What does your organization deal with matters such as corruption, child labor, and environmental crimes? Do you rely on your moral compass, and that of your colleagues, and formalize these issues in your contracts with business partners? Or is compliance more than simply another box to check? To go beyond compliance, you can draw on a range of controls, such as thorough due diligence reviews. This offers six crystal-clear ways your organization to benefit.
With digitization increasing, and social media becoming more and more pervasive, customers can instantly share their bad experiences with an audience of millions. This has created a new reality in which brands must operate, where they are infinitely more vulnerable than they were in the pre-social media era.
Imagine that your company is linked to an environmental crime, child labor, exploitation, corruption, fraud, or something similar. This information could deter customers, end your business partnerships, and plunge your company’s stock into a steep decline.
What is your risk appetite?
In terms of compliance, every company faces a choice. Does it go for a reactive compliance strategy by simply checking the box? Or should it do more to avoid questionable practices matters such as corruption, child labor, and environmental crimes? If you have a low risk appetite, and prefer to pursue compliance proactively, you need to go beyond compliance.
In recognition of their corporate social responsibility, more and more companies are applying a “beyond compliance” approach, and doing more than is strictly legally mandated. For example, a company might introduce a culture of risk aversion, adopt thorough due diligence reviews, or implement other controls.
Thorough due diligence reviews
Larger brands go the route of thorough due diligence reviews. This involves proactively scrutinizing customers, vendors, and third parties for involvement in those questionable practices.
One of the tools available to Dutch companies is the checklist of the Financial Intelligence Unit – the Netherlands, which describes 72 tools and practices to help fight corruption and fraud. Another possibility is to look up the countries where your business relations are based in the Corruption Perception Index (CPI) to find out more about the potential risks.
Other proactive approaches to compliance
Thorough due diligence reviews are far from the only instrument available to companies. For example, UNICEF urges organizations to go beyond compliance by mapping out their entire supply chain. Are you sure that the cacao beans are not harvested by children? Are no environmental crimes being committed in the goldmines? Have any officials anywhere been bribed? A good example of this approach is Dutch retail chain Zeeman, which has published its entire supply chain on its website.
If you have a zero-tolerance risk appetite, you can consider the following controls also:
- Use an impact assessment to identify risk factors in your business processes, at your business relations, and in the supply chain.
- Pursue a proactive policy for high-risk regions, individuals, and communities. Describe what you expect from your workforce, your vendors, your customers, and your business partners, for example by introducing proactive risk management. It is vital to monitor every link in your supply chain, up to the level of the end customer.
- Make sure that your policy is supported by your internal and external stakeholders, that it has been approved at C level, and that becomes part of the DNA of your entire workforce, your partners, and third parties.
Go beyond compliance, reap the benefits
If you succeed in giving shape to your zero-tolerance risk appetite, at the very least this will yield six benefits:
1. Improve your customer ratings
More and more customers are flocking to brands that have no association with abusive practices such as modern slavery, pollution, or corruption, that communicate actively about those issues, and that have a transparent supply chain. This is evident from the popularity of fair-trade products, for instance, Tony’s Chocolonely’s slave-free chocolate, and sustainable banks such as Triodos and ASN Bank. Also, customers prefer companies that proactively set about eliminating abusive practices from their business networks.
2. Strengthen your relationships with investors
Some investors pressure companies to go beyond compliance, for fear of scandals that might cause the company to lose customers, or become exposed to operational risks and lawsuits. If you can demonstrate that you go beyond compliance, this makes you more attractive to investors, but also to new customers and business partners.
3. Reduce your risks
By mapping out your supply chains – and making adjustments where necessary – you can improve your risk management. In the food industry, for example, better supply chain reviews can reduce the food safety risks.
4. Generate more appeal and appreciation as an employer
Companies with a clean ethical compass will have happier employees, and are more attractive to incoming talent. This is a key requirement for millennials.
5. Build more enduring business relationships
Companies with a strong positive image benefit from better and more enduring relationships, for example with their vendors, their business partners, trade unions, and government authorities.
6. Be prepared for new legislation
Legislation is becoming stricter and stricter. For example, the financial sector has been subject to further KYC regulation for some time now. While due diligence reviews are not yet mandatory in other sectors, European regulation is offering less and less latitude. If your company follows this example, you not only go beyond compliance, you are also prepared for the future.
Altares Dun & Bradstreet provides data and information to help you
Altares Dun & Bradstreet brings together key elements to improve the efficiency and effectiveness of your compliance management processes:
- Consistent data and information on a global scale, drawn from the world’s largest corporation database containing corporate information of more than 300 million companies worldwide. Thanks to our data and information, you can create a holistic understanding of your business relations and identify any that pose an elevated risk. With our database, you can monitor any updates and changes also, as well as staying compliant, even if the laws change.
- Data, information, and technology to help you uncover the risks posed by customers, vendors, and other relations, and take immediate action if a vendor is not squeaky clean.
- More than 170 years of expertise and experience in the field of data and high-quality user-ready business information, whatever the size of your organization.
- Custom solutions and managed services designed specifically to match your compliance needs.
If you would like to know more about using an external database for your company, click here to find out what we can do for your organization.