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.

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Stage 1: General supply chain knowledge and initial ESG risk assessment 
Sector materiality - scope and measures 
  • Which specific ESG issues do you determine as having a potentially material environmental or social impact?
  • Which specific ESG issues do you determine as having a potentially material operational/ business impact?
  • Which ESG issues are subject to due diligence, and which do you measure? Directly, tier one, tier two, etc.
  • Have you benchmarked your supply chain ESG performance?
Sector materiality - assessments 
  • Have you analysed the ESG risks in your supply chain? Tier one, tier two, tier three, etc.
  • What audit/checks do you perform on your supply chain? Tier one, tier two, tier three, etc.
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:

  • Scale refers to the gravity of the adverse impact.
  • Scope concerns the reach of the impact, for example the number of individuals that are or will be affected or the extent of environmental damage.
  • Irremediable character means any limits on the ability to restore the individuals or environment affected to a situation equivalent to their situation before the adverse impact.
  • How many tiers are there in your supply chain?
  • What proportion of goods and services are provided by direct suppliers? Note: The number of supply chain glinesh and the number of tiers that each line will reach can vary significantly within a companyfs procurement of goods and services. The longer the supply chain, the more likely there may be issues . e.g. the garment sector has a relatively long supply chain.
Market dynamics
  • Is the market characterised by oligopolistic buyers with significant leverage over suppliers?
  • Are buyers exposed to significant price competition? (if yes, there is a risk of exploitation of suppliers, either at tier one or further down, due to cost cuts being passed on).
  • Describe the uniqueness/critical nature of the products or services you provide (to clients/customers/communities)?
  • Which members of the supply chain (tier one, tier two, tier three etc.) are unique/ critical to you?
  • Detail how you have diversified your suppliers and your ability to switch suppliers. 
Size of the investee company
  • SME/large corporate?

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.

Geographical risk 
  • What percentage of your supply chain operates in high-risk countries (e.g. non-OECD countries): tier one, tier two, tier three, etc.
  • What percentage of your supply chain spend is in non-OECD countries? Tier one, tier two, tier three, etc. Note: Geographical location provides an indicator of local legislation and enforcement. Non-OECD countries may have lower standards which could pose increased social risks such as bribery and corruption, human rights, and labour standards, as well as environmental risks such as deforestation. However, systemic risks such as climate change have the potential to affect all countries (beyond non-OECD designated countries. 

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