**[DOWNLOAD SMARTKYC’S ESG RISK FRAMEWORK](https://marketplace.procurementleaders.com/partners/smartkyc/resources/smarteye-esg-risk-framework)**

**The imperative for robust third-party ESG risk monitoring**

The imperative for robust third-party Environmental, Social, and Governance (ESG) risk monitoring has never been more pressing. This is due to several converging factors that highlight the intricate relationship between corporate reputation and supply chain integrity:

Heightened corporate consciousness:
- Companies are increasingly prioritising ethical practises, emphasising diversity, inclusion, and ESG considerations in their operations. This heightened awareness underscores the significance of aligning business practices with ethical standards to maintain corporate reputation.

Awareness of reputational implications:
- The serious implications of reputational damage on brand image, market valuation, and revenue have come to the forefront. With the swift amplification of negative information through social media channels, even minor mishaps can have far-reaching consequences, necessitating proactive risk mitigation strategies.

Impact of regulatory frameworks:
- Regulatory frameworks, such as the EU’s Corporate Sustainability Due Diligence Directive (CS3D), signal the complexity of maintaining high standards of due diligence across all business relationships. While not globally mandated yet, these regulations underscore the importance of implementing robust ESG risk monitoring practices.

**Learnings from the banking sector**

There’s a compelling parallel between the evolution of regulatory frameworks in the banking sector and the emerging dynamics in corporate landscapes. The post-9/11 era, for example, led to the introduction of the Patriot Act, which placed a substantial responsibility, more than just an onus, on banks to combat money laundering and terrorism financing.

Similarly, corporations are now navigating an emerging ESG-oriented regulatory environment, placing them at the forefront of endorsing ethical practices.

This shift necessitates proactive measures on the part of corporations to champion ethical conduct and mitigate reputational risks, mirroring the transformative journey of the banking industry.

**Linking ESG with supply chain integrity**

However, firms still generally evaluate ESG from two angles: their own sustainability and ethical performance, and the impact of their investment decisions, while the interdependency with suppliers and partners remains underexplored.

This oversight is significant, as the ethical lapses of these external entities can inflict substantial reputational damage through association, accentuating the critical need for effective ESG risk monitoring.

**Crafting an ESG risk framework to mitigate third-party risk**

Identifying third-party ESG risks necessitates a nuanced understanding of potential ethical misdeeds and lapses. But in order to know how to screen and monitor these relationships, you need to know what those potential ESG misdeeds are or what ‘bad’ ESG looks like.

smartEYE's ESG Risk Framework pinpoints the specific violations to monitor, backed by a vast array of subcategories that include synonyms, colloquial terms, and language variations—though we are open to discussions on refining our classification. In fact, we recommend that each organisation calibrates their risk categories according to their unique approach and risk appetite.

This ESG risk framework we have developed serves as a guide for our third-party risk monitoring, smartEYE. It is by combining a comprehensive risk framework with advanced multilingual search and content processing capabilities, that smartEYE offers real-time third-party ESG risk alerts, emerging as a vital tool in preserving corporate integrity.

**Meeting the challenge of comprehensive third-party risk monitoring**

In conclusion, effective third-party ESG risk monitoring is essential for safeguarding corporate integrity and resilience. By recognising the interconnectedness of corporate reputation and supply chain integrity, organisations can implement proactive risk management strategies to mitigate potential risks and protect their brand reputation.

However, the task of understanding the risks within third-party engagements unveils an industrial-scale challenge due to the vast networks involving entities, directors, shareholders, and their entourages. The quest for comprehensive risk assessment is made even more daunting by the disparate information sources, diverse languages, and the need for continuous due diligence over the life of a business relationship.

Faced with the enormity of this task, organisations must choose between allocating increased manpower—often seen as an insufficient strategy—or harnessing technology to efficiently, swiftly, and cost-effectively manage due diligence processes. Tailored technological solutions, aligned with an organisation's unique risk profile and needs, present a path toward enhanced, cost-efficient due diligence.

To explore our ESG Risk Framework and discover how smartEYE can fortify your organisation against third-party risks, please download it [here](chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://smartkyc.com/wp-content/uploads/2024/03/The-key-to-effective-third-party-ESG-risk-monitoring.pdf).

The key to effective third-party ESG risk monitoring, By Dermot Corrigan

smartKYC

HSBC and B2B fintech Tradeshift have today announced an agreement to launch a new, jointly-owned business focused on the development of embedded finance solutions and financial services apps. 

As part of this agreement, HSBC will make a $35 million investment into Tradeshift in two stages and will join its board. The agreement is part of a funding round which is expected to raise a minimum of $70 million from HSBC and other investors. 

The new joint venture will allow HSBC and Tradeshift to deploy a range of digital solutions across Tradeshift and other platforms. This will include payment and fintech services embedded into trade, e-commerce and marketplace experiences, and will help enable Tradeshift to scale its business commerce proposition across the globe. More details about the joint venture will be announced ahead of its planned launch in early 2024.

**Barry O’Byrne, CEO of Global Commercial Banking at HSBC**, said: “Enabling and growing global trade has been in HSBC’s DNA for almost 160 years. We are very excited to partner with Tradeshift to help businesses and their suppliers trade more smoothly using world-class technology and solutions that the joint venture will deliver.”

“This agreement supports our strategy of being a digital first bank, which includes our commitment to partnering with fintechs and embedding our solutions into the platforms of others.”

**Christian Lanng, CEO and Co-founder of Tradeshift**, said: “The world’s biggest trade bank and the world’s largest trade network are joining forces. Our deepening partnership with HSBC delivers a strong foundation from which to scale and accelerate our vision of a trade network that creates economic opportunity for businesses everywhere.”

“HSBC’s reputation and global infrastructure bring instant credibility and broad appeal to any financial solutions brought to market through the Tradeshift platform. It’s transformative, and it’s a tremendous validation of the innovation and product architecture we have developed over the past decade.”

HSBC supports around 1.3 million businesses worldwide and is the world’s largest trade bank, facilitating over $800 billion of trade flows annually. Tradeshift supports over $260 billion of annual gross merchandise value for a million business users on its platform. 

Ends / More

**Note to editors:**

**HSBC Holdings plc**
HSBC Holdings plc, the parent company of HSBC, is headquartered in London. HSBC serves customers worldwide from offices in 62 countries and territories. With assets of $2,990bn at 31 March 2023, HSBC is one of the world’s largest banking and financial services organisations

**Tradeshift**
Tradeshift is the business commerce platform that redefines the way B2B buyers and suppliers connect, transact and grow. We’re a leader in e-invoicing and AP automation, offering tools for compliant e-invoicing in 50+ countries, including China. We’re also an innovator in B2B marketplaces and embedded fintech services that bring value, opportunity and growth to any business that joins the network. Tradeshift’s vision is to connect every company in the world, creating economic opportunity for all. Today, the Tradeshift platform is home to a rapidly growing community of buyers and sellers operating in over 190 countries. Find out more at: www.Tradeshift.com  

HSBC announces plans for new joint venture with Tradeshift

Tradeshift

**SAN FRANCISCO – July 19th, 2023** – Transaction volumes across US supply chains grew at their fastest pace in more than two years as domestic trade activity showed renewed signs of resilience following a recent slump. 

Data from Tradeshift’s Q2 [Index of Global Trade Health](https://tradeshift.com/global-trade-report/) shows that the volume of new orders and invoices exchanged between US buyers and their suppliers grew at 3 points above its expected range in Q2, recovering from a level of 6 points below the baseline in the previous two quarters. 

“We saw order volumes starting to tick up in the US last quarter as supply chains worked their way out of a bullwhip cycle,” said Christian Lanng, CEO and Co-founder at Tradeshift. “Conditions are still challenging, but the combination of a strong domestic market and high consumer confidence could well give US supply chains enough fuel to ride out the current storm.”

Emerging signs of stability in the US contrast with a more uneven global picture. Total transaction volumes across the Tradeshift platform grew at 4 points below the expected range, a modest improvement on the 5-point deficit in Q1, but nonetheless evidence of a trading environment that remains sluggish. 

The Eurozone and the UK followed the global trend, with trade activity in the Eurozone 3 points below expectations in Q2 compared to a score of -8 in the previous quarter. In the UK, transaction volumes grew at 5 points below the baseline in Q2 compared to -7 points in Q1.

The decline in global demand has impacted the pace of China’s recovery following its lifting of COVID restrictions at the beginning of the year. Transaction volumes between Chinese buyers and suppliers rose at 1 point above the expected range, indicating progress that is more steady than spectacular. 

Globally, order volumes stayed flat at 2 points below the expected range in Q2 and appear to be settling at that level. Key sectors, including transport and logistics, and manufacturing, also appear to be settling into a lower rhythm after consecutive quarters of steeply declining activity. Invoice volumes fell more sharply in Q2, suggesting that supply chains are having to adjust to the prolonged drop in orders. 

“For suppliers, a slowdown in orders is manageable so long as it’s predictable,” said Lanng. “The restriction in access to financing that often accompanies economic uncertainty is far more damaging. Helping small businesses unlock trapped liquidity is among our topmost priorities.”

**-ENDS-**

**About Tradeshift’s Index of Global Trade Health**
Tradeshift’s Index of Global Trade Health analyses business-to-business transaction volumes (orders processed from buyers and invoices processed from suppliers) submitted via the Tradeshift platform to offer a perspective of how external events may be impacting business-to-business commerce in a variety of different regions and sectors across the globe. 

**About Tradeshift**
Tradeshift is the business commerce platform that redefines the way B2B buyers and suppliers connect, transact and grow. We’re a leader in e-invoicing and AP automation, offering tools for compliant e-invoicing in 50+ countries, including China. We’re also an innovator in B2B marketplaces and embedded fintech services that bring value, opportunity, and growth to any business that joins the network. Tradeshift’s vision is to connect every company in the world, creating economic opportunity for all. Today, the Tradeshift platform is home to a rapidly growing community of buyers and sellers operating in over 190 countries. Find out more at: www.Tradeshift.com

**Forward-looking statements**
Any statements contained in this document that are not historical facts are forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995. Tradeshift undertakes no obligation to publicly update or revise any forward-looking statements. All forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from expectations. 

© 2023 Tradeshift Holdings Inc. All rights reserved.

For more information, contact:
Harry Ronaldson
pr@tradeshift.com

US Trade Activity Shows Resilience Amid Challenging Global Conditions

With regulators in a growing number of markets mandating ever greater – and ever deeper – corporate carbon disclosures of emissions, even businesses based outside those jurisdictions will face growing demands for data from customers and investors that are affected.

To ensure compliance in an increasingly stringent regulatory environment, organisations must evolve both their capabilities and those of their suppliers to incorporate primary data into their carbon footprint calculations. This is a complex task, requiring specialist skills, strong supplier relationships and, potentially, third-party support. 

Download *Plotting the path to net-zero: Developing Scope 3 data capabilities*, in partnership with Emitwise, to gain insights into:

- **Understanding how to gather Scope 3 data to calculate emissions:** Gain an overview of different Scope 3 calculation methods, and discover how companies are engaging with vendors to gather supplier-specific information.
- **Elevating capabilities:** The skills that buyers and suppliers need to evolve as they work together to deliver advancements in data quality.
- **Enabling deeper and more effective collaboration:** The actions organisations are taking to overcome supplier disengagement and forge cross-industry links to help accelerate and scale progress.
- **Embedding Scope 3 into procurement processes:** Discover how organisations are progressing beyond reporting to leverage supply chain emissions data in their operations and decision-making.

Plotting the path to net-zero: Developing Scope 3 data capabilities

ESG Solutions

Emitwise

Even organisations with sophisticated procurement functions struggle to integrate disparate systems into a coherent whole. This lack of integration leads to poor visibility and transparency, creating a host of challenges of inefficiencies, such as excessive rogue spend and increased risk exposure.

Download this Procurement Leaders whitepaper, published in partnership with Focal Point, to gain insights into:

- The connection between process improvements and increased visibility. 
- Why disconnects between different systems call for better integration; rather than an overhaul of the function's tech stack.
- How improved visibility can help procurement teams leverage the full potential of AI tools.

Driving procurement performance through clarity 

Spend Data Management & Analytics

Sourcing Technology

Focal Point

Artificial intelligence. It’s the topic on everyone’s minds – not just in procurement, but across the world of business and beyond. Leaps forward in the sophistication and accessibility of the technology over the past 18 months mean it is imperative that leaders understand its long-term implications.

While AI presents plenty of potential opportunities for procurement – from automating negotiations to generating valuable insights from contracts – the pace of change is slow, with many functions reporting they are being held back by problems with their data, funding and skills.

*AI-powered procurement: Decode, deploy, deliver*, published in partnership with Ivalua, examines the ever-evolving procurement technology landscape, providing detailed insights into procurement functions' tech stacks, investment priorities and the steps they are taking to harness the power of AI in their organisation.

Download the report to gain insights into:

- The extent of procurement technology support and the impact of AI components.
- Procurement teams' priorities for digital investments.
- Real-life examples of the AI use cases that leading organisations are currently exploring.
- How CPOs and their teams are preparing for AI by investing in new data infrastructure and upskilling staff.

AI-powered procurement: Decode, deploy, deliver

Robotic Process Automation

S2P Suites

Ivalua

Supply chain disruption is not new: shipwrecks, piracy, and natural disasters have disrupted supply chains for centuries. But the supply chain disruption keeping procurement executives awake at night in 2024 is very different from the disruption that their predecessors worried about in 1924 or 1824. Simply put, geopolitical uncertainties and tensions have never had a greater potential to wreak havoc on trade flows.

Download this Procurement Leaders whitepaper, sponsored by HSBC, to gain insights into:

- The difficulties procurement teams face as they seek to redesign their supply chains to minimise the impact of potential threats.
- The role supply chain finance can play in de-risking trading relationships.
- The four-stage risk and assessment and mitigation process that can help teams plan more effectively in an uncertain environment.

*By completing the form to download this whitepaper, you will be signed up to receive updates from Procurement Leaders and you consent to your personal data being shared with HSBC, who may contact you with further relevant information. [View HSBC's Online Privacy Statement here](https://www.us.hsbc.com/online-privacy-statement/) to learn how your personal data will be processed and how to withdraw this consent. You can opt out of Procurement Leaders emails at any time, please see our [Privacy Policy](https://procurementleaders.com/privacy-policy/)*

Building resilient supply chains amid an uncertain geopolitical landscape

Working Capital Optimisation

HSBC

Procurement’s operating model is the skeleton on which its capabilities sit – the function’s shape and size influences its cohesiveness and ability to meet business needs. As procurement’s remit and its operating environment continuing to evolve, operating models are undergoing rapid change, with more than three-quarters of CPOs reporting that they have altered their org model in the past three years.

*Beyond centre-led: The future of procurement operating models*, in partnership with SpendHQ, illustrates how organisations in different industries and at different stages of their maturity journey have adapted their operating models to meet their evolving requirements, providing inspiration to leaders as they look to structure their function most effectively.

Download the report to gain insights into:
- The factors leaders should consider when developing a future-fit operating model.
- Target operating models for procurement organisations at varying levels of maturity.
- How leading organisations structure their functions to enable business partnering.
- The evolving role of centres of excellence in ensuring peak performance.

Marketplace

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Plotting the path to net-zero: Developing Scope 3 data capabilities

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AI-powered procurement: Decode, deploy, deliver

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The key to effective third-party ESG risk monitoring, By Dermot Corrigan

HSBC announces plans for new joint venture with Tradeshift

US Trade Activity Shows Resilience Amid Challenging Global Conditions