In today's globalised economy, businesses are increasingly exposed to risks from various sources, including ESG. As a result, companies are under increasing pressure to demonstrate compliance with a wide range of regulations and standards to their customers, partners and regulators. As requests to disclose elements of compliance systems across a wide range of topics are becoming more frequent, there is an increasing need for a solution that ensures companies are not buried in questionnaires and research.
Demonstrating compliance is challenging for many companies because it involves representations of information, data and, most likely, some opinion on the status and completeness of many risk areas across many dimensions. The company reporting the information is placed in a tough position because it wants to provide enough data to the requestor to display the inner workings of its compliance, yet without identifying significant concerns or risks that it would otherwise want to keep under wraps. Complicating this request for transparency even more is the complexity of multiple risk areas, multiple reporting standards, and multiple differing requests at different points in time and from different perspectives.
One way that businesses can demonstrate compliance is by obtaining an ISO certification. ISO standards provide an international framework for organisations to manage their operations consistently and effectively. An ISO certification is recognised by businesses and governments worldwide, and companies with an ISO certification will have a competitive advantage over those that do not. Once a business has a certification, that certification can be provided to any requesting company as evidence of very high compliance with industry standards and relevant laws.
Companies are now turbocharging their processes to request suppliers to complete due diligence questionnaires and collect information to assess their risks and make informed decisions about whether they want to work together. ISO standards can be used as a tool to circumvent this form of due diligence because they provide evidence of a comprehensive framework for assessing a business’s compliance with a wide range of regulations and standards. The ISO standards are reliable because there is a strong trust between ISO and the accreditation and certification bodies that oversee ISO’s certification process.
Benefits of ISO certifications:
ISO standards are relevant to a wide range of businesses and organisations, regardless of size, industry or location. There is no limit on who can use the ISO standards and guidelines to build compliance systems.
ISO standards are developed by a consensus process that involves experts from around the world. The standards are regularly updated and improved to ensure that they are reliable, current and relevant to business. They are simple to read and have lots of additional guidance.
ISO standards are accepted by businesses and governments globally. This means that ISO certification can provide businesses with a competitive advantage. The accreditation and certification process is very challenging, and certificates are only awarded to the highest in their field.
ISO standards are flexible enough to be tailored to the specific needs of different businesses and organisations. This ensures that businesses can achieve compliance without having to make major changes to their operations.
By using ISO standards as a tool for due diligence, businesses can gain a comprehensive understanding of their compliance risks and make informed decisions about how to mitigate those risks. ISO certification can provide businesses with a competitive advantage and help them build trust with their customers, partners and stakeholders.
There is a simple three-stage process that companies should take around ISO certification:
- Build your own programmes according to the standards and gain certification
This means that you ‘walk the talk’ and set a high standard for compliance. The best programmes to start with are those on anti-bribery, compliance, human rights, safety, environment, privacy and information security.
- Demand through contracts and strong persuasion that your suppliers also get certified
Make it a condition that suppliers, partners and their own channel partners gain certifications across key areas.
- Reward companies for certification
You might also reward companies that are certified for their efforts in managing their own risk, which in turn manages yours. The reward might be access to preferential data, pricing, information or products. A certified supplier is looking for a benefit in spending the time to manage their own risks at your request. Think about how you can reward them for their efforts.
There are already known and respected standards and guidelines that can be used to simplify compliance with key ESG areas. Most of these standards have been in place for many years, and they are a perfect way to build compliant systems.
ISO standards are the ultimate due diligence solution to prove compliance. They can save a large amount of time in collecting and reviewing data and speed up the engagement process, saving you money and allowing you to focus your attention on the more pressing matters of your business.
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