Suppliers a Key Priority in Sustainability Compliance

Q: How does Achilles Group serve the mining sector? 
A: Our ideal customers are those who operate in highly regulated environments while exposed to environmental risks and corruption. The energy and mining industries fall under this umbrella. The mining industry faces strong regulatory pressures worldwide and is often questioned for its environmental impact and relationship with local communities. Countries seek to ensure that mining companies do not just extract resources and disappear, but that they leave a legacy and transfer technology and other benefits. 

Achilles Group' primary role is to assist clients in comprehending the risks associated with their suppliers. Even if a mining company has world-class policies, a substantial portion of its operations depend on its supply chains. Given this context, organizations face intense scrutiny. For example, a company might unknowingly engage a supplier employing child labor in a remote area. In the mining sector, such issues are magnified twentyfold.

The mining sector has a greater need to manage its value chain than sectors with less exposure to supply chain risks. Achilles Group entered Latin America hand in hand with the mining industry. We have worked with practically all the major companies in Chile, including Cerro Verde, Codelco, Pan American Silver, and Yamana Gold. We have extensive experience and a proven track record within the sector and now we are entering Mexico. 

Q: What are the main challenges your clients in the mining industry are facing and how is Achilles Group helping them? 
A: In a nutshell, the challenges are regulatory and standards compliance. The USMCA is introducing requirements to demonstrate due diligence in a company’s value chain. Specific regulations are already in place dictating how companies manage and review their suppliers. If a mining company in Mexico exports to the European Union or the United States and fails to meet these regulations, clients could be forbidden from buying their products. 

Two decades ago, it seemed that no one paid much attention to what happened in the supply chain as long as the supplier remained financially stable. About a decade ago, the industry began to focus on reputational risks, such as working with those who engaged in illegal activities like money laundering. The industry is also focusing on environmental, social and governance (ESG) principles and clients now need to provide concrete evidence of the due diligence they conduct within their value chain. 

Q: Which industries benefit the most from Achilles Group’s services? 
A: Achilles Group's services are required across various industries, including oil and gas, electricity distribution, renewable energy, construction, transportation, and mining. We are also beginning to work with sectors that did not need to worry about their suppliers until recently, such as banking. This change in focus is driven in part by regulatory requirements and the shift in consumer habits. Younger generations now consider environmental friendliness and social responsibility when making purchasing decisions. Thus, companies in the technology, telecommunications, and banking sectors are recognizing the need to oversee their supply chains more closely. Companies are feeling the pressure from both consumers and governments to have good policies and extend them to their value chain. 

Q: What can the mining sector’s suppliers learn from industries like oil and gas? 
A: The oil and gas industry has always been a pioneer in supplier development and value chain financing. There is much to learn from the oil and gas sector, which has numerous collaborative projects between suppliers. Major mining companies expect significant social responsibility to their value chains. If a company gradually raises its compliance standards and requires the same from its suppliers, it propels the industry forward. Chile, for example, has drawn inspiration from many practices in the oil and gas sector and developed technology to export both minerals and knowledge worldwide. 

The energy sector has pioneered  the concept of exporting knowledge. The Mexican mining sector could replicate this approach by understanding suppliers, identifying areas with limited competition and financially weaker partners, and recognizing where technology transfer is needed. This information can be used to develop supplier development programs that benefit suppliers while turning Mexico into a country that exports mining technology, not just minerals. 

Q: What is Achilles Group’s role in helping companies to comply with net-zero goals? 
A: Latin America is rife with greenwashing as many companies issue sustainability reports that are good, but miss a pivotal point: supplier networks. These sustainability reports often highlight workplace equality or the prevention of forced labor, but dedicate only a page to the value chain and limit themselves to mentioning actions taken in local communities.

In this sense, Achilles Group can serve as a practical, real-world tool that provides proper supplier due diligence. Companies with policies on gender equality or pay equity can start demanding the same from their primary suppliers or establish business partnerships with suppliers that align with their values. It is crucial to avoid a disconnect between what a company claims and what it practices throughout its value chain. This is our greatest contribution to sustainability compliance.  

Q: Why should companies prioritize supply chain transparency in Mexico?  
A: First, changing regulations are prompting companies to reevaluate their supply chain practices. These companies are anticipating that clients will soon demand more transparency and sustainable practices, which could impact their business relationships. Second, large mining companies are part of global initiatives like the Global Pact and the UN Sustainable Development Goals, which require them to demonstrate their commitment to sustainable practices within their value chain.

Working with reliable suppliers is critical. Conversations with industry insiders suggest that some companies still have a somewhat traditional approach to supplier relationships, which does not account for the rapid changes in the industry. It is vital for businesses to have a clear understanding of their partners. To ensure compliance, it is important to be transparent. 

Q: What are Achilles Group’s expansion goals? 
A: Achilles Group is in the research phase, with the goal of understanding the key players and the companies most exposed to risk in the Mexican mining sector. This will be our focus for the remainder of 2023. We are also establishing partnerships with Mexican associations as we did in Chile. We had productive conversations with the Mexican Mining Chamber (CAMIMEX).

We offer expertise from more developed mining markets and aim to assist clients here by sharing best practices employed by companies in different regions. Many of our clients in other countries,  like Pan American Silver, own projects in Mexico. Our work with the La Colorada project in Chihuahua demonstrates that we are not starting from scratch in Mexico. Our ambition is to build a comprehensive database of qualified suppliers in the Mexican mining industry, which will be beneficial for every company. We expect this phase to span from 2023 to 2025. 

We plan to do this job collaboratively and start with the heavyweights. In the mining sector, four or five major players account for about 70% of the industry's business volume. In Mexico, Grupo México and Peñoles are some of the major players and they are our primary focus for the next four to five years. This approach will also benefit smaller players as they will be able to access a system where suppliers are already qualified. Suppliers are now working with multiple companies to undergo separate due diligence. With the system we plan to implement, suppliers will only need to go through a single process.

Achilles Group is an international consulting group specializing in supply chain design and management, with additional capabilities for cybersecurity, sustainability, health and safety management, and financial risk analysis.