Governance Module

Businesses face significant challenges related to governance & corruption issues in their supply chains. One of the main challenges is the complexity and global nature of supply chains, which often involve multiple tiers of suppliers, subcontractors, and partners across different countries and regions.

Ensuring compliance with a multitude of legal and regulatory requirements such as the EU’s Corporate Sustainability Reporting Directive (CSRD) and the U.S.’s Foreign Corrupt Practices Act (FCPA). The lack of standardized regulations and varying enforcement levels further exacerbate the complexity of governance issues.

Overcoming these challenges requires strong commitment, collaboration with suppliers, investment in traceability systems, and continuous monitoring to maintain high standards of governance throughout the supply chain. FRDM’s Governance Module is supported by a comprehensive analysis of geographic and industry risks like government cohesion, infrastructure, business environment, corruption, and financial stability of the countries your suppliers and sub-suppliers operate in. FRDM’s Governance Risk algorithm is frequently updated and applied to each stage of your supply chain, from vendor to commodity. Suppliers can provide additional information to better inform their scoring through the use of FRDM Supplier Link, a supplier side dashboard where suppliers can manage their own updates, assessments, data and more.

Sanctions Check Suppliers & Sub-Suppliers.

Businesses that rely on sanctioned upstream suppliers face a significant risk to their operations and reputation.

FRDM maps your supplier’s sub-suppliers and runs sanctions checks on each entity.

Some of the lists we screen against:

Export Control Lists
Forced Labor Risk (Xinjiang Import Controls Designation)
Possibly the Same as Entity in Export Controls List
Possibly the Same as a Sanctioned Entity
Sanctioned
Withhold Release Order Entity
Export to Sanctioned Entity
Export to State Owned Enterprise
Former Sanctions
Government Contractors in BIS MEU Country
Owned by Entity in Export Controls List
Owned by Entity in USA Commerce BIS MEU List
Owned by Entity in USA NDAA Section 1260H List
Owned by Entity in USA Treasury Non-SDN Chinese Military-Industrial Complex List
Owned by Sanctioned Entity
Owned by State Owned Enterprise
Owned by Withhold Release Order Entity
Owner of Entity Subject to Regulatory Action
Owner of Entity in Export Controls List
Owner of Sanctioned Entity
Owner of State Owned Enterprise

Owner of Withhold Release Order Entity
Politically Exposed Person
Possibly the Same as State-Owned Enterprise
Possibly the Same as an Entity Subject to Regulatory Action
Regulatory Action
State Owned Enterprise
Bribery and Corruption (from Adverse Media)
Financial Crime (from Adverse Media)
Former State-Owned Enterprise
High Risk / Cash Intensive Industries
Law Enforcement Action (from Adverse Media)
Organized Crime (from Adverse Media)
Other Reputational Risk (from Adverse Media)
Related to Export Controls
Related to PEP (Politically Exposed Person)
Related to SOE (State Owned Enterprise)
Related to Sanctioned
Basel AML
Corruption Perceptions Index
EU High-Risk Third Countries

Benefits of Monitoring Governance In Your Supply Chain

Improved Compliance and Legal Protection:

Supply chains that lack diversity are exposed to various operational and reputational risks. A lack of diversity can lead to limited perspectives, hampering innovation and problem-solving capabilities. It can also increase the likelihood of discriminatory practices, resulting in legal and compliance issues. Assessing supplier diversity in supply chains allows you to identify potential risks and take proactive measures to mitigate them. By ensuring equitable treatment, diverse representation, and inclusive practices throughout your supply chains, you can reduce the chances of discrimination, exploitation, and labor violations.

Enhanced Reputation and Stakeholder Trust:

IRobust governance frameworks in supply chains contribute to increased transparency and accountability, earning the trust of stakeholders. Mitigating governance risks demonstrates a commitment to responsible business practices, strengthening relationships with suppliers, customers, and investors. A positive reputation as a responsible and ethical organization can enhance brand value, attract customers, attract talent, and differentiate the company in the marketplace.

Minimized Supply Chain Disruptions and Increased Efficiency:

Proactive risk management of governance issues minimizes supply chain disruptions and associated costs. By addressing potential risks in advance, companies can identify and mitigate vulnerabilities, ensuring smooth operations and continuity. Effective risk management strategies improve overall supply chain efficiency, optimizing processes, reducing waste, and enhancing productivity.

How It Works

Each supplier gets a score based on FRDM’s Governance risk algorithm along with any assessment information the supplier chooses to provide.

The Governance risk algorithm consists of multiple indicators such as the MSCI World Governance-Quality Index (USD), the Global Sustainable Competitiveness Index (GSCI), SASB MaterIality Matrix and more.

Each supplier loaded into FRDM gets risk scored for the industry(s) it works in, country(s) it operates in, products or services it provides, and trading partners it does business with (requires Trading Partners Module). In addition FRDM screens for any adverse media regarding governance issues involving your supplier.

You can invite your supplier to link to your dashboard so they can provide any certifications, policy assessments, and additional information. Supplier’s scores change accordingly based on the maturity of their certifications, policies, and additional information. FRDM aggregates all supplier scores into an impact page where you can track progress over time as well as generate reports for external use.

Use Cases For Governance Module

Companies reporting on different sustainability frameworks will appreciate the effectiveness of the Water & Waste Module to drive data and insights needed for reporting which include sections C9 and C12 of the Carbon Disclosure Project and multiple Sustainable Development Goals. In addition the FRDM Governance Module assists with regulations like the EU’s Corporate Sustainability Reporting Directive (CSRD) and the U.S.’s Foreign Corrupt Practices Act (FCPA).

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Governance Module

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