Look at some of the top companies and most renowned brands in the world, and you’ll notice they tend to have something in common: terrific corporate social responsibility (CSR) reputations. Meanwhile, companies that fail to grow responsibly watch their stock fall.
When internal corruption is exposed, the impact can extend even beyond brand reputation. Executives from companies where misconduct has been uncovered often get a pay cut when they move to their next position—especially those who work in finance.
Further complicating the issue, companies now have more areas of concern in managing their reputation. Executives and compliance teams are now held personally responsible for corruption and human rights abuses in their supply chains, a development supported and forwarded by the influential Yates memo of 2015.
That’s a lot of reason to care about CSR.
At Assent, we understand the importance of strong CSR. Interested in doing more at your organization, but not sure where to begin? Download the CSR pocket guide to get started.
In 2017, there were several expansions to the CSR regulatory landscape that had implications for the way companies perform due diligence in their supply chains. Despite the challenges they present, fulfilling these requirements with efficiency and accuracy can help your brand maintain a positive image. To do this, your company needs to plan for the year ahead.
Here are the top five CSR reporting areas and trends your company needs to be aware of in the coming year.
The World Bank estimates that roughly $1.5 trillion is paid in bribes around the globe every year. That’s a whopping 2 percent of the global gross domestic product. As a result, there were several landmark enforcement cases in 2017, and all signs point to the FCPA continuing to impose severe fines in 2018. This could catch several companies off guard. Although most look for bribery and corruption in their downstream channel partners and re-sellers, few work to address risk in their supply chains.
Furthermore, compliance programs that do examine the extended enterprise make the mistake of focusing on historical data rather than what’s happening in their supply chains in the present. Companies can address this by leveraging the ISO 37001 standard, which allows them to adapt existing compliance programs to satisfy up-to-date requirements and take a proactive stance on bribery and corruption.
Have work to do in your anti-bribery, anti-corruption program? Download the whitepaper Combating Bribery & Corruption in the Supply Chain, and receive guidance from the experts.
EU Non-Financial Reporting
In 2017, the European Union (EU) Non-Financial Reporting Directive was implemented. Companies must respond to its requirements for the first time in 2018 and report on information from the 2017 financial year. Disclosures must include data on four aspects at minimum:
- Social and employee matters
- Human rights
- Anti-corruption, anti-bribery
Further, companies must disclose on five content areas:
- Business model
- Policies, including due diligence processes implemented
- Outcome of policies
- Principal risks and how they are managed
These criteria present a broad scope of surveying requirements. In order to collect the data necessary to report, compliance officers will need to perform strategic due diligence throughout their supply chains. Luckily, there’s no shortage of help in determining the kinds of data you should be collecting. Several common guidelines, including UN Global Compact principles, Organisation for Economic Co-operation and Development (OECD) guidelines, and ISO 26000 standards, are available to help compliance teams fulfill their requirements with efficiency.
Sustainability reporting criteria are broad by nature. As more companies begin producing reports, it causes increased strain on suppliers, who struggle to respond to multiple data requests that often don’t share a common surveying schematic. This problem can be exacerbated by a lack of training available to suppliers. They may not understand the “how and why” of responding to compliance requests.
To counter this trend, expect to see more companies using Global Reporting Initiative standards, streamlining the ask on suppliers and allowing for improved speed and accuracy on responses.
Human Trafficking & Slavery
You’re about to hear a lot more about human trafficking and slavery. Several new and proposed regulations support the imperative that companies purge human rights abuses from their supply chains and report on year-over-year progress. Meanwhile, many compliance teams in scope of implemented regulations such as the UK Modern Slavery Act (MSA) will need to reevaluate their due diligence strategies, as more than half of the FTSE 100 MSA statements submitted in 2017 received scores of less than five out of 10, based on minimum compliance requirements.
There has been increased scrutiny as a result of the French Duty of Vigilance Law and the U.S. Trade Facilitation and Trade Enforcement Act, and with the Dutch Child Labour Due Diligence Law and Australian Modern Slavery Act on the horizon, there’s no avoiding these requirements. If your compliance with the UK MSA has fallen short, you will likely find yourself behind on new legislature as well. Ongoing failure to comply could lead to embargoes, public boycotts and other forms of damage to your brand.
In 2017, the Slavery & Trafficking Risk Template (STRT) emerged as a go-to standard for showing compliance with the full range of human trafficking and slavery regulations, including the UK MSA, the California Transparency in Supply Chains Act, and new regulations implemented and proposed in 2017. Developed and published by the Social Responsibility Alliance, the STRT can help your company streamline due diligence and improve supply chain-related public disclosures with an easy-to-administer standard.
Does your program need guidance on responding to human trafficking and slavery legislature? Download our eBook, Human Trafficking & Slavery and Your Supply Chain, to learn more.
EU Conflict Minerals
Despite talk of a possible repeal of the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2017, conflict minerals requirements have only expanded due to implementation of EU legislation. The EU Conflict Minerals Regulation takes a multi-faceted approach to the sourcing of tin, tungsten, tantalum and gold in war-torn regions. In order to comply:
- Non-EU manufacturers must assess compliance with the standard
- Importers must conform to any EU product-level declarations that apply
- EU manufacturers must create disclosures and perform due diligence
- Non-EU smelters and refiners may be required to perform due diligence to import
- EU smelters and refiners have mandatory, government-driven due diligence obligations
These new requirements could affect up to 1,000 importers, which will in turn impact their suppliers. That means more companies than ever will be collecting conflict minerals and smelter data in 2018, highlighting the need for training and guidance.
The Responsible Minerals Initiative (formerly the Conflict-Free Sourcing Initiative) has quickly pivoted to help compliance officers strengthen conflict minerals programs through training, resources and audit programs.
Centralize Due Diligence on the Assent Compliance Platform
Now that you know what’s on the horizon, what does your compliance team intend to do about it? Taking a proactive approach to CSR requirements will help your company avoid enforcement from regulatory bodies, negative media coverage and NGO call-outs that damage your brand and betray the mountains of work your compliance team performs every year. Unfortunately, it’s almost impossible to manage these requirements, perform due diligence, educate stakeholders and stay on budget alone—but you don’t have to.
The Assent Compliance Platform helps many of the world’s most recognized brands maintain their reputation and mitigate the risk of regulatory violations in their supply chain. We provide the regulatory guidance, intuitive software, data collection expertise and Assent University educational offerings your company needs to centralize due diligence under one roof and stay ahead of regulations before they can impact your brand. Our software modules leverage industry standard surveying criteria to help your company mitigate a range of CSR-related risk areas, with a focus on providing up-to-date, real-time results.