Both Investors and Corporate Executives are Seeing Sustainability Benefits
Conflict mineral rules and reporting are heating up on three continents, causing an increase in compliance activity for any and all companies involved in global trade and a look toward unified, simplified reporting and tracking techniques.
In the United States, the holiday shopping season will put another spotlight on a variety of retail goods that may contain conflict minerals. While more and more companies are taking extraordinary measures to verify all source materials in their products, the vast majority of enterprises are still struggling to determine whether their phones, TV sets, computers, cars, toys and other products contain minerals from the conflict regions in Africa. This news, which began trickling out after the last round of reports this summer, will likely continue to cause consumers, investors and others to raise questions about ethical sourcing.
While larger companies have been subject to SEC reporting regulations, the next round of conflict mineral investigations will now fall onto smaller companies that will undoubtedly have less internal resources to track and verify their supply chains for conflict minerals. In Europe, final rules are being prepared for what is expected to be tougher conflict minerals reporting for companies based in the European Union and trading with EU countries. In China, leaders there are finalizing due diligence guidelines for responsible mineral sourcing.
Source Intelligence is a third party service provider that assists global enterprises and suppliers in the process of achieving supply chain transparency, with a specialization in conflict minerals reporting. International experts within Source Intelligence are able to guide companies through this myriad of global regulations, and provide a one-stop enterprise solution to collect and report necessary data.
Connecting people to their supply chains, Source Intelligence helps companies do their part in preventing the sourcing of minerals from conflict areas, which leads to increased risk mitigation along the supply chain. Developing close working relationships with suppliers and investigating the supply chain is the very first step in preventing human rights abuses occurring in your own supply chain. Source Intelligence’s ““Conflict Minerals Reporting. A Deeper Look into RY2015 SEC Filings” provides an in-depth analysis of how companies are fulfilling their Conflict Minerals Reporting requirements, and how methods are changing and improving over time. To download the full report, click here. To watch our on-demand webinar on key trends and highlights with additional insights from experts, click here. –
Reports by MIT Sloan Management Review, Boston Consulting Group, and McKinsey & Company, are revealing a trend of both investors and corporate executives realizing that there is a direct link between successful corporate sustainability practices and improved long-term corporate financial performance.
A recent study found that 90% of investors are likely to measure a company’s sustainability performance before making any investment decisions. MIT Sloan Management Review and Boston Consulting Group released “Investing for a Sustainable Future,” a report summarizing data from interviews conducted with executive-level investors.
In this case, corporate sustainability is defined as environmental, social and governance (ESG) efforts, and investors are seeing a strong link between such efforts and financial performance. ESG efforts can include auditing and reporting on regulatory compliance, ethical sourcing, supply chain transparency, and many other aspects of sustainability and governance. According to the report, a company showing commitment to sustainability is signaling to investors that they are thinking seriously about long-term growth. In 2014, McKinsey & Company released the report “Profits with Purpose: How organizing for sustainability can benefit the bottom line,” which outlines how exactly sustainability practices can have a “material financial impact” on a company. The report revealed that 89 percent of companies that have a high ESG rating can outperform in the financial market in the medium and long run, compared to companies that have low ESG scores. The research by McKinsey suggests that sustainability yields benefits to companies such as risk mitigation, leading to new business opportunities, and improving returns on capital.
Roughly half of investors said that they would not invest in a company if they have poor sustainability performance. Investors were asked the reasons for which they value sustainability performance, and the top three reasons were: increased potential for long-term value creation, improved revenue potential, and demonstration of operational efficiency.
Environmental compliance solutions can assist companies in demonstrating sustainability efforts to potential investors. To learn more, click here.