**[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

Once something that could be left to the legal department, regulatory compliance has become an important aspect of procurement’s day-to-day considerations as lawmakers the world over have become increasingly bold in their attempts to police business.

This is most obvious in the area of sustainability, where many governments are pressing businesses to get a better handle on the carbon emissions, pollution, waste and human rights in their value chains. But the regulations that procurement teams need to be conscious of span everything from data protection to employment rights and product safety.

Amid a complex regulatory environment, the implications for procurement functions vary considerably depending on the industry and geography of an organisation. With that in mind, it would be impractical to provide a comprehensive guide that enables businesses to comply with the different requirements of each regulatory regime. But by focusing on some of their common threads, this report aims to show how the function can develop the right capabilities, processes and relationships needed to navigate this complex, uncertain environment with as much confidence as possible.

*Download Simplifying compliance: Managing procurement's regulatory burden* , , published in partnership with Procurement Leaders, to gain insights into:

- The legal landscape: Discover the regulations of most concern to procurement and supply chain teams.
- Governance and project management: Learn how leading functions are organising staff to ensure they are prepared for incoming laws.
- Engagement and processes: Identify opportunities to build on existing processes to enable more efficient regulatory compliance.

Simplifying compliance: Managing procurement’s regulatory burden

Risk Management Tools

Prewave

Join Ian Lawless, Head of Content Partnerships & Event Director at Procurement Leaders, and Conrad Smith, CEO at Graphite Connect, as they tackle some of procurement’s most pressing data challenges — from breaking down silos and improving data quality to preventing fraud before it strikes.

Each episode delivers five sharp insights in just five minutes — real-world strategies that cut through the noise and help you act faster.

[Watch now](https://www.bigmarker.com/series/5-in-5-a-pl-graphite-collabo/series_summit?utm_bmcr_source=MarketplacePL) to unlock smarter, faster ways to manage procurement data.

5 in 5: A Procurement Leaders & Graphite Collaboration

Supplier Management and Collaboration Tools

Spend Data Management & Analytics

Graphite Connect

As purchase orders and contract values reduce in size, there is less value to be obtained through applying professional procurement rigour. Eventually, the point is reached at which the cost of extracting the value exceeds the value itself.

However, artificial intelligence in the form of generative large language models and autonomous AI agents can successfully take on a wide range of procurement activities, deploying human-like skill and competence at a fraction of the cost. This is transforming the thoroughness and depth with which procurement is carried out – extracting lost value by treating tail spend with a rigour comparable to strategic spend.

Download *Unlocking deep value: the impact of agentic AI on source-to-pay* published in partnership with Procurement Leaders, to gain insights into:
- The potential impact of AI on procurement processes including sourcing, contract management and P2P.
- How AI can maximise existing sources of value – and open up opportunities that have did not previously exist.
- Quantifying the potential ROI of implementing artificial intelligence.

Unlocking deep value: The impact of agentic AI on S2P

Sourcing Technology

S2P Suites

Zycus

Procurement professionals report they must contend with risk landscape that consists largely of low-probability, high-impact events – so-called ‘black swans’.

This reflects supply chain managers’ lived reality in the years since 2020 – a period punctuated by disruption resulting from a series of catastrophic events, including the Covid-19 pandemic, Russia’s war in Ukraine, and ongoing, escalating geopolitical conflicts.

With international relations ever-more fractious, companies’ ability to trace supply chains is becoming increasingly critical if they are to mitigate geopolitical and compliance risks. Yet while there is no shortage of will on the part of procurement teams to improve their oversight of supply chains, meaningful visibility remains a distant reality for most.

Download *New approaches to uncovering sub-tier risks*, published in partnership with Procurement Leaders, to gain insights into:

- **Prioritising discovery:** With functions having to balance the competing demands of revenue-protection and regulatory compliance, learn how organisations are segmenting the supply based to map and screen the supply base.
- **Promoting transparency:** Discover the advantages and disadvantages of different methods of gathering information on Tier-n suppliers.
- **Mitigating threats:** The strategies leading organisations are enacting to avoid – or, at least, minimise – the impact of sub-tier risk events.

New approaches to uncovering sub-tier risks

Supplier Intelligence

The era of relative stability that enabled globalisation – and the long value chains and low-cost sourcing opportunities that it created – is over. Instead, CPOs now operate in an environment characterised by uncertainty, volatility and, above all else, complexity.

On top of this, the ever-accelerating development of AI promises to revolutionise productivity and extend businesses’ capabilities in a way that was once unimaginable, although many organisations are unclear on how they can deliver tangible results in this area.

Ultimately, the challenge for leaders is twofold: better understanding this complex environment; and becoming comfortable with leading their organisations into an uncertain future.

Enter the *CPO Compass 2025*. Unlike other reports published by Procurement Leaders, the aim here isn’t necessarily to provide readers with 'the answer'. But, by talking to subject-matter experts to explore the macro trends, we explore several of the tensions that leaders must navigate in the coming years. 

Download this year's report, in partnership with Ivalua, to gain insights into the following areas:

- **Navigating the business supercycle:** In a world of post-global sourcing, experts discuss the macro factors that CPOs should account for when developing their strategies.
- **Balancing human and artificial intelligence:** Understanding the interplay between people and technology as leaders seek to develop future-fit functional capabilities.
- **Powering next-level productivity:** Facing ever-greater pressure to do more with less, could procurement’s role in the value chain unlock opportunity for buying organisations and suppliers alike?

Marketplace

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Simplifying compliance: Managing procurement’s regulatory burden

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Unlocking deep value: The impact of agentic AI on S2P

New approaches to uncovering sub-tier risks

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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