Require your suppliers to disclose their ownership structure

With supply chains becoming increasingly complex, more geographically diverse and regulated by multiple jurisdictions, taking necessary steps to identify who you’re doing business with is now more critical than ever before. On average, more than 25% of a company’s market value depends on its reputation and Companies entering into contractual agreements with multiple suppliers should require public disclosure of ownership structures to mitigate reputational and regulatory risks.

Join the growing number of businesses and investors who require suppliers to publicly disclose beneficial ownership as a condition of supply.  

A robust approach to identify the beneficial ownership of third parties should begin with requesting identification and company documents from all partners; carrying out an enhanced due diligence report which ensures up-to-date and auditable compliance for organizations in any jurisdiction; and acquiring previously verified references from banks and monitoring of supply chain agents.

Companies can also ask suppliers to disclose their ownership information via OpenOwnership, the Global Beneficial Ownership Register which allows companies to self submit and publish ownership information for public benefit.

  1. Detect supplier risks early: Companies who require suppliers to publicly disclose ownership will benefit from early detection of supplier risks. Helping you better assess and award supplier contracts and preventing disruption to the supply chain, reputational risks or financial damages.
  2. Ask suppliers to publicly disclose ownership: as the below case study shows, a broader range of stakeholders and civil society can help companies to identify potential risks. By widening the reach of beneficial ownership transparency to their own suppliers, companies can help identify risks for other businesses, too.
  3. Comply with legislation: Requiring suppliers disclose their beneficial owners helps companies to ensure they are compliant with legislation such as the UK Modern Slavery Act, UK Bribery Act and FCPA, which all have extra-territorial requirements.

Transparency in supply chains can help build more resilient, responsible and sustainable companies. By working with suppliers who are transparent about their ownership you can monitor and manage risks with full visibility, and make necessary adjustments, without being caught off-guard.

Case Studies

In Myanmar, The Coca-Cola Company chose to conduct further due diligence on a potential supplier after engaging with local civil society organizations and learning that a director in the company held a stake in the Myanmar jade industry. For years, the U.S. has placed sanctions on Myanmar’s jade industry due to long term links to human rights abuses and environmental degradation. After further investigation, it was found that the director also held stake in a company that was as a contractor for a U.S. sanctioned army company. The company’s first check did not uncover these risks.

These instances could have posed serious reputational and financial risks to Coca-Cola as an early investor in Myanmar’s emerging economy. If Coca-Cola had ready access to beneficial ownership information of the local supplier they could have more quickly identified the potential risk to their company.

Help grow the ownership transparency movement, and protect your supply chain, by requiring beneficial ownership information from your suppliers.

Help grow the ownership transparency movement, and protect your supply chain, by requiring beneficial ownership information from your suppliers.

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