How can TPRM align with emerging sustainability reporting requirements?

Third-party risk management programs can align with emerging sustainability reporting requirements, especially for environmental and governance compliance, by:

1. Integrating Sustainability Criteria: Incorporate environmental and governance factors into the existing risk assessment frameworks to evaluate third-party partners based on their sustainability performance.

2. Enhanced Due Diligence: Conduct thorough due diligence on third parties to assess their impact on the environment, adherence to governance best practices, and compliance with regulatory requirements.

3. Contractual Agreements: Include specific sustainability clauses in contracts with third parties to ensure they uphold required environmental and governance standards.

4. Monitoring and Reporting: Implement systems to track and monitor third parties’ sustainability practices regularly. Require standardized reporting on environmental and governance metrics.

5. Training and Awareness: Educate third-party partners on sustainability expectations and collaborate on improving mutual sustainability performance.

6. Continuous Improvement: Establish mechanisms for feedback, audits, and addressing non-compliance issues to drive continuous improvement in third-party sustainability practices.

By implementing these strategies, third-party risk management programs can effectively align with emerging sustainability reporting requirements, ensuring better environmental and governance compliance across the supply chain.