"A Company Must Make A Start On Data Collection Of Where The Risk Is" Senior Director, CRIF
In recent times several companies have pledged to work only with suppliers that adhere to environmental, social, and governing standards
In an interaction with Urvi Shrivastav, Editorial Lead, BW ESG, BW Businessworld; Wilfred Sigler Senior Director - Market Development & Digital Solutions, CRIF India speaks about sustainability, supply chain, the issues around it, and how CRIF is working around these issues.
How can companies monitor sustainability processes and evaluate their supply chain?
In recent times several companies have pledged to work only with suppliers that adhere to environmental, social, and governing standards, across Teir-1 to Tier-2 and then to a Tier-3, with an aim to create a cascade of sustainable practices that flows smoothly throughout the supply chain.
- Formulating a code of conduct for suppliers
- Checking the validity of information provided by direct suppliers and sub-suppliers
- Consolidating the pool of suppliers to reduce complexity in the supply chain
- The information from suppliers’ self-assessments can be used in the selection of new suppliers as well as in confirming of existing suppliers
CRIF has created a platform specifically designed to monitor supply chain ESG compliance. The platform (Synesgy) makes it simple to manage data collection on supply chain sustainability as it is fully automated. Companies can check the sustainability performance of all their stakeholders such as suppliers and business partners with the help of this tool. Suppliers are invited by the platform via mail and after completion are assigned a score and a certificate. This helps a company to evaluate the ESG roadmap of their supply chain and incorporate the same in their own ESG roadmap. Such a certificate helps the supplier to be competitive in the market and look at differential terms based on their ESG standing
How can companies prevent and mitigate operational risks in their supply chain?
To manage operational risk a company needs to have strong due diligences process, anti-money laundering checks or anti-corruption services etc. Supply-chain disruptions are happening due to lack of robust processes to identify and manage growing supply-chain risks as business are becoming more interconnected. New threats, such as ESG compliance, cyber-attacks are emerging alongside more traditional supplier risks, such as supplier bankruptcy etc.
It is important to:
- Identify and prioritize risks
- Strengthen cybersecurity defences
- Perform due diligence when choosing your suppliers
- Conduct regular reviews of existing partners for both traditional and new threats
This requires data collection and analysis of the collected data.Organizations should start by identifying risks in terms of KNOWN and UN-KNOWN.
Known risks can be identified and are possible to manage over time
For Example - A supplier bankruptcy in supply chain would be a known risk.
It can be estimated based on the supplier’s financial history.
Risks such as cybersecurity vulnerabilities in the supply chain are also now quantifiable through discreet cyber checks to quantify cybersecurity risks. Unknown risks are difficult to predict, mitigating unknown risks is best achieved through collecting multiple data points about your suppliers and regularly analyzing this data. It is important to create a strong risk-aware culture within an organization in order to have a regular process around such risk-identification mechanisms. A company must make a start on data collection of where the risk is and then take action with traditional operational risk-oriented consultants/activities in a much more focused and efficient way.
What is the importance of identifying governance quality issues in the supply chain?
Governance quality or in general ESG issues on supply chain might imply legal responsibilities on a company and possibly even on top management of a company. Governance is also a key to avoid frauds and loss of money hence it might 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. Sending suppliers, a more consistent message that economic, social, and environmental requirements are all important. It coordinates the way financial, material, and human resources are earmarked within the framework for decision-making.
A sound system of governance ensures a stable business environment that allows a company to operate as usual avoiding disruption of its business. Tracking suppliers and maintaining a sustainable supply chain will soon become more essential and not optional. From a company’s standpoint, a supply chain is only as strong as its weakest link.
What are some of the CSR Trends that have emerged post-lockdown?
- Evaluating CSR Impact
Emphasis on monitoring the impact of CSR programs is an emerging trend that businesses are observing. Employee engagement, social return on investment, customer growth, and retention are just a few of the measures that go into determining a company's effect. Consistently tracking these metrics can assist assure CSR success.
- Partnering with companies focusing on sustainability management
Companies are now looking to partner with businesses/vendors that are engaging in activities or initiatives focusing on environment management and the sustainability concept. Customers are also choosing to buy products from companies that are actively involved in sustainability and management concerns.
- Working environment
Companies are looking to build workplaces that are safe for employees as well as concentrating on the emissions generated by the company. Organisations are looking to develop products and solutions that can sustain the environment and thereby relay a positive influence on the ecosystem.
- Programs for staff
Companies are implementing employee programs that can benefit businesses as well as the community at large. They are also looking to hire a workforce that holds experience and an educational background in sustainability and climate financing.
Source: Publication: Businessworld.in ,7th Oct,2022