Supply chains and compliance

Partner for Control Risks’ Compliance, Forensics & Intelligence, Maria Knapp joins the Sam M. Walton College of Business at the University of Arkansas in its latest “The BIS” podcast to discuss ESG compliance, how companies assess their supply chains and the importance of businesses recognizing the impact they have on their communities. Following are excerpts from their conversation; for the full podcast, click the button below.

Cindy Moehring: Control Risks is engaged by corporate clients because they sense and know there is investor pressure and expectation. Talk about that evolution a little bit because it is definitely a hot topic.

Maria Knapp: Yes, it is. Social and governance risks is something that Control Risks has been working in for over 45 years. If you ask our analysts, there's volatility everywhere, so we provide nuanced assessments of the issues our clients are facing so they can make well-informed decisions. When it comes to ESG, that means understanding what's happening on the ground and key stakeholders who may not be within your own corporate ecosystem and may instead be local communities. Issues around human and labor rights are increasingly becoming more diverse and we've seen that when companies get it wrong, it has an impact on human and social rights holders. It impacts its operations and can also have an effect on an investors’ decision to invest or withdraw.  

ESG Compliance is certainly emerging as a discipline. It’s about measuring, monitoring and managing. If you measure, you’re not only looking at your own company and operations, but also rights holders, stakeholders around you and the impact that you have on them. When you think of monitoring, you’re keeping track and ensuring that your compliance systems are working well. Finally, when you’re managing; you’re tackling the issues that are manageable or engaging.  

Cindy Moehring: I agree. It is incredibly important to perform all three of those steps. Do you have any thoughts on how COVID has affected or increased our focus on ESG? Do you think companies are struggling with the pandemic more than they would have done without it?

Maria Knapp: Good question. It's hard not to see COVID as a trigger for a lot of things.

ESG has been at the centre of everyone’s minds since COVID; especially on the social side of things. What is interesting is that at the start of the pandemic, a companies’ commitment to ESG could have gone either way . I think the financial strain that came from the pandemic could have encouraged government and companies to focus their efforts on just staying afloat in the interest of economic survival. Instead, we’ve seen a greater focus on how companies treat their people, the environment and how they respond to climate change.

COVID has put us in a place where people (who are the real actors in the financial system) have been regarded as important pressure points for companies compared to former trends around governance and responsible business. 

For more of this discussion on ESG and how Control Risks are engaging with organisations on ESG compliance and supply chains, listen to the full podcast now.