Beyond audits: How businesses can strengthen ESG risk management

With over 40,000 amfori audits conducted annually, audits are a widely used method for ESG risk management, supporting the identification and verification of ESG risks. At amfori, we believe that audits are a valuable tool in the ESG due diligence journey, but they are not the final destination. We encourage our members to look beyond the audit checklist. While audits provide valuable insights, they cannot be the silver bullet. An effective ESG risk management strategy requires a broader, more collaborative approach that recognises the limitations of audits and incorporates other ESG due diligence methods while continuously seeking improvement.

One of the tools for holistic ESG risk management

While audits can help identify and verify ESG risks, they are only one part of a bigger picture. They provide a snapshot of social and/or environmental conditions and practices of a production site, based on observations, interviews, and document reviews. They rely on the information provided by audited sites. Misrepresentation, human error, or changing conditions can affect audit results. Moreover, audits may not detect hidden or emerging ESG risks, particularly those involving complex issues such as workplace discrimination or environmental harm.

That is why audits should not be treated as a standalone solution. At amfori, we encourage our members to consider audits as part of a broader risk management strategy. We support them with solutions to make informed decisions and drive meaningful, long-term improvements in their supply chains. This can include stakeholder engagement, capacity building, grievance mechanisms, and continuous improvement efforts.

ESG due diligence is a dynamic journey

Responsible business conduct is an ongoing journey, not a one-time compliance exercise. Responsible companies tend to move beyond reactive compliance and adopt a more proactive approach. This means:

1. Identifying and assessing ESG risks across their supply chains.
2. Taking action to prevent and mitigate ESG risks, not just responding to audit findings.
3. Tracking progress and communicating transparently with stakeholders.

Audits can support this journey by providing insights and highlighting areas of improvement. But they are most effective when used alongside other ESG due diligence solutions and approaches that foster deeper understanding and long-term change.

Supporting suppliers through long-term collaboration

Suppliers play an active role in building responsible supply chains; they are not passive subjects of audits. At amfori, we encourage our members to support their suppliers before, during, and after the audit process. This includes:

1. Encouraging suppliers to make the most out of training sessions available on the amfori Academy, to prepare for audits and improve their knowledge of ESG standards.
2. Collaborating to identify areas where suppliers can effectively improve using the Continuous Improvement feature on the amfori Sustainability Platform.
3. Promoting a culture of learning and continuous improvement, rather than “passing” with a grade.

When companies collaborate closely with their suppliers, audits become what they are meant to be: a catalyst for sustainable growth and resilience.

Integrity requires collective commitment

The credibility of the audit process depends on the integrity of everyone involved: companies, suppliers, auditors, and auditing firms. Each stakeholder has a role to play in ensuring that the amfori audit process provides reliable and credible audit results. This includes:

1. Upholding high standards of professionalism and impartiality
2. Reporting concerns or irregularities in the audit process.
3. Engaging in open dialogue to improve audit quality and effectiveness.

At amfori, we are committed to maintaining the highest standards in our auditing framework thanks to the amfori Audit Assurance Programme (AAP). But ultimately, we rely on our members’ commitment to uphold these values in practice.

Toward a holistic risk management approach

Ultimately, audits should be seen as one piece of a larger puzzle. A truly effective ESG risk management strategy is holistic, adaptive, and rooted in collaboration. It combines:

1. Verification tools, like audits.
2. Reliable risk insights like those provided by amfori ESG Risk Compass can help identify the suppliers that may require further investigation through an audit.
3. Preventive measures such as training sessions and capacity building, available on the amfori Academy.
4. Responsive supply chain grievance mechanisms, like amfori Speak for Change, and remediation.
5. Strategic engagement with stakeholders.

Audits are not a guarantee of compliance, nor are they a substitute for responsible business conduct. Audits are a means to an end. By embracing their role in the audit process and committing to a broader ESG risk management strategy, companies can lead the way in building more ethical, transparent, and sustainable supply chains.

This integrated approach supports companies to make informed decisions, manage their ESG risks more effectively, and ultimately, drive meaningful, long-term improvements in their supply chains.

At amfori, we stand ready to support our members every step of the way. If you want to know more, please contact us.