The CRI Group’s 3PRM™ (Third-Party Risk Management Program) has launched its ESG Due Diligence program that defines, detects, and improves Environmental, Social, and Governance (ESG) risks for organisations.
Corporate Research and Investigations Limited’s ESG Due Diligence is aimed to support investors classify areas where companies may be exposed to substantial human rights and environment-related perils and red flags. It uses effective strategies to vet extended business relationships thereby evolving company’s sustainability and ESG rating.
We’ve taken corporate financial reporting to an advanced level with our ESG Due Diligence program structured to mitigate commercial risks by focusing on certain key features of ESG.
The four aspects of CRI Group’s ESG Due Diligence
- Business Overview & Assessment While traditional due diligence verifies asset ownership and key contractual risks, ESG due diligence requires a much broader analysis of potential risk exposures for the target company, especially when it comes to products, jurisdiction, industry/business sector, type of operations associated with the business, e.g., office, manufacturing/production, warehousing, logistics, etc. This overview also includes performing extensive background checks on decision-makers to uncover questionable precedents and behaviors of key stakeholders.
- Environmental Impact & Assessment CRI Group investigators, researchers, and subject-specific experts assess regulatory compliance implementation to record serious incidents and regulatory breaches regarding the environmental aspects of your organisation. Detailed findings on the nature of any incident, improvements made with corrective actions, the lessons learned, and regulatory action and proceedings against the subject in question (enforcement/prosecution/fine) are prepared and maintained for your records.
- Social Aspects Assessment CRI Group experts assess the Human Resources practices of the organisation, including (but not limited to) health and safety maturity levels, community involvement depending on the business sector (investments, sponsorships, donations, and type of operations), consumer safety, and product/services regulations, actions taken to ensure the health and safety of consumers, data protection and privacy of the consumers, any previous breaches, complaints, and the improvements and information security management system that have been put into place.
- Governance Assessment Our experts assess your organisation’s commitment and the responsibilities of senior management on sustainability, policies and procedures, anti-corruption and bribery monitoring, and best practices. What does your company currently do to safeguard against illegal practices? We check for any corporate mis-governance and/or ethics-related employee claims/breaches/enforcement/litigation action relating to issues such as anti-bribery and corruption, cases of unfair labor practices, human rights abuses, and other unethical business practices.
Delivering Value-Led Sustainability
In a bid to tackle human rights and environmental impacts across global value chains, a new European Union (EU) mandate now places liability on companies unable to assess and mitigate unethical third-party behaviour. The EC also unveiled plans to tackle forced labor and promote decent work worldwide – including a proposal to ban products produced with forced or child labor from the EU market. The new legislation will also complement Sustainable Finance Disclosure and Taxonomy Regulations.
The proposed directive is being described as a landmark moment for the environment and human rights and comes with costly obligations and penalties that could be imposed on companies, and the civil liability it could entail. This puts an end to the era of voluntary policing and requires companies operating in the EU to ‘identify, address and remedy their impact on human rights and the environment throughout their global value chains.’ The directive will benefit company investors who want to be assured that climate change, negative environmental impact, human rights, business ethics, and corporate governance are factored into their selections. Organisations of any type or size can benefit greatly from ESG Compliance by practicing good governance, starting with highly effective performance, responsible stewardship, and ethical behavior.
The benefits of good governance resulting from ESG Due Diligence are manifold as the resulting compliance certification will:
- Help increase organisational effectiveness, sustainability, accountability, and fairness.
- Fortify systems, methods, and processes to spot red flags and help avoid major incidents.
- Build a higher level of trust among stakeholders, shareholders, and the public.
- Demonstrate that the organisation is acting with integrity, transparency, and accountability.
- Establish credibility in the marketplace as the organisation is viewed as making a conscientious investment in responsible management.
- Provide a competitive advantage among potential business partners who perceive a well-governed organisation.
- Mitigate the potential risk of failure within the organisation’s systems.
- Conform to the internationally recognised and widely advocate regulatory requirements of an effective corporate compliance program.
- Maintain compliance with the European Supply Chain Act, the German Supply Chain Due Diligence Act (SCDDA), the EU Forced Labor Regulation, and other local, regional, and international regulatory frameworks.
On the flip side, the risks of non-compliance that companies will face include:
- Unsafe working conditions
- Child labor and Forced labor.
- Unethical employment
- Environmental degradation
- Violations of freedom of association
CRI Group’s ESG Due Diligence will also throw up red flags, keeping investors safe from rogue companies. These warning signs include:
- Business Operations & Solvency
- Poor Reputation
- Past Allegations of Corruption
- Production, Quality, or Delivery Issues
- Conflicts of Interest
- Licensing & Credentialing Issues
- Links to Organized Crime
- Improper Payment Arrangements
- Workforce & Human Rights Issues
- Undisclosed third-party transactions
- Material misrepresentations or commissions
- Unreported financial difficulties
- Criminal or regulatory sanctions
- Undisclosed legal or bankruptcy proceedings
- Politically Exposed Persons – PEPs
- Environmental Negative Impact
There can be more red flags, of course, depending on the nature of the industry, scope, and jurisdiction of the subjects in question.