In the world of business, companies are beginning to realize that sometimes building new products that we all love means finding faster and cheaper ways to bring them to us.

Often, that means sending design and production to different parts of the world and being far away from the corporate headquarters and factory floors, where a watchful eye can be kept.

In recent years, many terrible events have happened due to actions that occurred during the sourcing, assembling, and manufacturing of goods.  Some such examples include repeated fires in factories in Pakistan, India, and China, the collapse of the 8-story Rana Plaza building in Bangladesh, and the slavery and rape in the mining of tin, tantalum, tungsten, and gold in the Congo.

Without having control and checkpoints that include environmental, social, and sustainable practices in a company’s product development and supply chain processes, many risks will be introduced without a company’s awareness.

Risks like:

1. Lack of Fire and Factory Safety
2. Non-Compliant Hazardous materials
3. Packaging made from virgin forest
4. Improper disposal of electronic waste
5. Raw Materials from Protected Sources/Shortages
6. Country of Origin issues
7. Human Slavery and Trafficking
8. Lack of Worker Rights
9. Banned Freedom of Association

And…

10. Disputed Fair Wages

Often, these events happen in developing countries, many of whom struggle with poverty, poor infrastructure, and corruption, far away from first world nations.  It’s only after the event has occurred that a company finds out that their product or supply chain was involved.  Some company’s never even know that their product was subcontracted many times without their approval, a major risk for all involved.

At that point, it’s difficult to repair the damage that has been done to your brand and it’s difficult to recoup losses in sales that could occur from customer and industry boycotts or country level sanctions.  Worse, lives taken can never be repaid.

LINKAGE OF ERM AND CSR
This is why there is now a trend to find the synergies between the distinct disciples of Enterprise Risk Management and Corporate Social Responsibility.

It’s imperative that organizations expand the definition of these two fields to merge traditional risk management practices with the environmental and social concerns the world now faces.  Many of these risks are in product development and in the multi-tiered supply chain, as well as, the operations and use and disposal of resources like water, energy, waste, and one’s carbon footprint.

What if someone could show that by managing the risks and resource utilization, a company could be more profitable and build a stronger brand reputation, leading to more customers and better shareholder value?

It IS possible.

This can be done by assessing the 10 risks, prioritizing the risks by their importance (also called “materiality”) and by building new programs that track and analyze these risks throughout the company, its partners, and supply chain.

A company has a duty.  That duty is to manage and prevent risks from occurring to the business and all those connected to it.

Before consequences of unmanaged risks can occur, a company needs to build and/or strengthen programs that will mitigate the risk.  If there isn’t expertise in-house, then seek out 3^rd parties who can help initiate programs and train staff.  It’s important to build programs and processes that will help the company avoid the risks, reduce any potential negative impact or probability of occurrence, and monitor and measure the success of those programs.

Bio:

Kelly Eisenhardt is Co-Founder and Managing Director at BlueCircle Advisors, an environmental compliance and sustainability consulting and training firm based in Massachusetts (www.bluecircleadvisors.com.)  In her role at BlueCircle Advisors, she is responsible for providing business intelligence, strategy and implementation of environmental, social and governance (ESG) risk programs.  Her experience aligns well with her client’s needs for technology, compliance, and sustainability expertise by helping companies create and manage their corporate environmental and social responsibility programs.

To contact Kelly Eisenhardt, send emails to kelly.eisenhardt@bluecircleadvisors.com or follow her on Twitter @KelEisenhardt.  For more information about BlueCircle Advisors and the company’s products and services, please visit www.bluecircleadvisors.com, on Facebook at BlueCircle Advisors, on Twitter @OurBlueCircle, and on the LinkedIn group at the BlueCircle Advisors group.