Boards urged to address ESG risks in supply chain

As the 2023 United Nations Climate Change Conference in Dubai approaches, a new report on supply chain due diligence is sounding the alarm for business leaders to tackle immediate and long term ESG risks in their supply chains.

Published today by the Chartered Institute of Internal Auditors, Supply Chain ESG Risks: Harnessing the Potential of Internal Audit examines the critical need for organisations to align their supply chains with their own social values and environmental targets.

With regulators, customers and investors increasingly demanding greater supply chain transparency and accountability, the report underlines the important role of internal audit when providing assurance and supporting due diligence activities.

Anne Kiem OBE, chief executive of the Chartered Institute of Internal Auditors said: “The climate crisis is already having a significant impact on supply chains and boards need to ensure they have robust risk management and business resilience strategies in place to cope with this. At the same time, businesses need to focus on ensuring supply chains are decarbonising and not sabotaging their transition to Net Zero. Internal audit has a key role to play by providing the board and senior management with independent assurance that climate hazards in the supply chain are being addressed effectively.”

Richard Chambers, senior internal audit advisor at AuditBoard, added: “Accelerating climate change means the risk of havoc caused by supply chain disruption is growing by the day. Meanwhile, business leaders are also being called upon to ensure their supply chains are more environmentally and socially responsible. By harnessing the power of internal audit organisations can enhance their ability to identify, mitigate and manage climate-related and other ESG supply chain risks effectively.”

Disordered by geopolitical risks, macroeconomics and the pandemic, global supply chains are rebuilding in the context of a growing focus on climate risk. In the current issue of CIR Magazine, Jeremy Hughes looks at how companies are finding synergies between the two to create mutually beneficial outcomes

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