In a recent post by Moody’s Analytics, the company highlighted the importance of screening wildlife trafficking in supply chains to cut financial crime.
Wildlife trafficking has been a worldwide concern for years. It not only involves brutal poaching methods but also poses a grave threat to endangered species, local communities, and even the stability of global health by increasing the risk of pandemics. Despite this, the action taken against companies indirectly participating in such practices through their suppliers has been shockingly minimal to date.
However, a growing call for concerted international efforts has emerged, underscored by a UNODC report published in 2023. The report highlights a burgeoning agreement on the need for action and implies a rising risk of legal repercussions for companies in the near future. Despite the urgency, there is a startling deficiency of research into what measures companies are taking to counter wildlife trafficking in their supply chains.
According to the United Nations, wildlife trafficking is the world’s fourth-largest illegal trade, trailing only drugs, counterfeit goods, and human trafficking. However, researchers from the University of South Florida propose that wildlife trafficking might indeed pose more severe consequences than these other illicit trades due to its destructive effects on biodiversity and the resulting risk of epidemics and pandemics.
Furthermore, the ease with which illegal wildlife products can be transferred from poacher to consumer has been exacerbated by technological advancements, improved connectivity, and increased demand and purchasing power. This is causing the peril associated with this trade to escalate alarmingly.
Various international and national laws have been enacted to combat wildlife trafficking. One such is the Convention on International Trade in Endangered Species (CITES), an agreement among governments aimed at halting the unlawful wildlife and plant trade. Similarly, the US Lacey Act prohibits the import, export, sale, or acquisition of protected wildlife and plants. Nevertheless, the enforcement of these laws varies greatly by country, and the need for bolstered international collaboration has been highlighted in a recent UNODC report.
The relatively low level of attention wildlife trafficking receives is partly due to the less extensive media coverage compared to other geopolitical issues. Thus, both companies and the public tend to be unaware of the broad scale and pervasiveness of the illicit wildlife trade and its multifaceted societal implications. However, as companies strive to enhance their environmental, social and governance (ESG) frameworks, there is a growing need to focus on curtailing wildlife trafficking in their operations and supply chains.
In addition to potential legal sanctions, companies face the threat of reputational damage if found involved or associated with wildlife trafficking. Several prominent platforms have faced this blow, having been accused of facilitating wildlife trafficking. Businesses are responding by ramping up their efforts to mitigate wildlife trafficking. Initiatives include blocking and removing related content, raising employee awareness on the issue, and even partnering with non-governmental organisations (NGOs).
Yet another way companies can combat wildlife trafficking in their supply chains is by understanding its deep interconnections with other financial crimes like money laundering, bribery, tax evasion, smuggling, and fraud. Companies need to integrate screening for these financial crimes into their ESG risk management strategies.
This includes meticulously examining their suppliers and understanding the sources of their materials. Detecting trafficking and associated crimes is complex, and utilising technology to identify red flags, such as adverse media mentions, is key to effectively combatting trafficking.
Read the full post here.
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