Tag: Assent Compliance

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Innovation in Compliance

Supply Chain and ESG – What You Need to Know: Episode 5 – Responsible Minerals, Supply Chain and ESG with Jared Connors and Daniel Zamora

 

Jared Connors and Daniel Zamora join Tom Fox in the final episode of the Supply Chain and ESG – What You Need to Know series, to discuss how market expectations have evolved with regards to due diligence in the responsible sourcing field.

 

 

Due diligence used to be a data collection exercise where you get transparency into your supply chain, but now it’s all about what you do with that information after you collect data – how a company can move from being reactive to being proactive. The first step to making this move is collecting data more efficiently; this allows you to have the resources in place to perform risk management within your supply chain. You need to know who’s on your supply chain, and you need to have a specific program in place to identify the risks of smelters.

 

Under the Biden administration, there has been a major focus on critical minerals when it comes to sanctions and regulations. Critical minerals are not specifically tied to the Dodd-Frank Act, but this focus has emphasized to stakeholders in the industry to be vigilant about them in general. Having an entity in your supply chain that is tied to a sanction puts you at risk no matter how direct or indirect that linkage is.

 

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Supply Chain and ESG – What You Need to Know: Responsible Minerals, Supply Chain and ESG

I recently had the opportunity to visit with several folks from Assent Inc. for a sponsored podcast series entitled Supply Chain and ESG – What You Need to Know. We discussed: ESG drivers with Jared Connors and James Calder; UFLPA, Supply Chain and ESG with Travis Miller and Jamie Wallisch; the New World of Product Compliance and ESG, with Cally Edgren and Devin O’Herron; Emissions Reporting Strategies with Devin O’Herron and Jared Connors; and Responsible Minerals, Supply Chain and ESG, with Jared Connors and Daniel Zamora. Today, in our final post, we consider responsible minerals, supply chains and ESG.

We began with a review of the evolution on responsible mineral sourcing. It started with conflict minerals, which has been around for 10 years or so. This led to a rather dramatic shift in the worldwide corporate mindset and companies and stakeholders determined that there needed to be more engagement all levels within the supply change. Zamora pointed to the example of due diligence. “It began as a data collection exercise where you get transparency into your supply chain, but now it’s all about, what can you do  with that information after you collect data? What you see from the expectations of stakeholders is performing risk management, right to diligence activities within your supply chain.” This means going beyond regulatory requirements, it means risk management activities related to identifying sanctions within your supply chain.

One of the key themes of this series has been how a comprehensive ESG program can bring a much more integrated, holistic approach to not simply regulatory compliance but also in overall business operations. That also presents the opportunity to use an ESG approach to move from simply a reactive to proactive program. With Zamora, we look at steps a company can take to facilitate this change.

Zamora said, the “first step is you need to collect data efficiently. Once you do that officially, it allows your organization to have the resources in place to focus at how to perform risk management from within your supply chain. Number two, you need to have a specific program in place that would allow you to see and identify the risks so you can see where minerals are coming from and where the minerals are going afterwards. This allows you to identify those risks ahead of time, having risk assess verifiable sources out there that will allow determine who the bad actors are before then engage in bad behaviors.”

All of this allows a company to make better business decisions in terms of risk management. Zamora said, “it gives them time. It gives them a lot of power to take corrective actions, according to those risks. It could be communicating that those risks within their own supply chain. It could be passing that information along to their legal team. Once you have that ability to see these risks live as if an organization is being proactive about it instead of being reactive and waiting for those risks to show up in your supply change; a company will have a lot of power to have corrective action in order to mitigate those risks.”

We concluded with a discussion of the stakeholders who might be concerned with responsible minerals and how a corporation can use an overall ESG program to engage with them. This can include the shareholders, it could include customers, it could include employees, it could include third parties your organization does business with, and it could include the locales where a company does business or operates. Zamora said, “conversations have definitely changed,”. Now it has expanded to “even metal associations.” These conversations are also at “multiple levels within the supply chain. It is no longer the downstream companies and the shareholders right now, you see expectations at the mid-tier suppliers, you see these conversations at the smelters and at the upstream level.” All these levels are getting engaged in discussions and conversations around the ESG requirements.

To listen to the podcast this blog post is based upon, click here.

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Innovation in Compliance

Supply Chain and ESG – What You Need to Know: Episode 4 – Scope 3 Emissions Reporting Strategy with Devin O’Herron and Jared Connors

 

In part 4 of the Supply Chain and ESG – What You Need to Know series,Tom Fox is joined by Devin O’Herron and Jared Connors of Assent to discuss Scope 3 emissions reporting as the key to disclosure success. They talk about the importance of accounting for Scope 3 in your emissions strategy.

 

 

There are three scope levels within the emissions reporting strategy: Scope 1 refers to things like your vehicle or things you’re doing around your facility; Scope 2 is the purchased heat or electricity powering your facility; and Scope 3 is all those variables outside your four walls. The most important aspect of Scope 3 is purchased goods. This has a large impact on organizations that may not necessarily take in raw materials and directly manufacture those raw materials into a finished good. The supply chain is a very significant factor to consider when coming up with the emissions strategy as a company.

 

A recent study found that Scope 3 emissions are typically 11 times larger than an organization’s Scope 1 and 2 emissions combined. As mandatory climate disclosure legislation progresses into the future, the overall emissions strategy needs to start accounting for Scope 3 as much as possible. 

 

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Innovation in Compliance

Supply Chain and ESG – What You Need to Know: Episode 3 – The New World of Product Compliance and ESG with Cally Edgren and Devin O’Herron

 

In part 3 of the Supply Chain and ESG – What You Need to Know series, Cally Edgren and Devin O’Herron of Assent join Tom Fox to discuss product compliance and sustainability. They explore how the two worlds are starting to intersect. 

 

 

Making sure products meet regulatory requirements is what product compliance is all about. In recent years, the requirements have been changing. There used to be a focus on safety features like mechanical and electrical safety, but things changed with the RoHS Directive in 2002. That directive was meant to make sure electronic waste from third-world countries was safe. It was one of the first times a regulatory rule had more to do with sustainability than traditional product safety.

 

Manufacturers need to understand that their customers are no longer just concerned with what they hold in their hands at the end of the process – they want to make sure that their suppliers are using responsible processes. The two worlds of operations compliance and product compliance are starting to connect. As we become increasingly aware of the importance and relevance of the social and environmental costs associated with manufacturing processes and the barrier they present towards sustainability, ESG metrics represent another way of managing and measuring these externalities. 

 

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Supply Chain and ESG – What You Need to Know: New World of Product Compliance and ESG

I recently had the opportunity to visit with several folks from Assent Inc. for a sponsored podcast series entitled Supply Chain and ESG – What You Need to Know. We discussed: ESG drivers with Jared Connors and James Calder; UFLPA, Supply Chain and ESG with Travis Miller and Jamie Wallisch; the New World of Product Compliance and ESG, with Cally Edgren and Devin O’Herron; Emissions Reporting Strategies with Devin O’Herron and Jared Connors; and Responsible Minerals, Supply Chain and ESG, with Jared Connors and Daniel Zamora. Today we look at the new world of product compliance and ESG.

I certainly see safety as a key component of the ‘S’ in ESG. However, I had always focused on worker safety and perhaps greater environmental safety. Yet consumer product safety is also a component of the ‘S’. This is not new but combines topics and regulatory concerns in product compliance which have been gaining in importance for the past 20 years.

Edgren began with explaining that product compliance is a discipline focused on ensuring that products meet regulatory requirements where they are sold. Further, there is an evolution of those regulatory requirements. Product regulatory compliance used to be more traditionally things like electrical safety or mechanical safety, but then back in 2002, the Regulatory of Hazardous Substances (RoHS) came along. The RoHS directive applied design criteria to electrical products. The significance of this was that for purposes of the RoHS directive, it was not just tied to the safety of the user as traditional product compliance regulations were; it was actually tied to the safety of the third world countries, where the electronic waste ends up.

This created a regulatory obligation with more of a sustainability focus behind it versus the traditional product safety. Over the last 20 years there has been a tremendous explosion of these types of regulatory obligations. These aren’t just nice to do things. Edgren pointed to an example of the European Union’s (EU) Ecodesign Directive which established a framework to set mandatory ecological requirements for energy-using and energy-related products sold in all 27 member states. She noted, “both of these regulations, the RoHS directive and the EU Ecodesign Directive require compliance, or you cannot sell in locations where they are effective.” This is where the product compliance bridge comes back into the area of greater sustainability or environmentally focused regulations.

O’Herron expanded on this by noting, “there’s a lot of connection directly to the E in ESG with product compliance, as there’s a focus on environmental regulations and making sure that your products are meeting those environmental regulations.” But it is more than simply meeting regulatory expectations. He explained it “has to do with externalities. What are these costs of doing business? Not just the financial cost, which are fairly well established. It is the social and environmental costs as well, which have not “traditionally been quantified.”” He provided the example of the “environmental social cost involved with the disposal of toxic chemicals at the end of their life in electronics is unacceptable. We are becoming increasingly aware of the importance and relevance of these externalities and the barrier that they present towards sustainability, environmental, social, and governance metrics represent another way of starting to measure and manage those externalities.”

One of the greatest benefits to ESG, has been not simply the realization of the inter-connectedness of what were seemingly disparate areas of business. It is that companies are taking a much more holistic approach to looking at these issues. Edgren said we may not be there quite yet in the area of safety, but she believes it is an evolving process and dialogue. She said, “what I am seeing and what I have experienced, is we are starting to merge the environmental into the more traditional product safety. We are starting to elevate those conversations which in reality, are just different pieces of the same whole puzzle. We are starting to have those conversations. I don’t think that industry is a hundred percent there yet of connecting product safety to ESG, but that’s certainly part of the message that we are highlighting.”

It is this realization of inter-connectedness that may be the most import consequence from an overall corporate ESG approach. In 2020, the Department of Justice (DOJ) released the Update to the Evaluation of Corporate Compliance Programs which mandated that the corporate compliance function have access to all corporate data. No more siloes for compliance. When you take that attitude and apply it to an ESG framework, you begin to see the power of integrating all these data points to make your overall business more robust, more resilient and more cohesive.

Join me tomorrow where look at a Scope 3 emissions reporting strategy.

To listen to the podcast this blog post is based upon, click here.

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Innovation in Compliance

Supply Chain and ESG – What You Need to Know: Episode 2 – UFLPA, Supply Chains and ESG with Travis Miller and Jamie Wallisch

 

Tom Fox welcomes Travis Miller and Jamie Wallisch to part 2 of the Supply Chain and ESG – What You Need to Know podcast series, sponsored by Assent. In this episode, they talk about the Uyghur Forced Labor Prevention Act (UFLPA), and how it impacts the way companies do business across the supply chain.

 

 

The UFLPA is a United States federal law that stops companies from importing products made with forced labor in the Xinjiang region of China, or any other part of China with forced labor by workers or other minorities. This law is important because it makes sure that companies are aware of what is happening and take steps to stop it. The UFLPA makes companies use processes that already exist in their business. To follow the UFLPA, your company would need to have a compliance program in place. Jamie also explains how regulators could assess companies’ compliance programs using the UFLPA. 

 

For ESG to succeed, ESG is important for companies to do well. Each company out there affects more than just the people who work there. It’s not just about who you choose to do business with, but also who you choose to profit from. You can’t just condemn bad business practices verbally. You have to be actively engaged in ethical behavior. 

 

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Supply Chain and ESG-What You Need to Know: UFLPA, Supply Chains and ESG

I recently had the opportunity to visit with several folks from Assent Inc. for a sponsored podcast series entitled Supply Chain and ESG – What You Need to Know. We discussed: ESG drivers with Jared Connors and James Calder; UFLPA, Supply Chain and ESG with Travis Miller and Jamie Wallisch; the New World of Product Compliance and ESG, with Cally Edgren and Devin O’Herron; Emissions Reporting Strategies with Devin O’Herron and Jared Connors; and Responsible Minerals, Supply Chain and ESG, with Jared Connors and Daniel Zamora. Today we review the intersection of the Uyghur Forced Labor Prevention Act (UFLPA), Supply Chains and ESG.

The UFLPA is a law which targets goods made, whole or in part, by forced labor in the China Jing Jang region or made by forced labor in other parts of China by Uighurs, or other minorities. Wallisch explained that it is designed to operate as a de facto trade ban on goods from the Jing Jang region of China. US businesses will face the high burden needed to overcome an expectation of forced labor presumption. Wallisch believes this is the most “significant law placed around the issue of forced labor, and it has the most tangible and concrete terms of repercussions, that companies can potentially face.” Further, she believes the key will be around your documentation to provide to US Customs and Border Protection. Miller noted that this means if you are “asking companies to look back into where the actual sand came from, that got turned into the silica, that got turned into the semiconductor, that got turned into the circuit board, that got turned into the device that finds its way into your laptop. There’s just never been anything like it.”

Interestingly, this ties directly into a company’s overall ESG framework as it is combining all elements in such a program. When you tie the UFLPA, together with anti-corruption laws such as the Foreign Corrupt Practices Act (FCPA), export controls laws and regulations enacted by both the Trump and Biden Administrations and anti-money laundering (AML) laws, such as the AML Law of 2020, you begin to see a more integrated approach by the government and how companies must respond with an integrated approach such as a corporate ESG program. Wallisch concluded, “it’s really signaling the intersectionality of all these particular topics under ESG.”

Miller noted, interestingly, about how much this law and its guidance weave together existing business processes. He believes the UFLPA was “birthed out of the America Supply Chain Executive Order in the US/China trade war, which was focused on semiconductors, critical, raw materials elements that are the subject of the extractives. To comply with it, you could not actually start unless you already had a product compliance program in place. This means that if you do not know the bill of materials, if you do not have an approved vendor list, if you do not know where your components are being manufactured; how do you even begin the ESG program? So really in my opinion, the UFLPA is not novel in that it created something new; it is  novel in that it is forcing companies to use all the existing business processes to tie back the breadcrumbs and figure out things that they should already know and then to be responsible for reporting on them.”

Miller believes that even with the UFLPA and other regulatory initiatives, the real driver here is business and business operations. He believes it will require organizations to recognize that their organizational footprint, for each business extends beyond the four corners of the organization. This will come into play for financing whether through private equity investment, public market offerings, bank loans or other mechanisms. It has not extended down into individual responses to requests for quotes in the business world.

Equally importantly, he said, “it’s also about who you chose to do business with, who you chose to profit from, and it’s not enough that you can just say, well, I outsource the bad stuff; slaves being used in my supply chain and bribery occurring in the same place. That is no longer a sufficient answer. It’s this assessment, it’s this realization that you are the sum of your components. You are the sum of your relationships. The business is not an island. It’s everything being pulled together and your entire impact on the globe, on the people on the world, on the business processes that derives your profitability now must be considered. And that’s quite revolutionary. If you think about it.”

Join us in Part 3, where we consider the new world of product compliance and ESG.

To listen to the podcast this blog post is based upon, click here.

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Innovation in Compliance

Supply Chain and ESG – What You Need to Know: Episode 1 – ESG Drivers with James Calder and Jared Connors

 

James Calder and Jared Connors are today’s guests on this premier episode of the 5-part series, Supply Chain and ESG – What You Need to Know. This series is sponsored by Assent. In this conversation, they chat with Tom Fox about how ESG impacts a company’s performance presently and in the future.

 

 

Before the pandemic, many companies were very dependent on global supply chains. But now that the pandemic has started, companies need to be more resilient and focus on environmental resilience. This means that they need to be careful about where they get their supplies from because there is a risk of disruptions. Additionally, companies that can’t demonstrate that their products don’t violate human rights are at a disadvantage. Without evidence that they are adhering to labor laws, they could lose business to their competitors, Jared tells Tom. 

 

ESG can help companies save money and be more efficient. “When you think about that in the context of labor… if you’re helping the well-being of these organizations or these individuals out there working in these organizations, oftentimes you see a lot more efficiency and better quality in their work,” Jared says. 

 

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Supply Chain and ESG – What You Need to Know: ESG Drivers

I recently had the opportunity to visit with several folks from Assent Inc. for a sponsored podcast series entitled Supply Chain and ESG – What You Need to Know. We discussed: ESG drivers with Jared Connors and James Calder; UFLPA, Supply Chain and ESG with Travis Miller and Jamie Wallisch; the New World of Product Compliance and ESG, with Cally Edgren and Devin O’Herron; Emissions Reporting Strategies with Devin O’Herron and Jared Connors; and Responsible Minerals, Supply Chain and ESG, with Jared Connors and Daniel Zamora. Today we consider key environmental, social and governance (ESG) drivers.

We began with some of the key factors driving ESG. The pandemic was a major driver and the Russian invasion of Ukraine another key event. Calder believes that key issues around sustainability overlaid with increased regulatory and investment pressure have also been key drivers. The pandemic emphasized the huge dependency on global supply chain, and everyone realized we have to become more resilient and maintaining resilience also increased the need for environmental resilience.

Additionally, there are multiple drivers for human rights, built upon the UK Modern Slavery Act,  such as the Uyghur Forced Labor Prevention Act (UFLPA). Laws are being created focusing on the environment, human rights and especially supply chain due diligence. It can even be a risk now to source from regions that do not abide by the appropriate environmental controls or do not abide by our expectations on human rights, all of which can lead to a supply chain disruption.

Obviously, investors, lenders and even insurers are looking at ESG issues with the constituencies. Connors emphasized the commercial pressures companies are under regarding ESG. He related, “today alone, I’ve had calls with three companies about this.” He went on to add issues can range “from social accountability looking upstream at all their suppliers of parts and sub-assemblies. If I don’t meet these obligations, I can’t ship into a certain geography. And they were talking about restrictions on being able to import goods into the United States and the pressures that they were feeling from their customers on showing their due diligence on what their labor practices were to their customers.”

Another significant driver is in talent acquisition and retention where companies are looking at competing for new employees and trying to attract new talent into their organizations. Companies want to show their leadership in sustainability because there is a new generation of employees who want to work for and at companies with sustainability values. Not surprisingly, Connors sees investor relations as a fundamental driver of ESG and interestingly, “investors are looking at that from a non-financial reporting, as much as they are looking at it from a financial performance aspect. In fact, the more C-suite level individuals I talk to, they say that ESG sustainability is more of what their shareholder meetings are than what their financials are anymore.”

We also considered where the ESG drivers may be down the road. Calder noted it is unusual because there is both legal and regulatory pressures in addition to the market pressure. These market pressures will only grow from what we are seeing now in terms of sustainability and ESG and they are being weighed stronger in the bid process. He noted, “customers are coming to us saying we’re actually losing bids.” But this provides a market opportunity that if you can demonstrate “qualities that are superior to your competitors in these areas, you could win more bids.”

One driver that does not get as much as it should is the business operations aspect of ESG. Connors grew up professionally in the conflict mineral space where companies were required to take a deep due diligence drive into their supply chain. This provided companies with solid information which led to the opportunity to discover inefficiencies. ESG offers companies that same opportunity with data, to determine if there are operational inefficiencies. If there are inefficiencies, business solutions can be brought to bear to help make companies actually run more efficiently from the data collation required for an ESG program.

Calder concluded with a caution about green washing. He said, “we see through a lot of our monitoring of the supply chain” and that companies export more regulatory oversight around carbon emissions and reporting. The US Securities and Exchange Commission (SEC) has created their own enforcement task force for ESG. “The SEC will expect standards. The SEC will expect auditing. They expect you to be able to back up what you say and that backing up what you say does come from a reporting requirement.”

Join me tomorrow where I consider the UFLPA, supply chains and ESG.

To listen to the podcast this blog post is based upon, click here.

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The ESG Compliance Podcast

ESG Supply Chain Compliance with Travis Miller and Jared Connors


Assent Compliance’s Travis Miller and Jared Connors join us as they discuss their work in conflict minerals supply chains, how ESG compliance plays a role, what companies should do to interpret data and increase efficiency and recovery, and the future of risk management.
▶️ ESG Supply Chain Compliance with Travis Miller and Jared Connors:
Key points discussed in the episode:
✔️ Companies are starting to realize the significance of making a commitment to ESG through responsible sourcing.
✔️ Outsourcing usually occurs in the most regulated, most dangerous, and least profitable businesses.
✔️ Business continuity planning is crucial in risk management, more flexible disaster response, and efficient operations. Aside from environmental and social, risk is also a financial concern.
✔️ The most important letter of ESG is P – product, people, and policies. Middle-aged workers are the most vulnerable and highly targeted in inhumane business practices and violations.
✔️ Dig deeper into organizations and understand their commitments to mitigate and prepare for risk.
✔️ Non-financial risks are pressuring investor disclosures.
✔️ ESG is reorienting the global market and the world. Large-scale environmental and social scandals ruin reputation and business.
✔️ Educating the supply chain contributes to overall company efficiency and risk management.
✔️ Compliance toolkits should be utilized even outside the company. The legal space has become the ideal practice ground for compliance.
✔️ Companies should be proactive in detecting supply chain issues internally.
✔️ Translate technical speak to an executive language to gain interest from the C-level suite.
✔️ Assess supply chain maturity.
✔️Companies are now compelled to make a change due to their global influence. Consumers’ cries for environmental and social accountability are now heard – all thanks to social media.
Jared Connors is a senior subject matter expert on Corporate Social Responsibility at Assent Compliance, the worlds’ leader in supply chain data management.
His expertise involves achieving ESG goals by understanding and mitigating potential supply chain risk, the transition from CSR to ESG, how companies can take a holistic approach to ESG, and ESG-related regulations, such as those pertaining to human trafficking and slavery, conflict minerals, and anti-bribery, anti-corruption.
Travis Miller is General Counsel at Assent Compliance. He manages Assent’s worldwide legal activities, advises the Board of Directors on legal matters, and oversees corporate compliance, governance initiatives, and other commercial transactions. Before coming to Assent, he served in various high-level counsel positions with companies such as Microchip Technology, Foresite Group, and St. Jude Medical.
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Travis Miller on Linkedin
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