Risk Intelligence: A Key Player in ESG, TPRM, and Sustainability

October 6th, 2022 Hannah Tichansky Reading Time: 4 minutes
ESG Risk Intelligence

A Conversation on ESG With:

  • Colin Campbell, Senior Director – Product Marketing, Aravo Solutions
  • Daniel Perry, Director Global Alliances, EcoVadis

To celebrate and kick off the launch of Aravo’s new ESG Solution, Colin Campbell sat down for a fireside chat with Daniel Perry from EcoVadis to discuss the value of risk intelligence as part of an organization’s ESG and third-party risk management (TPRM) programs.

Colin Campbell: At Aravo we’ve been positioning the value of ESG in three different objectives, 1) helping companies build sustainable and ethical supply chains that reflect their brand values; 2) meeting the growing and complex regulatory requirements, and; 3) managing and mitigating potential risk exposure across the extended enterprise.  Daniel, can you share with us why organizations must meet these objectives?

Daniel Perry:  There are a number of reasons why a business may decide to start assessing their suppliers on sustainability topics. Some of them can be born out of legislative pressure. It may be other stakeholders involved that are pressuring the organization to move in that direction as well, be that investors, employees, or customers. But by and large, you’re safest if you are aiming to go beyond compliance. If you can drive sustainability performance within your supply chain, you are in a better state and more prepared when those new regulations and legislations come into place.

What we are seeing historically is a shift from disclosure, like the California Transparency Act, through to regularly updated disclosures, such as with the UK Modern Slavery Act, to now full due diligence and duty of care, which is what’s happened in France with the Duty of Vigilance, and more recently with the German Due Diligence Law. The companies that have been most prepared for these changes are the ones who have been incorporating sustainability into the way that they track the performance of their suppliers because essentially, they’ve had their bases covered based on global best practices. But there is a big knee-jerk reaction coming from the many companies that are immature on these topics and are now scrambling to ready for regulatory changes that are coming very soon.

Picking up on what you mentioned, moving beyond compliance, that brings up the subject of continuous and ongoing risk monitoring on a more frequent basis. What do you think about the value that continuous and ongoing monitoring delivers to an ESG-focused supply chain risk management program and what solutions like Aravo bring to this area?

Daniel:  I think the Aravo role is so valuable because you can be the single point of entry for a supplier to start trading with a company or continue to trade with their customer. The sustainability responsibility of a risk manager may be one small piece of a much broader puzzle. But being able to have that single pane of glass and see all of the different risks at play for a particular supplier in one location is super valuable. And then, should sustainability be one of the areas for risk or opportunity, they can drill down into that and go into our platform and see the full scorecard.

When it comes to our partnership and deep integration between our respective solutions, I think it’s an incredible value add for organizations to help them identify and mitigate risk across their supply chains. How does that play into the overall proposition?

Daniel:  What we did from the outset at EcoVadis was to find a way that we can put all businesses on a level playing field. Whether you are a manufacturer in Latin America or a wholesaler in China, or you’re a retailer in Europe, if you’re providing the same product to a customer, the customer needs to be able to say which is more or less sustainable than the other. At the very highest level, we have medals like bronze, silver, gold, and platinum. The next level down is the scores, an overall score out of 100. Environmental labor, human rights, ethics, and supply chain all have their own scores within those four themes. However, you may end up in a situation where all things being equal, you’ve got a few suppliers that are of similar scores and you want to go another level down where you’re thinking about positive impacts, e.g., what can I nudge the supplier on to help them do better on sustainability. And that’s where the strengths and improvement areas come in.

Within the scorecard, you can see some highlights of what we’ve found in our assessment of that company based on evidence that they’ve provided, what they’re doing well, but also some gaps. And those gaps are prioritized. It’s fully transparent so that the supplier has the same information that you do. Even if they’re on the other side of the wilderness and in another language, they are looking at the same score sheet, and those improvement areas can be converted into corrective actions. Rating typically happens once a year. But in between those 12 months, you may want to know that the supplier is taking some action and closing out some of those key corrective action items. And that’s where the functionality comes in.

That’s a great point Daniel, and it’s helping companies to sit alongside their suppliers & partners, and work together with those corrective actions to continue developing ethical and sustainable supply chains.  We appreciate you joining us and sharing your insights as we continue to support our joint customers around the world build ESG programs.

Learn more about Aravo’s new ESG solution, as well as our ongoing integration with EcoVadis.

Hannah Tichansky

Hannah Tichansky is the Senior Content Marketing Manager at Aravo Solutions, the market’s smartest third-party risk and resilience solutions, powered by intelligent automation. At Aravo, she manages all content and thought leadership produced for products and campaigns, and contributes as an author for articles and blog posts.

Hannah holds over 12 years of writing and marketing experience, with 6 years of specialization in the risk management, supply chain, and ESG industries. Hannah holds an MA from Monmouth University and a Certificate in Product Marketing from Cornell University.

Hannah Tichansky is the Senior Content Marketing Manager at Aravo Solutions, the market’s smartest third-party risk and resilience solutions, powered by intelligent automation. At Aravo, she manages all content and thought leadership produced for products and campaigns, and contributes as an author for articles and blog posts.

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