When building a solid risk management programme for your operations and supply chain, it’s vital to think beyond traditional issues like quality, delivery speed and cost control. In recent years, more customers, business partners and regulators are focusing on ever-evolving environmental, social and governance (ESG) factors. These include climate change, workforce health and safety incidents, and human rights abuses such as modern slavery, among many other risks.
As public sentiment evolves and the regulatory environment matures, a poor understanding and/or mismanagement of ESG risks by your organisation could very quickly lead to financial loss and reputational damage. On top of potential penalties, the consequences can include business disruption, cancelled contracts, an inability to retain skilled staff and falling share prices, among other threats to your long-term operational resilience.
A few pointers
ESG risks can hide anywhere in the value chain. In addition to putting active governance, risk management and remedial processes in place across your operations, make sure your suppliers, contractors and other third parties are aware of their ESG obligations—in line with the law and your company’s specific standards and policies.
Ideally, you should define your expectations in this area from the outset. Establish a clear set of rules for third party suppliers, vendors and contractors to follow, so you can easily measure and report on their performance.
It’s also advisable to communicate frequently with regulatory bodies, peers and the public, so you can all work together on mitigating current and future ESG risks.
Don’t underestimate the valuable role that modern technology can play in ensuring the performance and efficiency of your organisation’s ESG risk management programme. Using a compliance management solution with automation capabilities can deliver the following benefits:
1. Ease your admin burden Continuously assessing and managing ESG risks across your operations and supply chain involves processing and analysing data from multiple sources. This can be a significant operational burden. With automation handling the bulk of your third-party screening and due diligence processes, you can save time and money.
2. Curtail your reliance on manual methods Automation reduces your dependence on paper records, complex spreadsheets and long email chains that involve many different parties. Your compliance processes are instantly standardised and simplified, your data is clean and structured, and you quickly minimise the risk of duplications and data entry errors.
3. Keep sensitive information secure With a compliance automation solution that carries an ISO 27001 certification, you can guarantee contractors, suppliers, investors and other stakeholders that you are implementing a coherent, comprehensive and systematic set of security controls to protect all sensitive and personal data.
4. Improve data visibility and accessibility On an automated compliance platform, you can view compliance status and audit trails within a single dashboard. Further, with a system that continually verifies compliance requirements, your team can make informed risk management decisions based on quality, real-time data.
5. Manage constant regulatory change Making sure all parties are complying with the latest versions of all relevant regulations is a mammoth task. This is where automation can lighten the load, checking and verifying whether current compliance obligations are being met.
All these advantages put your organisation in a better position to manage ESG risks comprehensively and efficiently, creating a long-term competitive advantage as well as a positive societal impact.
Ultimately, the goal is not just to avoid fines, legal liability and negative press, but to build a more socially and environmentally responsible organisation. With an efficient, automated approach, you’ll have the flexibility to optimise your supply chain at speed and on-board new contractors, suppliers and other third parties swiftly, secure in the knowledge that you’re managing ESG risks effectively. All these factors help to build a more responsive and resilient organisation.
How iPRO can help We help organisations achieve best practice in third-party risk management, in line with their ESG objectives. iPRO’s enterprise technology platform automates the most time-intensive compliance management tasks, allowing clients to efficiently manage a range of business risks through independent verification, real-time reporting and analytics.
The best way to understand what we can do for your organisation is to experience it first-hand and book a free demo.