For companies managing APAC supply chains, MindEarth recommends three priority actions based on the benchmarking findings. First, shift investment from audit-centric compliance to capability-building programmes — structured training, technical assistance, and peer learning networks for key Tier 1 suppliers. The data consistently shows that capability building produces more durable performance improvement than audit pressure alone.
Second, prioritise labour practice transparency as the highest-risk disclosure gap. Labour practice scores are the lowest-performing dimension across all four markets and are the primary target of EU and US supply chain due diligence regulations, including the German Supply Chain Due Diligence Act and the proposed EU Corporate Sustainability Due Diligence Directive.
Third, begin collecting Scope 3 emissions data from key suppliers now. Companies that have already built supplier emissions data collection processes — even if imperfect — will be significantly better positioned to meet the CSRD and SBTi Scope 3 disclosure requirements that will become standard expectations for large buyers within the next two to three years.
