US Food Supply Chains 'Pose ESG Risk', Says Moodys

US Food Supply Chains 'Pose ESG Risk', Says Moodys

A global risk assessment firm, Moodys, has highlighted the existence of human rights infringements in the US food supply chain. Despite the assumption that such issues are limited to developing countries, Moodys notes that the labor conditions involved in producing food are a significant concern. The International Labour Organisation (ILO) reports that over 50 million people, including 3 million children, are living in modern slavery. Moody's points out that goods produced with child or forced labor are found in most US grocery stores. A study also reveals that 62% of forced labor risk in the US food supply chain occurs within the country. With supply chains facing increased scrutiny, companies must monitor their operations to avoid involvement in human trafficking and forced labor.

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FAQ: U.S. Food Supply Chains and ESG Risks According to Moody's

Q1: What is the ESG risk associated with U.S. food supply chains?

A1: Moody's has stated that U.S. food supply chains carry ESG-transgression risks. This refers to issues in environmental, social, and governance aspects that can pose risks to companies involved in those supply chains.

Q2: What prompted Moody's to highlight these ESG risks?

A2: New laws and regulations that require better disclosure and management of ESG factors are part of the driving force behind the assessment of these risks. Companies must now tackle these issues due to evolving legislative landscapes.

Q3: How can companies address ESG risks within their supply chains?

A3: Companies can comply with disclosure and reporting requirements such as SFDR (Sustainable Finance Disclosure Regulation) and CSRD (Corporate Sustainability Reporting Directive). They should also adopt robust risk management frameworks that assess and mitigate ESG risks at global, regional, and site levels.

Q4: What are some of the root causes of supply chain risk according to Moody's Analytics?

A4: Moody's Analytics points out that most supply chain risks stem from the poor performance of specific suppliers. This can manifest in various forms, including operational disruptions, financial instability, or non-compliance with ESG standards.

Q5: Why are globalized supply chains beneficial despite the risks?

A5: While globalized supply chains do come with complex legal, compliance, monitoring, and reporting demands, they also offer huge benefits in terms of economies of scale, access to diverse markets, and the ability to leverage efficiencies and innovations from around the world.

Q6: Are there any recent reports from Moody's on ESG risks?

A6: Yes, Moody's has provided reports and documents that include analysis on how ESG risks could affect entities, the importance of ESG delivery to stakeholders, and the ESG landscape in areas like Latin America. Their assessments often include consideration of how supply chains, commodity prices, and financial flows can be impacted by these risks.

Q7: How does Moody's assess ESG risks?

A7: Moody's has an ESG assessment framework under development, which likely includes ratings and methodologies designed to supervise and monitor ESG risks. These frameworks aim to integrate ESG considerations across all platforms.

Please note, this FAQ is based on the information contained in the search results provided and could be enhanced by additional information from Moody's and related sources for more specific and updated insights.