Require your suppliers to disclose their ownership structure
On average, more than 25% of a company’s market value depends on its reputation. Protecting your reputation and taking necessary steps to identify who you’re doing business with is now more critical than ever before.
But with supply chains becoming increasingly complex, more geographically diverse and regulated by multiple jurisdictions, this poses a major challenge. Only 45% of all jurisdictions provide director information online, while only 36% disclose shareholders.
Companies entering into contractual agreements with multiple suppliers can require disclosure of ownership structures, as a key tool to help screen suppliers and mitigate risks.
Companies who require suppliers to 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.
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.
Join the growing number of businesses and investors who require beneficial ownership information from your suppliers.
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 (EDD) 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. Checking and registering information in central registries will also be integral to this process.
Commit to starting this process in your company today.
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.