Back in September, our CEO Dermot Corrigan penned an article ESG – Is It There to Tick a Box or Rattle the Cage?  in which he explored the problematic factors surrounding ESG policies and practices in firms. So when we read Sarah O’Connor’s excellent reporting in last week’s FT, Retail’s tick-box approach to supply chains is untenable here at smartKYC  – we couldn’t help but collectively nod along in agreement at the points that were made.

Quite rightly, O’Connor points to law and policy makers to enforce necessary changes – more specifically that companies should know that, ‘their defence in court will rest on the seriousness of their due diligence, not the glossiness of whatever they wrote on their website’.

We’d agree that all the well-intentioned board statements aren’t really worth a jot and governance is about the ground truth – not self-declarations. And we’d actually go one step further and advise firms not to rely solely on third party risk rating companies either, as their reports tend to be largely based on company disclosures which is essentially tantamount to companies ‘marking their own homework’.

Another element that rang especially true for us in the FT article was the parallel that was drawn between labour abuse in the manufacturing supply chain and money laundering in banking. Again, we could not agree more, as we established our pedigree in financial services, working with firms to help them meet their anti-money laundering (AML) and know your customer (KYC) regulatory obligations.

But corporate supply chains often consist of a huge number of links, in fact Gartner estimates 60% of organisations are now working with more than 1,000 third parties and predicts this number is likely to grow even more over the next few years. You could almost hear supply chain managers choking on their cornflakes the morning O’Connor’s clarion call for stricter oversight was published.

But as with most things, technology is on hand to make this a much less daunting proposition. AI-enabled relationship intelligence tools consisting of natural language processing, machine learning and linguistic expertise give firms visibility at operating level by screening at high frequency for any evidence in the supply chain of mal practice, for example the use of forced labour or predatory pricing.

We believe the deployment of this kind of robust, independent monitoring programme is the only failsafe way firms can move beyond ESG box-ticking and towards a level of due diligence that separates those brands that walk the walk and those that are just all talk.

Hugo Chamberlain

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Hugo Chamberlain


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