ESG risk – your supply chain’s next priority

After being overlooked for years, ESG compliance is gaining the spotlight across North America. With new rules and regulations coming into play, it’s paramount you understand why identifying ESG risk in your supply chain is essential for your business.

Complex and vast supply chains are renowned for having limited visibility, and therefore heightened risk around Environmental, Social and Governance challenges. There are common challenges that large supply chains struggle with, but there are a range of strategies to help mitigate them too. Generally, the main challenges supply chains struggle with include forced labour, social value, environmental, carbon tracking and quality.

These challenges can cause much bigger problems if overlooked.

Substantial fines can land on companies who do not comply with forced labour regulations, and in worst cases, criminal convictions.  This in turn can cause catastrophic damage to a company’s reputation and leave their credibility in tatters.

On the flip side, ensuring all of these risks are mitigated and managed can lead to big improvements for your business.

Significant growth can occur when a business shares a strong social story and is able to demonstrate sound moral and ethical credentials.

Therefore, investors are increasingly likely to be attracted to evidence of sound environmental and social governance. Businesses see that their audiences and stakeholders – customers, candidates, investors – expect the companies they involve themselves with to prioritize social responsibility. Everyone wants to be seen to be doing the right things whenever and however they can.

So, getting onboard with ESG risks and mitigation is a must do, right?

Let’s mitigate the risks.

As mentioned, poor visibility over your supply chain is the biggest obstacle you have. Limited visibility means you’re missing areas where ESG issues can be avoided or improved. If you had complete clarity over your entire supply chain, it would be simpler to pick out areas of weakness and take the correct steps to remedy them. But how do you ensure the data you capture is as robust as it can be?

First, moving away from the pen and paper method is a must. Inputting data by hand leaves you open to risk of human error and eats into your time. You may find yourself cutting corners to ensure you have enough time to focus on other tasks. Ensuring you have a robust, digital end-to-end solution can take this off your plate and manage data collection in a reliable and detailed manner. For example, Alcumus SafeContractor uses unrivalled technology to ensure that you are data-rich, organized and compliant.

Second, it’s key you engage with your contractors. Get eyes and ears on site by hearing their feedback. This way you’ll fully understand every corner of your supply chain. First hand feedback makes for strong qualitative data on your supply chain and will help you uncover issues you may not have seen from your office.

These tips give you a step in the right direction on your ESG compliance journey – but things are ramping up fast. Regulations are getting tighter, especially with the introduction of the Canada Modern Slavery Act in 2024.