Third parties are playing an increasing role in the overall success of a business with ever-increasing requirements to optimize costs. There is also a paradigm shift in the business environment due to the recent pandemic and an increased focus by investors and regulators on Environmental, Social & Governance (ESG). ESG trends are leading to a greater need to understand third-party relationships and ensure needed transparency. Going forward, monitoring third parties will have a direct and meaningful impact on businesses and play a critical role in ESG strategy.
With the increasing reliance on third parties, these relationships gain more importance to execution strategy and can become leaders in ROI and operational gains through execution of ESG strategies.
Key Solution areas
Often third parties are the largest contributors to environmental strategies (i.e., greenhouse gas (GHG) emissions for travel, shipping, data storage, real estate). Third-party engagement is a key requirement of a successful ESG strategy.
Key business functions are being increasingly outsourced to third parties, which translates into these outsourced roles having an impact on social strategies (i.e., temporary labor force). Key social initiatives need to be actively embraced by our clients’ third parties to ensure success.
Any successful ESG strategy requires a proper governance structure to be successful. Third-party governance begins with the acceptance of a code of conduct or similar Terms & Conditions but also requires regular third-party assessments to help ensure compliance.
How KPMG can help mitigate risk
- Assessing the third-party environment
- Operationalize third-party ESG strategy
- Measure and report third-party ESG achievements.
Download the insight to dive deeper into ESG Third- Party Solution.
About KPMG LLP’s Forensic - Contract Compliance team
For more than 25 years, our Forensic - Contract Compliance team has been in the position of assisting our clients in evaluating their third-party relationships against compliance standards. Our reviews are built off assessing third parties against their contractual obligations with our clients. Our reviews have garnered both financial results in cost recovery & future cost savings and non-financial results in highlighting non-compliance with codes of conduct and corporate requirements. Our specialty is bringing needed transparency while maintaining and enhancing the relationship between our clients and their third parties.