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ESG Risk Management along the Supply Chain

The movement by businesses in Hong Kong to promote sustainability gathers more momentum every year. We thought it would be good to take a look at the knock-on effect it is having, as businesses around the world face pressure to adapt.

Hong Kong is a global hub for apparel companies and has many ties to the apparel industry in the region. As apparel companies from Hong Kong increasingly look to promote sustainability, their supply chain partners in Asia are looking to conform.

Anouschka Jansen, Sustainable Solutions Director of QIMA – a global provider of quality control and supply chain compliance solutions, recently spoke at an AAFA webinar on ESG risk assessment and management, stressing the importance of building a risk assessment strategy which is agile and comprehensive. Having an ESG risk management strategy and framework in place is as important for brands and suppliers alike, to discuss and manage ESG risk in partnership, reducing the power imbalance in supply chains.

How the Sustainability Movement is Affecting Apparel Manufacturers

Apparel manufacturers globally are struggling to stay afloat amidst continuous supply chain disruptions, repercussions from global inflation and new ESG expectations.
The major challenges, in relation to sustainability, come from new ESG and mandatory Human Rights and Environmental Due Diligence legislations, affecting apparel brands and their supply chains around the world, and ongoing changes to consumer buying habits.
ESG and Due Diligence expectations are now reaching deep into global supply chains. This provides new challenges as brands do not have the visibility beyond their Tier 1 suppliers, while suppliers are not aware of these pressures on their clients and what they mean for them.

Consumer demands related to sustainability and other matters are on the rise. These demands cause brands and other industry players to pay an ever-increasing amount of attention to the sustainability and ethical credentials of manufacturers as well as their products.

These new pressures are part of the evolution of the apparel industry. Where manufacturers are able to reduce their ESG risk profile, they will become more competitive.

What Manufacturers Can Do About It

Key things in effectively addressing ESG risk are for manufacturers to build a risk assessment framework and formulate a customized ESG risk strategy.
New approaches and technologies are now available, such as worker voice tools and real-time risk feeds, allowing for a comprehensive 360° risk assessment.
The question that manufacturers need to ask themselves is what do end consumers, brands and other business partners expect from them when it comes to sustainability and ESG risk. Often, manufacturers are the most important link in the chain, when it comes to producing sustainable apparel.

The important thing to note is that where businesses effectively tackle ESG risk, this can make them more valuable. Businesses in Hong Kong, for example, may nowadays be looking to partner with those manufacturers that most effectively address ESG risk.
ESG is a critical topic and is only gaining more significance world-wide. Global supply chain solution providers like QIMA are at the forefront to help clients understand new mandatory due diligence legislations that are rapidly coming into force, developing ESG risk reports and strategy frameworks that can analyze the supply chain, mitigate risk and reach sustainability goals with more confidence.

QIMA is a global provider of quality control and supply chain compliance solutions that combine on-the-ground experts for quality inspections, supplier audits, certification, and lab testing, with a digital platform that brings accuracy, visibility, and intelligence for quality and compliance data. The company currently operate in 95 countries and help more than 17,000 global brands, retailers, manufacturers, and food growers achieve quality excellence.

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