**[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

While accessing data to inform decision-making was once a longstanding challenge for procurement teams, today leaders face a very different challenge: they have more information than they can act on. 

Functions need to understand which signals matter, how far in advance they predict an outcome and have the confidence to commit to decisions before a window of opportunity closes. 

Fortunately for procurement executives, AI-powered products are enabling  functions to identify and mitigate volatility in real time, as well as uncover links and relationships in supply chains that procurement teams can absorb into their modelling to deliver long-term value.

Download *AI in... Volatility Management*, in partnership with Procurement Leaders, to access insights into:
- **Separating the signal from the noise:** How AI can leaders to identify and act on the information that matters.
- **Training to win:** The steps functions should take to calibrate AI-powered products to inform long-term decision-making and improve processes.
- **Real-world application:** Discover how companies are harnessing tools to identify significant aspects of supply chain causality that would otherwise have gone undetected.

AI in... Volatility Management

Risk Management Tools

Spend Data Management & Analytics

Sybilion

From pandemics to natural disasters, international trade negotiations and even conflict, supply chain risk management has rarely seemed so uncertain, beholden to moving parts.

With research from HSBC indicating many businesses are not well informed of, or prepared for, potential shocks, this whitepaper explores what leading businesses are doing differently.

Download The big picture: Safeguarding supply chains in a volatile world to gain insights into:

- The steps organisations are taking to account for geopolitical uncertainty when making supply chain investment decisions.
- How companies are moving from reactive to proactive supply chain risk management.
- Actions that leaders are taking to optimise working capital amid prolonged volatility and uncertainty.

The big picture: Safeguarding supply chains in a volatile world

Working Capital Optimisation

HSBC

Although the range of roles within procurement has evolved massively over recent years, the function is thought to be on the cusp of the most dramatic shift in how it operates yet.

New tools and capabilities promise to automate much of the work currently done by humans and to augment further activities, leaving few tasks untouched. In fact, this change is already underway, with more than 70% of respondents to the *Procurement Salary Survey 2025* reported that at least some work previously done by humans is now being handled by AI.

This shift will require CPOs to rethink the roles, skills and, consequently, the people needed to drive success. Drawing on insights from the Procurement Leaders community, expert insight and real-life examples of how organisations are pivoting right now, this report guides procurement executives through this challenge.

Download *Blueprints for future talent: Developing an AI-ready procurement team*, published in partnership with GEP, to gain insights into:
- Reimagining roles: How the job mix within the function is likely to change and what different procurement roles could evolve into.
- The new skills mix: The technical and soft capabilities individuals will need to thrive in this new environment.
- Finding future leaders: How CPOs are identifying and developing the next generation of procurement talent.

Blueprints for future talent: Developing an AI-ready procurement team

Functional Performance

Artificial intelligence continues its relentless evolutionary push towards new operational horizons and strategic opportunities for procurement, with agentic AI representing the next step in the technology’s development.

While generative AI is reactive, creating content or answering queries only when prompted by a human, agentic technology is proactive and goal oriented. Agentic systems possess a degree of agency, meaning they can reason, plan and execute complex workflows across multiple systems with limited human supervision.

With procurement chiefs under continuing pressure to deliver more value, across more areas, with fewer resources, agentic tools offer a tantalising opportunity to accelerate the function's transformation and boost its impact by offloading tactical and time-consuming tasks – freeing staff to focus on high-level strategic work.

To reach this end goal, however, procurement must progress from experimenting with AI tools to delivering on use-cases that demonstrate the technology's bottom-line impact.

Download AI-powered procurement: Building the agentic future to access insights into:
- Developing bifocal AI strategies: Balancing near-term value delivery with fulfilling a long-term strategic vision for digital procurement.
- Implementing AI effectively: Leading organisations reveal when procurement should buy an off-the-shelf AI tool, develop a system in-house, and cocreate solutions with third-party providers.
- Understanding orchestration's evolution: Discover how procurement orchestration tools are evolving from a means of connecting fragmented tools and processes to enabling a 'hybrid' workforce comprised of humans and agentic AI tools.

AI-powered procurement: Building the agentic future

P2P Suites

S2P Suites

Sourcing Technology

Ivalua

Although AI applications have enabled many procurement teams to drive efficiency to new heights, they have not solved one of the function’s most pressing challenges: keeping pace with a volatile and uncertain environment.

Many teams rely on static reports, fragmented data and lagging indicators, leaving them vulnerable to surprises despite the overwhelming volume of information at their disposal.

However, by combining the latest advances in generative AI and large language models with human expertise, procurement teams can move beyond hindsight to foresight – building faster, more contextual and more predictive market and supplier intelligence capabilities.

Download *AI in... Market & Supplier Intelligence*, in partnership with Procurement Leaders, to gain insights into:

- Bridging the insight gap: How AI can accelerate impact and enable better decision-making.
- Procurement use cases: Real-world examples of functions leveraging AI-powered intelligence.
- Enabling long-term success: Four actions to help leaders set an effective strategy and maximise the tools at their disposal.

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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