A company needs to start collecting data on where the risk is Senior CRIF Director
In an interaction with Urvi Shrivastav, Editorial Manager, BW ESG, BW Businessworld; Wilfred Sigler Senior Director – Market Development and Digital Solutions, CRIF India talks about sustainability, supply chain, the issues around it and how CRIF works around these issues.
How can companies monitor sustainability processes and assess their supply chain?
In recent times, several companies have committed to working only with suppliers who adhere to environmental, social and governance standards, from Teir-1 to Tier-2, then to Tier-3, with the aim of creating a cascade of best practices. that flows smoothly through the supply chain.
· Development of a code of conduct for suppliers
Verification of the validity of the information provided by direct suppliers and subcontractors
Consolidate supplier pool to reduce supply chain complexity
Information from supplier self-assessments can be used in the selection of new suppliers as well as in the confirmation of existing suppliers
CRIF has created a platform specifically designed to monitor supply chain ESG compliance. The platform (Synesgy) simplifies the management of supply chain sustainability data collection as it is fully automated. Companies can check the sustainability performance of all their stakeholders such as suppliers and business partners using this tool. Suppliers are invited by the platform via mail and upon completion are awarded a rating and a certificate. This helps a company assess its supply chain ESG roadmap and integrate it into its own ESG roadmap. Such a certificate helps the supplier to be competitive in the market and to consider differential conditions according to its ESG position.
How can companies prevent and mitigate operational risks in their supply chain?
To manage operational risk, a company must have a strong due diligence process, anti-money laundering controls or anti-corruption services, etc. increasingly interconnected. New threats, such as ESG compliance, cyberattacks are emerging alongside more traditional supplier risks, such as supplier bankruptcy, etc.
It’s important to:
Identify and prioritize risks
Strengthen cybersecurity defenses
Exercise due diligence when choosing your suppliers
Perform regular reviews of existing partners for traditional and new threats
o This requires data collection and analysis of collected data
Organizations should start by identifying risks in terms of KNOWN and UNKNOWN.
Ø Known risks can be identified and can be managed over time
For example – Failure of a supplier in the supply chain would be a known risk.
o It can be estimated based on the supplier’s financial history.
o Risks such as cybersecurity vulnerabilities in the supply chain are also now quantifiable through discrete cyber controls to quantify cybersecurity risks
Ø Unknown risks are difficult to predict, mitigation of unknown risks is best achieved by collecting multiple data points about your suppliers and regularly analyzing this data. It is important to create a strong risk awareness culture within an organization in order to have a regular process around these risk identification mechanisms.
A business should start by collecting data on the location of risk and then act with traditional operational risk-focused consultants/activities in a much more targeted and effective manner.
How important is it to identify governance quality issues in the supply chain?
The quality of governance or in general ESG issues on the supply chain can imply legal responsibilities for a company and perhaps even for the management of a company. Governance is also essential to prevent fraud and loss of money, which can impact business continuity and company reputation.
Supply chain governance is multidimensional and includes initiating, developing and maintaining relationships between each “link” in a supply chain. Send suppliers a more consistent message that economic, social and environmental requirements are all important. It coordinates the allocation of financial, material and human resources within the framework of decision-making.
A strong governance system ensures a stable business environment that allows a business to operate as usual without business disruption. Tracking suppliers and maintaining a sustainable supply chain will soon become more essential and not optional. From a business perspective, a supply chain is only as strong as its weakest link.
What are some of the CSR trends that have emerged post-lockdown?
1. Assess the impact of CSR
The emphasis on tracking the impact of CSR programs is an emerging trend that companies are seeing. Employee engagement, social return on investment, customer growth and retention are just a few of the metrics that go into determining a company’s effect. Constant monitoring of these measures can help ensure the success of CSR.
2. Partnership with companies focused on sustainable development management
Companies are now looking to partner with companies/suppliers that engage in activities or initiatives that focus on environmental management and the concept of sustainability. Customers also choose to buy products from companies that are actively involved in sustainability and stewardship concerns.
3. Work environment
Companies are looking to build safe workplaces for employees while focusing on company-generated emissions. Organizations seek to develop products and solutions that can support the environment and thus relay a positive influence on the ecosystem.
4. Staff programs
Companies are setting up programs for employees that can benefit the business as well as the community as a whole. They also seek to hire a workforce that has experience and training in sustainability and climate finance.