How do firms stay on top of ever-shifting ESG landscape?

Michelle Knight of Ethixbase360 on helping businesses mitigate risk by providing visibility on the shifting supply chain ESG regulations landscape

What is your professional background?

I have worked in the risk and compliance industry for over 25 years, in global roles with large risk-management organisations and boutique compliance companies in Hong Kong, Singapore, Sydney and London.

What is ethixbase360, and what’s your role there?

Ethixbase360 is a global leader in third-party risk and compliance technology. We offer a comprehensive end-to-end risk management solution for managing third party risk. 

I oversee the research function at Ethixbase360, as well as looking into partnership opportunities and working on strategic accounts.

Biggest ESG challenges facing supply chains?

New regulations and reporting standards are placing demands on companies for more-credible corporate disclosures, which are linked to the risk of potential fines for non-compliance of existing or incoming ESG legislation. 

This is coupled with an increasing customer awareness of sustainability themes, high expectations from new and existing employees to work for and with ethical companies, and the need to demonstrate solid ESG credentials in stakeholder management and investment raising. 

More and more companies are being asked to measure and report on their supply chain sustainability metrics.

How do you help firms overcome these challenges?

By increasing end-to-end supply chain transparency, and by exploring risk with all third parties, by interrogating that risk and by collaborating with third parties to elevate standards and protect businesses.

Originally, we focused on governance and anti-bribery risks but our platform and approach has developed hand-in-hand with our clients and their third parties off the back of their real-world needs, which is why we focus on risks across the ESG spectrum.

How does the German Supply Chain Act change things?

This came into effect at the beginning of the year and affects all companies doing business in Germany, as well as their direct and indirect suppliers.

Companies with more than 3,000 employees must comply with the Law, with firms of over 1,000 employees being included from early 2024.

It applies to the entire value chain and specifies how companies must perform due diligence on human rights and the environment, including analysing possible risks, taking measures to prevent and mitigate any violations, setting up grievance mechanisms, and reporting on relevant activities. 

Compliance will require additional resources for companies that are affected, but those complying with similar laws in other countries have a head start, especially if they have automated due diligence and risk management processes. 

Businesses still relying on manual or homegrown risk-management systems can expect a steep learning curve.

How do you help firms adapt to supply chain legislation?

Staying on top of ESG regulations is already very important for organisations, and it will become even more important over time. The new German supply chain law is part of a wider movement that’s likely to bring more ESG regulations. 

For example, the EU Supply Chain Directive, once approved, will mandate extensive due diligence requirements.   

Ethixbase360 helps by automating manual processes and providing a single platform for risk assessment, risk ratings, and other risk management workflows. 

It allows clients to replicate existing processes and workflows, for an easier transition from manual to automated systems. It also performs risk assessments on third parties, applying a company’s own risk criteria, thresholds and weighting.

Who inspires you?

I continue to be inspired by my family, my friends and my colleagues who have all contributed to where I am today. 

I have also been very fortunate to have lived in a number of different countries, both as a child and an adult. As a result I have experienced different cultures and learned to be resilient. I have grown from all these experiences. 

Best advice ever received?

Be brave, be mobile and be flexible and remember: change is the only constant.

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