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How Can You Understand Your Vendor's ESG Practices

Organizations are increasingly prioritizing their Environmental, Social, and Governance (ESG) practices. As ESG gains prominence as a critical factor in evaluating the sustainability and ethical performance of organizations, it isn’t surprising that organizations want to understand and assess the ESG practices of their critical third parties.

Understanding their vendor’s ESG practices is important for organizations to be confident that their vendor’s practices align with their own ESG practices and values. With ESG rising as a third-party concern the ability to determine a vendor’s ESG practices is becoming more and more important.

How can an organization understand the ESG practices of its critical third parties?

An effective way for an organization to understand its vendor’s ESG practices is through third-party assessments. These assessments are designed to evaluate a vendor’s ESG performance based on predetermined criteria and provide insight into their environmental, social, and governance practices. A third-party assessment can be conducted the same way an organization leverages questionnaires to determine a vendor’s risk.

ESG assessments can be conducted through questionnaires that cover areas such as environmental impact, social responsibility, labor practices, governance, and ethical standards.

These ESG assessments can provide valuable insights to an organization about its vendor’s ESG practices. The responses to questions can be used to calculate ESG ratings. Organizations can make decisions about vendors by leveraging the insights and ratings from these questionnaires – similar to how organizations manage and mitigate risk, based on a vendor’s responses to risk assessments.

Understanding a vendor’s ESG practices is crucial for organizations that are prioritizing ESG performance. Through third-party assessments, organizations can gain insights into their vendor’s ESG practices and make informed decisions about their vendors based on alignment with their own ESG practices and values.

Archer is addressing the need for organizations to understand their vendor’s ESG practices by adding ESG capabilities to our Archer Third Party Governance solution. Organizations will be able to provide assessments to their vendors that include ESG questions and can use those responses to determine inherent and residual ESG ratings.

Contact us to speak to an Archer expert about how you can monitor your critical third parties ESG practices.


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