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SCRM Enhances CSR and Compliance

CSR and compliance encapsulate the regulations and standards that corporations strive to hold themselves to. An SCRM program brings awareness to these topics across the entire supply chain.

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What Does SCRM Mean for CSR and Compliance?

The amount of regulations and standards governing companies is only increasing. In the context of supply chain risk management, it’s essential to know that all of your suppliers—from tier one to end-tier—are complying with applicable standards and regulations. If they aren’t, you could potentially be at risk for fines, brand damage and more.

Although compliance has always been an important issue, it’s more relevant now than it has ever been. The rise of digital information and social networks gives a wide-open platform for consumer reactions to bad behavior. This means that maintaining good CSR and compliance practices is about more than just maintaining good CSR and compliance practices. It’s about actively monitoring your brand image to make sure that the stories your customers are telling about you are the stories that you want to be told.

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The riskmethods Solution helps us to work with financially stable suppliers that avoid child labor and push sustainable production.
Natalie Cueni, Strategic Performance Manager, Clariant International Ltd

The Case for SCRM and CSR and Compliance

  • Even if you don’t get fined for a compliance breach, the damage can be costly. Companies that have to release a statement related to corporate social responsibility violations suffer an average of a 2.8% reduction in company goodwill. (Source: “Study: Corporate Reputation: Is Your Most Strategic Asset at Risk?”, CIRANO, 2012.)
  • A singular and one-time risk event can have lasting effects. One study based on 843 senior-level executives showed that it can take longer than a year to restore reputation and brand image. (Source: "IMPACT: Measuring the Loss of Brand and Business Reputation after a Data Breach," Technology Law Review.)
  • The fines associated with compliance breaches can be steep. For example, organizations not in compliance with GDPR can be fined up to 4% of annual global turnover or €20 million, whichever is greater.

Enhance CSR and Compliance Using SCRM

  • Be aware of the standards and regulations that affect your industry, and put processes in place to make sure your suppliers are in compliance.
  • Extend information collection of industry standard and regulations to all suppliers, not just your tier 1 suppliers.
  • Use an SCRM solution to actively monitor all media outlets—when it comes to compliance, you can’t just set it and forget it.

Whitepaper: Supply Chain Reputational Risk

Reputational risk relating to suppliers arises when a supplier or sub-supplier acts (positively or by mission) in a manner that has a negative effect on the reputation of the customer.
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