I recently had a small logical "breakthrough" on how to work through hashtag#esg related #supplychain risks and align with regulations like #lksg and #csddd.
Being an ex consultant, whenever I encounter complexity, I like to solve it with hashtag#structure. Good simple logical structure always clears everything up for me.
We've had a structure in place, but until recently, I wasn't super satisfied with it. It didn't logically give an overview of when e.g. codes of conducts was enough, when to send out auditors, when risks are truly mitigated, etc.
It doesn't help that the regulations themselves are not super simple or structured - despite best intentions, there's just A LOT of fluff in them. 😅
So here's what we came up with.
1️⃣ We needed to make a distinction between ⚠ #risks and 🛑 #violations.
- ⚠ #risks were saying; hey, you're in country a, or shipping product b, and we know that therefore there's a larger probability that you'll have a child labor issue. This data comes from classic risk resources.
- 🛑 #violations would say; hey the random sample of workers violates the working hour rules, or these sewing machine doesn't have safeguards on which is a safety violations. Violation data is highly nuanced and comes from e.g. your whistle blower system, previous sanctions, news and media data or results of audits.
2️⃣ We needed to make a distinction between 💡 #preventative measures and 📣 #remedial measures.
- 💡 #preventative measures would be things like getting your suppliers to sign codes of conducts and writing compliance into your contracts. Training sessions, audits, etc. Pending the severity of the risk a combination of these will help mitigate that #risk.
- 📣 #remedial measures are the very specific #correctiveaction programs that mitigate a #violation; like ensuring processes are in place for keeping employees within working hours and doing another audit to ensure that, or putting safeguards on those sewing machines. These typically need to be verified by another audit.
- Of course a measure that's both #preventative and #remedial would be reducing/eliminating spend with a supplier at high risk / with violations.
This may seem a little simple in hindsight, but absolutely wasn't for me initially, so I hope it helps you! It helped us a lot to collaborate with Noerr, a leading european law firm, to guide us on this.
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