Companies must be more diligent in choosing partners to implement Covid-19 aid measures
MUMBAI: With an increasing number of companies mobilizing resources to support the government in dealing with the COVID-19 threat, there is an increased need for companies to conduct due diligence on partners they choose to work with to implement aid measures, said consultancy EY Wednesday.
Engaging with an unknown third party can expose companies to financial and reputational risks, EY warned in a report after a trend survey (CSR).
In the current stage of a pandemic, in which companies are mobilizing resources to support the government in facing the immediate threat, the need for diligence cannot be overstated, the report says.
Organizations may be interested in engaging in ongoing pandemic relief schemes and collaborating with (unknown) third parties to offer innovative solutions with the widest reach. But the compromise can potentially expose them to financial and reputational risks, he added.
The survey of an unspecified number of CSR executives said that almost half of the respondents had not taken any steps to verify the partners' history, and the report also acknowledged that identifying the right partner is extremely time consuming, tedious and complex.
He said 65 percent of respondents said they don't have a defined third-party diligence policy that covers implementing partners.
The report also highlighted a number of other concerns about CSR. About 13 percent of respondents to the survey reported unethical behavior in CSR projects, and 15 percent said they were unaware of the nature of CSR spending incurred and whether it was real or fictional.
A third of respondents said that financial misrepresentation of CSR funds is the most critical unethical practice demonstrated by implementing partners, which may include personal/family/friend travel expenses, among others.
It should be noted that many corporations have embarked on a series of post-pandemic relief efforts, either through themselves or by naming NGOs as implementing partners.
Many companies have also committed money to the specially created PM-Cares Fund, which helps make money count as a CSR allocation.