'Due Diligence' means a lot of things. Based on risk, different solutions might be needed.
At the end of the day, your role is to remove the risk of suppliers engaging in certain unethical activity (e.g corruption, human rights abuses, environmental damage, etc.). In selecting a supplier, you need the data on which to make an informed decision about whether the supplier is engaged in such activity 'or could be'. How much data you need and how comfortable you are very much comes down to understanding and appreciating ESG risk. It is essential to have a workable and effective supplier due diligence and selection programme.
Due Diligence might simply be a questionnaire or signed disclosures from the supplier or some special contractual language. It may extend to screening them against certain databases, media reports or reviewing some of their policies and procedures to manage their own risks.
You may need to go further in your fact gathering to conduct a background check, interviews, site visits, deep dives into their procedures, an audit, training or require them to obtain certain certifications or ratings.
You will need a programme to manage this huge challenge. We have a system to build a programme known as Engage. We will help you implement your programme to meet all the legal requirements and also your business ones. Have the programme embedded in your supply chain management function to assess ESG risks in your supply chain.
Every programme needs some technology. That could be as simple as some risk spreadsheets, pivot tables, visualisation software like PowerBI, a survey & disclosure tool, a learning management system. Some of that technology Speeki can provide and some we can recommend from our partners.
Risk in the supply chain is often hard to predict and identify. It may take some deeper analysis through interviews, meetings, location tours, research, inspections, or even a full audit. It may be simple desk-based research or the reliance on self disclosure from the supplier. Either way, your risk identification skills, risk management and ESG risk knowledge will need to be enhanced.
Andrew has been a leader in the third party due diligence area for over a decade. He understands the needs of companies to conduct due diligence in a way that is effective and timely. He has designed, implemented and reviewed programmes across a range of risk areas including anti-corruption, human rights, environmental and money laundering/financial fraud.
There is a lot of work to build a comprehensive programme around supplier due diligence and onboarding. Speeki will follow a framework that we created called 'Engage' that is a step-by-step way to build a programme and make sure it is valuable to the business as well as meets regulatory needs.
A big element of supplier risk management is an understanding of risk. Many supply chain professionals have not considered ESG risks beyond perhaps sanctions and corruption controls. Our services extend to detailed risk assessments in supplier categories and classifying risk around ESG areas.
Many companies have some form of supplier risk model in place and some form of due diligence being conducted, even if it is a simple questionnaire or webform collecting information. Speeki can review your existing processes and provide a gap analysis and areas for improvement to upscale the activity to meet the new rules and best practices.
Your suppliers may also need some guidance on ESG risks. While the main obligation is on themselves to do their own training, it is advisable to make training available to your suppliers on key topics that are relevant to them in so far as it relates to their provision of products or services to you. Speeki has ready made training on key issues and can develop custom courses.
It is most likely that for at least your higher risk suppliers you will need to conduct some deeper dive audits on key areas of the ESG spectrum that relates to them. Speeki conducts audits on suppliers in areas including governance, ethics, compliance, anti-corruption, sanctions, human rights, modern-day slavery, and many others in partnership with other content providers as required.
Much of the current legislation requires an incident reporting system to allow anyone to report issues about the suppliers (or your company). A separate incident management system is often required to simplify reporting issues. Speeki has a comprehensive App driven reporting system for suppliers to use and report issues on any ESG topic with a simple 'click of a button'.