Changing customer demands, stricter regulations, increasing requirements from investors and stakeholders: The pressure on companies to fulfil ESG requirements (environment, social, governance) is growing. Environmental or social changes give rise to so-called transition risks, which companies should address in a structured manner.
Violations can lead to reputational damage and rising costs
Relevant aspects are human rights, health protection, diversity and corporate values - i.e. socio-cultural aspects. Business practices should be legal and ethically correct and respect the rights of all employees. This includes fair working conditions, no use of child or forced labour, the protection of health and safety in the workplace and the promotion of equality and diversity.
Companies need a transparent view of their entire supply chain and all suppliers involved in value creation, for example with regard to whether they comply with relevant environmental and social standards. For globally operating companies in particular, the challenges are increasing due to complex production conditions and globally interconnected economic activities.
Social compliance strengthens companies
Companies that take a structured approach to social compliance can avoid transition risks, such as the threat of a shortage of skilled workers, and achieve competitive advantages. Through ethical practices and responsible behaviour, they attract greater interest from relevant stakeholder groups, increase productivity and perform better on the stock market. Companies with appropriate and effective social compliance receive better rankings and ratings, which can facilitate access to social bonds and improve capital procurement. In addition, higher employee satisfaction leads to lower employee turnover and higher productivity, which reduces operating costs and improves financial performance. More qualified professionals also want to work for such companies.
KPMG helps companies of different sectors and sizes to identify and assess social transition risks and implement suitable measures - and thus fulfil the requirements of human rights and environmental due diligence obligations under the Supply Chain Act. Together, we develop customised solutions and provide support in implementing them in operational practice. Benefit from tried-and-tested expert knowledge and support in integrating social compliance aspects and sustainability into your company's governance systems: risk management, internal control system, compliance management system and internal audit.
