Many organizations have grown accustomed to and developed protocols for vetting third parties for issues such as anticorruption compliance and privacy. But, with the rise of ESG, suppliers need to be reviewed for exposure on a much wider scale than ever before. Can existing protocols be used, or do they need to be replaced?
To find an answer we spoke with Rebecca Wellum (LinkedIn), Vice President Compliance & Diversity at GEOTAB. In this podcast she explains that in many ways ESG is a repackaging of things many organizations have been doing for some time.
To make your process effective she recommends starting by defining the risk areas for your industry. Then, look at your material sourcing to understand where everything in your supply chain is coming from. Learn not just what the supplier is providing and how, but it’s suppliers practices and sources as well.
When assessing vendors, she has found that in-person meetings are invaluable. It provides an opportunity to assess the cues that something may be amiss. These can include environmental health and safety papers and certifications that are out of date or a lunchroom that doesn’t look quite rights. Data points like these can give you a strong sense of the treatment of labor, and even the organization’s own sourcing methods.
She also recommends insisting on audit rights upfront. That’s when your organization has the most leverage. And be sure, she advises, to allow for not just paper, but in person audits, including on a surprise basis.
Small and medium-sized organizations need to be aware, she cautions, that this is not a simple task, but it is an essential one. Even if the company is not public and subject to the scrutiny of the SEC and shareholders, its customers are already likely to be increasing their ESG investment and expectation of their suppliers.
She also highly recommends taking the time to document what you have done. Keep audit trails and be prepared to demonstrate what steps you took while selecting, onboarding and periodically reassessing your suppliers.
Listen in to learn more, including the growing importance of assessing diversity as well.