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Supply Chain Due Diligence Investigations: More Than a Simple Box to Check

August 09, 20233 min read

Hg Due Diligence Blog and Social Media Series | Part 3

This is Part 3 of a 4-part mini-blog series.

The business environment of the past few decades has evolved rapidly, placing nearly every type of business, from very small “mom and pop” local shops to tech-driven conglomerates, into the global economy. Companies with broad operations across the pharmaceutical, retail, energy and food sectors, for instance, have much expanded terrain to navigate in the areas of threats, compliance management and reputational concern. Today, components by which even a simple product like a blended coffee is made may be sourced from five continents.

But how do organizations of every size ensure that the suppliers they contract with are free of corruption and illegal activity, such as human rights abuses? How does every organization ensure that the vendors they support align with their mission, values and culture? The complex array of data available online has only elevated the difficulty of understanding the ethical practices of an organization, especially that of a supply chain partner headquartered continents away.

The acronym ESG (Environment, Social and Governance) summarizes the areas Hetherington Group’s Due Diligence Services and Trainings focus on when vetting supply chain matters. As covered in my colleague Matthew Golabek’s blog about ESG here, public accountability for foreign and domestic companies regarding their impact on the environment, social justice and transparent governance is now of paramount concern as governing agencies such as the World Economic Forum and International Business Council have established standardized measurements to quantify ESG contributions and now require companies to report on their ESG status.

At Hg, we not only lead investigations on ESG matters across the supply chain for companies in a broad array of industries, but we also instruct procurement and other corporate officers in how to execute effective due diligence using open source intelligence (OSINT). We lead investigations for companies and train in issues such as:

  • Determining if a supplier has any concerning affiliations that could be a risk to their intellectual property 

  • Determining the legitimacy of physical locations of overseas suppliers and ensuring permits have been legally obtained

  • Ensuring the supplier has a good reputation and is not tied to any corruption or illegal activity 

  • Uncovering processes are in place to ensure the sterility and safety of products across the supply chain for the pharmaceutical industry

  • Exploring the publicly available investment and financial disclosures that often exhibit an organization’s true values

  • Verifying a supplier’s claims of green and sustainable operations

  • Locating trusted sources to obtain public records

  • Conduct site visits and internal interviews internally  

Where can supply chain officers, procurement managers and corporate boards of directors find such information? Often, the answers are hiding in plain sight through publicly available records. At Hg, we utilize state-of-the-art software that can locate local and international records and cross-reference data to ensure the legitimacy of supplier enterprises, identify patterns of reporting information that may uncover fraudulent locations, corporate officers and financial practices as well as scrape social media for instances of human rights abuses and negative environmental impact.

Navigating the digital sphere to ensure corporate integrity is complex, but at Hg, we keep pace with the array of resources, software, media and databases to enable our clients to ensure their business practices remain sound globally and their positive reputations stay intact. Because due diligence is not a seasonal activity like a tax audit —  but in fact a 24/7 process involving every department of an organization — we recommend due diligence training or outsourcing to a trusted partner like Hg to ensure enterprises avail themselves of the latest databases, processes and software to ensure a sound supply chain and insulate against compliance and regulatory violations while protecting against reputational damage that any negative report within the ESG realm can generate. Doing business globally with international partners in the supply chain that align in ethical standards is the best way to ensure a competitive market position, safe work environment and public trust – all of which contribute to long-term sustainability and viability.

To determine how Hg can help your organization secure its supply chain through investigations services and executive trainings, contact us at [email protected].

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