InvestAssure is helping to identify poor EHS performance and other unethical behaviour in supply chains and investment (or lending) portfolios at an early stage, enabling more effective risk mitigation, stakeholder communication and business assurance. NIMBUS monitors the web for corporate allegations and incidents, covering more than 5,000 companies across Asia.  SMART is an online tool for business or facility assessment, benchmarking, e-learning and improvement planning and monitoring. We also provide customised consulting, training and assurance services in Europe and Asia.

Poorer countries get worse ESG media exposure

It’s generally assumed that environmental, social and governance (ESG) risks are greater in emerging economies. Four years of NIMBUS web monitoring data for the Asia-Pacific region confirms this to some extent, although the picture is complex and holds different messages for investors and procurement managers.

We monitor hundreds of international and national web-media sites throughout the year for corporate allegations and incidents - ’alerts’. These are scored according to a range of risk indicators. The average risk level of NIMBUS web-media alerts is strongly related, inversely, to per capita GDP. The correlation is high at 0.7.

However, total media risk profile for any country, considering both alert level and frequency, is more complex.  Other factors strongly influence frequency of media alerts in different countries - in particular, freedom of the press, NGO activity, public access to the internet, predominance of different economic activities and regulatory compliance.

South Korea, has overall low ESG media coverage, relative to its GDP. However, reported allegations are generally more serious than for other wealthy countries, relating mainly  to corruption, fraud and occupational H&S in its manufacturing and engineering sectors. In Papua New Guinea, conversely, average alert levels are less serious, but overall media coverage is very high because of intense media attention from NGOs on its controversial mining and forestry projects.

 

 

SMART takes GSCP online - free licences

InvestAssure is implementing the GSCP supplier Requirements, Implementation Guidelines and Self-Assessment as online modules using the SMART web platform. We are offering free licences to individual business to trial the tool.

Each SMART module includes the core GSCP Requirements and Guidelines, explanatory notes, good practice and further learning links - as well as 4-level multiple choice self-assessment Questionnaires and options for documenting Current State and Improvement Actions.

Sites can collate all actions into an overall Improvement Management Plan which can be updated, along with the assessment, as progress is made. The site's module can optionally be made available to independent auditors and selected customers, providing a route to a single, transparent assurance and improvement process.

* More information on SMART   *SMART Online Demo

 

 

Profiling the ESG Risk Chain

A new analysis of our Nimbus database throws light on the ESG risks along the value chain in Asia. NGO campaigns amplify allegations about consumer products and deforestation. But more than half of ESG risk alerts are triggered by incidents and allegations in sectors further up the value chain, away from the consumer interface.

Mining accounts for over 20% of risk alerts, reflecting a high incidence of accidents in China and also environmental and community issues in Australia, India and Indonesia in particular. The electronics, chemicals and metals manufacturing sectors each account for 7-8% risk alerts.

Investors and brands whose primary concern is to avoid reputational damage tend to focus on high profile issues. But if the objective is genuinely to minimise ESG impacts across a supply chain, and to drive sustainable growth, then responsible sourcing and investment programmes probably need to reach further upstream.

 

 

 

What are the Categories of ESG Risk in Asia?

Analysis of our NIMBUS database, reveals that the dominance of mining, heavy industry and hazardous manufacturing sectors as key sources of ESG risks (see below) is caused by a high incidence of serious Health, Safety and Environmental incidents.

Fatalities in the Chinese mining sector are very significant in this respect, but so too are pollution and waste from hazard processes.

Unethical business practices rank 3rd highest, reflecting the prevalence of conscious irresponsibility lying behind many HSE incidents, as well as other allegations. Allegations and incidents relating to other ESG categories contribute significantly less to overall risks. This suggests that responsible sourcing and investment programmes probably need to re-focus on upstream environmental and H&S impacts, if they really want to make a difference.

At the sharp end this comes down to technological and human capability - investment. But a pre-requisite and major challenge here is 'business ethics' - senior management and private investor attitudes to responsible business. With corruption in government departments rampant, many companies ask "Why should we bother?