No one can argue the demand for ethical and sustainable products is simply a passing trend anymore. Consumers, investors and employees are making it clear they have high expectations of the brands they choose — and mounting evidence suggests that responsible businesses attract customers and enjoy increased profits. But customers and stakeholders aren’t the only ones holding companies to a higher standard. Increasingly, organizations are feeling the heat to become more ethically, environmentally and socially aware from regulators, as well.  

As pressure from all sides increases, so does the incidence of “greenwashing”— a phenomenon that occurs when a company purports to be environmentally conscious for marketing purposes but isn’t actually making any notable sustainability progress. Fashion brands, athletic organizations and even major airlines have all come under fire in recent years for allegedly misrepresenting their environmental, social and governance (ESG) efforts, at the cost of significant financial and reputational damage.  

Compliance teams already face a substantial challenge when it comes to vetting potential markets, partners or acquisition targets. And amid a sea of misinformation around sustainability compliance, properly assessing risk has never been more complicated.  

The solution? Technology: the “great enabler.” With so much data to sort through — and the need to conduct ongoing checks to monitor compliance — manual due diligence simply isn’t a realistic approach anymore. Technology is revolutionizing how risk assessment teams collect, analyze and act on due diligence intel. Here are three ways the right technology solution can help you streamline your due diligence workflow.  

Technology Can Expand and Aggregate Your Data Coverage

Legal and financial data have long been a standby of traditional risk assessment, but compliance professionals can’t stop there. A company’s due diligence process must cover a much wider range of sources than ever before to accurately establish ESG impact and spot potential threats. Monitoring a wealth of legal data, sanctions lists, news, financial reports, biographies and company disclosures, however, is no small task; searching through these sources individually is inefficient and time-consuming.  

This is where compliance teams can harness technology to simplify the due diligence process. The right solution can aggregate these essential data sources in one spot, making it easier to screen third parties against news archives, public records, legal cases, sanctions lists and social commentary for keywords like ”environment,” ”carbon,” ”pollution” and ”labor.” With a single search, you can unearth negative news, failed environmental checks or claims about a potential partner’s operations that can’t be found in an annual report or regulatory disclosure. 

Technology Can Keep You Abreast of Changing Regulations

Identifying ESG risk is no longer a “nice to have,” but a regulatory requirement. The U.S. Securities and Exchange Commission created a Climate and ESG Task Force to identify ESG-related misconduct by companies, and EU countries will have to introduce mandatory human rights and environmental due diligence legislation to comply with the forthcoming Corporate Sustainability Due Diligence Directive. The regulatory landscape is constantly in flux, requiring compliance teams to monitor new legislation, changing sanctions lists and additions to UN global standards on a daily basis. 

Remaining compliant with changing ESG guidance is an enormous task — one that can be dramatically streamlined with the latest technology. Instead of manually combing through UN guidance and country-specific regulations and sanctions lists, compliance teams can use a software or research solution that has all of these sources in the same place and flags new changes that could impact their operations.  

Technology Can Streamline Ongoing Due Diligence Monitoring

Vetting a third party is never a “one and done” process. To protect your business from financial or reputational damage, your due diligence processes should be ongoing. An entirely manual due diligence process simply isn’t going to cut it if you have a long list of vendors, suppliers and investors to wrangle. Today’s technology platforms make it possible to upload volumes of entities for immediate screening, as well as receive real-time alerts about relevant changes in risk level over time, empowering greater efficiency and accuracy in monitoring potential risk.   

Mitigating the legal, financial and reputational risks of greenwashing is complex, but it has also never been more important. With the right data and monitoring technologies, today’s compliance officers can more easily take on the challenge of assessing ESG risk, ensuring their companies are making a net-positive impact on the environment and the world at large.  

Mark Dunn is the director of product management at Nexis Solutions.