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Why Social Media Checks Are Crucial to ESG Compliance

Nearly 60 percent of the world is connected virtually via some form of social media. In the US, the number is even higher, with more than 70 percent of the population owning at least one social media account. The number of social media users is expected to increase to 243 million by 2025, including companies that have increasingly used social media and podcasts to reach a wider audience.

With this increased visibility, it’s essential to include social media checks when performing compliance or reputational due diligence, especially in the areas of ESG. Where environmental sustainability, social responsibility, and governing regulations are concerned, social media due diligence has been shown to fill in data gaps that paint a clearer picture of an organization’s compliance and stakeholders’ comments. Both stakeholders and consumers have placed greater value on an organization’s transparency and social responsibility, and social media checks play an important role in establishing that credibility. Below are some examples highlighting the importance of social media checks in ESG due diligence, as well as solutions and resources to help perform thorough social media due diligence.

What Does Social Media Have To Do With ESG Compliance?

Within the practice of global due diligence, human rights developments and legislative changes take place frequently, and it’s essential that businesses stay up to date. Amid rising issues with climate change and human rights, clients, regulators, and stakeholders are concerned with environmental and social claims made by organizations.

Greenwashing, for example, is a practice that is commonly criticized among companies that make unjustified or exaggerated claims of ESG compliance. In fact, a report which studied 25 major multinational companies found the group of companies aimed to only reduce emissions by 40 percent, and not 100 percent as the term “net-zero” suggests.

Thorough social media due diligence includes not only scanning popular social platforms, such as Facebook and Twitter, but also less common channels, such as forums, chatrooms, and even dark web locations. Online corporate review websites are also a good source for initially assessing company culture and how a business treats its employees. Checks of social media and other more discreet platforms are also effective means to gain visibility into the behaviors of third parties and their executives.

For example, social media checks can shed light on any reported environmental or human rights issue(s) that an organization has experienced from the media, positive or negative. In addition, many companies will utilize social media campaigns to promote misleading emissions reduction results but will exclude supply chain emissions data from these results, which can make up to 80 percent of an organization’s carbon footprint. By engaging in social media due diligence, organizations can fill in gaps and paint a more comprehensive picture of a company’s ESG efforts.

Social Media Checks in the Real World

Social media can be used — when responsibly — as a platform by those close to and/or impacted by malignant eco-social practices to voice their concerns about a company, government body, or country in general. When the information is deemed credible, social media is a mechanism for some to illuminate the concerns of those unheard by big media. Let’s look at some real-world instances in which social media due diligence may have helped an organization better evaluate its relationships with third-party partners.

Ikea — Deforestation and Forced Labor Violations

Ikea, the international furniture and homewares organization known for its “green” practices, was found to have sold furniture linked to illegal logging in forests crucial to the Earth’s climate. The furniture was reported to have been made with sourced wood from an illegal Russian logging third party. A thorough social media check scrutinizing Ikea’s online reputation among peers, associates, and critics, as well as meaningful social media associations, would have identified this illegal connection. As seen in the below tweet, social media diligence would have uncovered revealing online criticism of Ikea’s supply chain, including a “record of flouting forestry laws and rampant tree-cutting practices in environmentally essential Siberian forests.

Home truth – we took one of Ikea’s most popular chairs back to the forests where it grew. One tree per second goes into Ikea’s business so do its claims about sustainable forestry stand up?

– alex thomson (@alextomo) June 23, 2020

The company has also recently been exposed as having contracted with several Belarusian companies that use forced labor in penal colonies. According to the French non-profit investigative journalism network Disclose, various public accounting firms’ records and witness interviews revealed that nearly half of Ikea’s main partners had ties with such penal colonies over the last decade. The furniture giant — at least indirectly — took advantage of the low cost of Belarusian forced labor. Reporting on Disclose’s allegations, CNN’s coverage of the incident reminded readers that this was not the first time that IKEA was accused of forced labor in their manufacturing process. CNN stated, “IKEA was previously accused of using political prisoners in what was then called the German Democratic Republic in the 1970s and 1980s. In 2012 the Swedish company admitted to the fact and said it deeply regretted it.” By performing more thorough due diligence checks and learning from past violations, Ikea could have had a better understanding of exactly where its products emanated, and which suppliers had negative labor associations.

Ikea has worked with several Belarusian subcontractors over the past decade using forced labor in penal colonies where political prisoners are held

Revelations from @Disclose_ngo

 on Ikea’s business in Belarus with @tazgezwitscher @lesoir @nashaniva

Disclose (@Disclose_ngo) November 17, 2022

IKEA furniture was allegedly produced by prisoners in Belarus penal colonies under forced labor conditions, according to a new report by the French non-profit investigative journalism network Disclose

CNN (@CNN) November 18, 2022

Belarus — Workers’ Rights Violations

Scandia Steel and one of its primary supply chain partners, Belarusian Steel Works (BSW), were accused of workers’ rights violations and ethical non-compliance by their respective employees. Sometimes regular monitoring of social media provides advance notice of a situation worth following at a company subsidiary or supplier. In this situation in Belarus, Scandia Steel was also accused of moving slowly to respond to the workers’ strike at BSW. If Scandia Steel had conducted thorough ESG due diligence via social media, then it could have found posts like the tweet below. This would have given the company ample time to issue a proactive news release response or, better yet more promptly liaise with BSW to help resolve the dispute impacting employees and production.

Unprecedented repressions against workers in Belarus. Four workers of ”Belarusian Steel Works” in Zhlobin face a multi-year prison term for organizing the strike at the factory. Last week, ”Belaruskali” fired 55 workers, some managed to flee the country, many will be persecuted.

Franak Viačorka (@franakviacorka) November 28, 2020

Nestlé – West Africa Human Rights Supply Chain Violations

In a sector known for ESG issues, Nestlé has touted sustainable procurement through its third parties, but in 2019 was accused of having virtually no ESG due diligence processes in place to verify the environmental sustainability and human rights practices of its West African supply chain. As mentioned earlier, social media diligence evaluates and analyzes public activity online, including blogs, wikis, forums, and chat rooms — also performing this analysis as ongoing maintenance, perpetually scanning for new mentions or activity. Had Nestlé initially established ongoing monitoring and online checks as part of a comprehensive due diligence approach to the supply chain, the company would have eventually discovered not only unsustainable environmental practices, but also illegal child labor associated with its suppliers in Ghana and Ivory Coast. The agriculture and food giant has since pledged to accelerate its ESG initiatives, but earlier social media due diligence may have given Nestlé the opportunity to evaluate supply chain partnerships before they escalated to global criticism. As seen below, there was social media evidence and concern for Nestlé’s practices years before official accusations arose.

#Mars #Nestlé & #Mondelez are behind devastating #deforestation in West #Africa #Ghana #Cocoa #business #news

Social Media Due Diligence with IntegrityRisk

Using IntegrityRisk SocialCheck, organizations can align with best practices that embrace the value of integrated, full-spectrum diligence profiles to inform investment, hiring, compliance, and other consequential business decisions. This social media intelligence solution blends the power of technology and experienced human insight to give clients confidence in the integrity and completeness of the due diligence foundation underpinning crucial decision-making. SocialCheck identifies and analyzes social media through:

  • Investigating the presence of key platforms by industry;
  • Evaluating and analyzing public activity online, including blogs, wikis, forums, chat rooms, and more;
  • Identifying meaningful social media associations;
  • Scrutinizing online reputation among peers, associates, and critics; and
  • Performing diligence on unindexed web presences, as well as ongoing monitoring.

To learn more about how social media due diligence with IntegrityRisk can optimize your comprehensive ESG compliance process, contact us today.