Supply chain risk management and assurance are critical to identify and reduce risks and protect companies from legal and reputational harm.
Potential environmental, social, and governance (ESG) issues posed by suppliers in increasingly complex supply chains can increase reputational risks to an organization. Corporate supply chains generally include every company that comes into contact with a particular product or service. In other words, the “supply chain” refers to the series of steps and processes involved in the production and/or distribution of goods and services. This can include direct and indirect suppliers, manufacturers, distributors, and retailers, and may involve companies and individuals all over the world.
As Latham & Watkins Counsel Sara Orr discussed at the 2019 Sustainability Investment Leadership Council Conference, many ESG factors can impact corporate supply chains, including environmental practices, energy usage, social responsibility, human rights, child labor, trade security, anti-bribery, health and safety, conflict minerals, and product quality assurance. Risks might impact companies across industries and geographies, or they might be industry- or country-specific. For example, unsafe working conditions and forced labor may be found in many industries, but food security fraud — i.e., the deliberate mislabeling of food products — is unique to the food industry. Continue Reading