When engaging investee companies, investors can meet with a range of key decision makers and internal stakeholders
|Who to engage?||What to engage them on?|
|Board representative(s)||Should set guidance for the company on ESG management|
|C-suite level, including CFO, CEO, COO||Demonstrates leadership commitment. Useful to get appropriate level of attention/resources/commitment|
|Procurement decision||Able to answer the more technical questions on supply chain management|
|General counsel||A helpful perspective on supply chain issues related to regulations/compliance/liability/risk assessment|
|SustainabilityESG professionals||Holistic view on the various stakeholders engaged on the topic (e.g. clients/customers/competitors/communities/civil society NGOs,E&S consultants)|
|Quality management professionals||Provide overview of systemic management processes and systems that may incorporate or be relevant to supply chain management of ESG risks. This may include the audit function.|
|Impacted stakeholders and their representatives||Help assess performance of the company’s ESG risk management|
Stage 1: pre-assessment
Pre-assessment is used by investors to identify key risk areas – for example, conflict minerals in solar panels, and human rights issues in garment industries – to help highlight any red flags and steer the focus of the due-diligence process (and resulting engagement plans for ongoing stewardship of a company).
Pre-assessment can be done remotely as part of early stage due diligence, referring to reports and data published by the investee company (annual reports, memberships, partnerships etc.), and information from third parties such as NGOs and data providers such as SASB, GRI and CDC.
|Stage 1: General supply chain knowledge and initial ESG risk assessment|
|Sector materiality - scope and measures||
|Sector materiality - assessments||
|Severity of risk - environmental and social||
Have you considered the severity of potential adverse impacts? Note: In accordance with the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for MNEs, this risk analysis is undertaken by considering the scale, scope and irremediable character of an adverse impact:
|Size of the investee company||
Note: indicative of resource availability to manage ESG risks and opportunities, and of the nature of procurement in these companies. It should not be assumed that large companies will necessarily have better operating practices and procedures, or longer supply chain relationships than smaller entities, who may have close relationships with suppliers. Nor should it be assumed that large companies have greater ESG risks than smaller companies, as ESG risks can be material to both large and small companies.
Managing ESG risk in the supply chains of private companies and assets
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Who to engage