Corporate Image & Compliance at Risk – New Briefing Paper Available Now

We’ve published the second in our Supply Chain Risk briefings, written in conjunction with riskmethods, this one titled “Corporate Image & Compliance at Risk: How to Mitigate the Hidden Risks Lurking in your Supply Chain”. You can download it here now.

Each of our short, snappy papers gives an overview of a particular risk topic, with a quick analysis of the drivers, what it can mean to organisations in terms of the potential consequences, and some suggestions as to how the risk can best be addressed and mitigated. That is all packed into a concise two-page document.

This is a huge issue these days, running though a whole range of topics from environmental issues such as water security and sustainable forestry, to child labour and worker safety. Then there are many issues now where “reputation” is not just a matter of corporate image in the eyes of customers, but a matter of regulatory compliance; such as in the case of conflict minerals, bribery or modern slavery.

So, if you want to get a quick insight and some useful suggestions in this field, then download our paper now. Here is an excerpt.

"What Drives This Risk?

Issues here arise from many different quarters. Often the source lies in the supplier trying to cut costs. That might mean not investing in health and safety equipment or good working conditions for staff, or not disposing of waste properly. But in some of the worst cases that often hit the headlines, this crosses over into outright criminal behaviour, as in the case of the terrible Bangladesh factory fire, or the scourge of modern slavery.

In other cases, the risk may come from further down the supply chain. It could be that the first-tier supplier buys a contaminated ingredient in good faith but does not do proper checks, and this is then incorporated in a final product and sold on to the ultimate buyer, who suffers reputational damage.  Or take the General Motors case:

“… faulty ventilation in a production area led to a dust explosion at a Chinese automobile supplier in August 2014 that resulted in the deaths of 70 workers ... media pressure forced General Motors management to issue a public statement, as this operation is a sub-supplier to GM”. (ROI of Supply Chain Risk Management - ekseler consult / riskmethods report)

There has also been a considerable increase in the quantity and range of legislation that relates to corporate social responsibility issues in the supply chain, and this also feeds into the reputation issue in its widest sense. Much of the legislation is national, but can affect companies based in other countries if they work at all in the legislating territory, so few businesses can escape the consequences. For example, the California Transparency in Supply Chains Act, which went into effect in January 2012, requires certain companies to report on their specific actions to eradicate slavery and human trafficking in their supply chains. The Modern Slavery Act 2015 in the UK has similar provisions, and there are equivalents elsewhere around the world.

Other relevant issues include “conflict minerals”; vital natural resources extracted in war zones with implications for human rights. In the US, the 2010 Dodd–Frank Wall Street Reform and Consumer Protection Act required manufacturers to audit their supply chains and report use of conflict minerals.

These and other related issues all add up to a need for buyers to understand the risks and take appropriate action. There is also a practical burden for firms in terms of collecting data and reporting to the relevant authorities where required, in order to establish compliance to regulations".

Download the whole paper now here.

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