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International Due Diligence Aiding Corporate Social Responsibility

Posted On   date31/01/2020

International Due Diligence Aiding Corporate Social Responsibility

It is well known that every business requires due diligence to successfully (and safely) navigate the global markets. Before making international business decisions, it is imperative that individual investors and advisors learn as much as possible about the deals and people they are considering. Performing proper and comprehensive research and analysis is critical when selecting a new business partner, investment and also when merging or acquiring a company.

Business owners should understand the risks of their investment strategy and plan how to minimize those risks. This can surely be achieved when an international due diligence investigation is conducted and the relevant information is uncovered. However, far too often companies focus on the finances only without exploring other important data: for example, what is the social, legal, human and environmental standing of the company you are dealing with. If this company is meant to become part of your business, your partner, provider, or distributor, you want to know they are doing things right for the sake of your business wellness and the world.

The corporate social responsibility topic is back in the table with the recent discovery of a note from a Chinese prisoner appealing for help (due to forced labor) in a Christmas greeting card. The card was bought at a leading supermarket chain in the U.K. and it exposed how companies are failing in the due diligence (and failing in the continuous monitoring) of their suppliers and business partners. This was not the first time that an alleged victim of forced labor used a hidden message as an outcry for help. There have been numerous examples in the past, especially in the garment industry. Whether the messages are true or not, abusive and hazardous working conditions are a reality that have been exposed also through casualties and investigations around the world. And the worst part is that these extremely poor conditions are also a major issue in other areas such as the environmental.

The problem with being involved with such companies is not only the embarrassing spotlight a business might have to deal with for their relationship with a company who has no respect for human rights or the environment. It is also a matter of responsibility, respect, and the legal implications and reputation backlash this all means.  The financial impact can be devastating and even lead to bankruptcy. For those who are only concerned about the profits, it is important to understand that these situations carry a heavy impact on a business, and could eventually bring a company down.

Unfortunately, in most of the world there are no binding rules obliging companies to apply due diligence to safeguard decent working conditions and basic environment protections, except in the sourcing of certain goods as minerals and timber. Relying on a voluntary approach by businesses has proved inadequate as many companies continue to place profit above people, and cheap products cost lives every day.  HR professionals and business managers are not investigators, and should not attempt to play the role of international investigator.  Get real due diligence to protect your company.

A directive on human-rights and environmental due diligence should apply to all businesses worldwide, from multinationals to small and medium enterprises, in all sectors and covering franchised operations, and public-sector organizations. But even without a legal obligation there are smart business-people who have seen the opportunity that due diligence provides to grow their business.

The positive side is that modern society recognizes and rewards companies that encourage social and ecological responsibility. Conducting international due diligence is an investment to remain safe, but also to guarantee to customers that the whole chain has been carefully investigated and monitored to ensure responsible production, and in the end leads to greater profitability and growth.

International private investigators will help socially responsible organizations verify who they are dealing with, and guarantee that there is no place for irresponsible practices throughout its entire value chain. Contact us if you have a new business deal and need due diligence or corporate verification.

C. Wright
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