Risks that arise from social discontent surrounding a project or environmental challenges can be costly in terms of delays, work stoppages, negative publicity or, a worse case scenario, threats to operating licenses.
Much like financial due diligence, a company that proactively seeks to reduce and manage these risks, and potential risks, can benefit from improved business performance over time.
The management-approved social due diligence appraisal is consistent with commitments to sustainable development by a growing number of private, public and international lenders, and produces an enhanced understanding of the social risks that contain a potential for reputational or harm to the corporate brand from community, non-governmental or other political forces.
The social due diligence review, developed with appropriate standards of care – or codes of conduct – provides information for top management to reconcile the demands of doing business with the demands of community or other interests in the footprint of the corporate operation.
An independent team of knowledgeable due diligence analysts, assembled locally, and in cooperation with company personnel, will include the following:
- Conduct social due diligence of the proposed activity in its area of operation;
- Assist the client in developing measures to avoid, mitigate or compensate for negative social impacts;
- Identify opportunities to improve outcomes;
- Monitor and document the client’s performance throughout the development phase;
- Report to management on an ongoing basis.