Sustainability is no longer confined within the four walls of a company. As businesses become increasingly interconnected, the impacts of a company's environmental, social and governance (ESG) initiatives extend to its partners, suppliers and third parties. Keeping up with the highest standards of third-party compliance can be challenging, especially given the ever-changing global regulations and expanding list of risk topics.
However, there is a solution that can ensure the highest standards of third-party compliance without overburdening internal resources. Companies can utilise assessments provided by external experts to evaluate their third parties, gain insights into their current status and ensure compliance with the highest standards.
Using external experts to assess third-party compliance with standards such as human rights, data privacy, environmental impact and other ESG factors can offer numerous benefits for companies.
Objectivity and credibility
External experts provide a perspective that is free from internal biases. This impartiality can bolster the credibility of an assessment, both internally and externally, and enhance the trust of stakeholders. This is particularly valuable for investors, regulators and customers who appreciate independent verification of a company's claims.
Expertise and experience
External experts often possess specialised knowledge and experience that might not be available internally. They are conversant with the latest standards, best practices and regulatory requirements in areas like human rights and environmental management. This knowledge enables them to conduct assessments more effectively and provide insightful recommendations.
Assessing third parties for compliance can be resource intensive. Employing external experts allows a company to focus its internal resources on core activities. This approach also offers scalability: as a company expands its roster of suppliers or third parties, external experts can manage the increased workload.
External experts can help identify and manage potential risks more effectively. Their expertise and experience allow them to spot issues that might be overlooked internally, aiding companies in avoiding potential reputational, financial or legal damages.
External experts can provide feedback and recommendations that assist a company in continually improving its third-party management processes. They can also benchmark a company's performance against industry standards or competitors, informing strategic decision-making and driving performance improvements.
Validation of internal controls
External assessments can validate a company's internal controls and processes. This can increase confidence among stakeholders and prove valuable during regulatory scrutiny or investor due diligence.
Engaging external experts can help companies enhance transparency in their supply chain, showcasing to stakeholders their commitment to upholding ESG standards throughout their operations.
In conclusion, external assessments can provide a more reliable, thorough and insightful evaluation of third-party compliance. This can aid in risk management, performance improvement and the enhancement of stakeholder trust.
If you're interested in learning more about expert assessments of third parties’ compliance with ESG programmes, visit our webpage.