Understanding environmental and social risk
What environmental and social (ESG) risk means in the context of UK supplier due diligence, and what public data Senserity uses to assess it.
Environmental and social risk covers a range of concerns that go beyond traditional financial and governance checks. In procurement and compliance contexts, these risks relate to whether a supplier operates responsibly: whether it has environmental enforcement actions against it, whether it meets health and safety standards, whether it treats its workforce fairly, and whether it is transparent about its practices.
Senserity assesses environmental and social risk using publicly available UK data sources. This article explains what those sources cover and how the results feed into the risk profile.
Environmental risk
Environmental risk in Senserity is primarily assessed through two UK regulatory bodies:
Environment Agency enforcement
The Environment Agency publishes records of enforcement actions taken against companies for environmental offences. These include pollution incidents, illegal waste disposal, breaches of environmental permits, and failures to comply with environmental regulations.
Senserity checks for the existence of enforcement records, the type and severity of each action (court cases, cautions, formal warnings), how recent the enforcement is, and whether the company is a repeat offender. A single historical caution is a different signal from multiple recent court cases.
Environmental enforcement data feeds into the Operational category. Serious or repeated environmental offences are weighted more heavily, and very recent enforcement actions have a greater impact on the score than older ones.
Health and Safety Executive (HSE)
The HSE publishes enforcement notices and prosecution results for companies that breach health and safety law. Senserity monitors several types of HSE action:
Improvement notices. The HSE has identified a breach and requires the company to fix it within a specified period.
Prohibition notices. The HSE has identified an activity that poses a risk of serious personal injury and has prohibited the company from continuing it until the risk is addressed. Prohibition notices are more serious than improvement notices.
Criminal convictions. The company has been prosecuted and convicted of a health and safety offence. Senserity checks the fine amount, whether the offence involved a fatality, and whether the company has prior convictions.
HSE data is particularly relevant for companies in construction, manufacturing, logistics, and other sectors where workplace safety is a primary concern. A company with a clean HSE record in a high-risk sector is a positive signal. A company with multiple prohibition notices and convictions is a significant risk.
Social risk
Social risk in Senserity draws on several public data sources:
Gender pay gap reporting
Companies with 250 or more employees are required to publish annual gender pay gap data. Senserity checks whether the company has submitted its reports, how large the pay gap is (mean and median hourly pay, bonus pay), how pay is distributed across quartiles, and whether the gap is improving or worsening over time.
Gender pay gap data is an imperfect proxy for workplace equity, but consistent reporting and a narrowing trend are positive indicators. Failure to report when required is a compliance failure. Very large gaps or worsening trends may signal broader governance or culture issues.
Modern slavery statements
Companies with turnover above £36 million are required to publish a modern slavery statement describing the steps they take to prevent slavery and human trafficking in their operations and supply chains. Senserity analyses these statements for completeness, assessing whether they cover the mandatory areas (organisational structure, policies, risk assessment, due diligence, training, and performance indicators).
A comprehensive, recently updated statement indicates that the company takes modern slavery compliance seriously. A missing, outdated, or superficial statement is a negative signal, particularly for companies in sectors with high supply chain complexity.
Social accreditations
Senserity checks for voluntary social accreditations such as:
Disability Confident. A UK government scheme that encourages employers to hire and retain disabled people. There are three levels: Committed, Employer, and Leader.
Armed Forces Covenant. A voluntary pledge to support the armed forces community. Senserity records whether the company is a signatory and what commitments it has made.
These accreditations are positive indicators. Their absence is not penalised, because they are voluntary, but their presence contributes to a better Social category score.
Workforce indicators
Where financial data is available, Senserity examines workforce-related metrics derived from filed accounts: average staff cost per employee, staff cost trends, employee headcount changes, and the relationship between headcount and revenue. These provide indirect signals about how the company invests in its workforce.
Limitations of public ESG data
It is worth noting that public ESG data in the UK is patchy. Environmental and HSE enforcement only covers incidents that have come to the attention of regulators. Gender pay gap reporting only applies to larger employers. Modern slavery statements are only required above a turnover threshold. For smaller companies, very little public ESG data may be available.
Senserity scores based on what is available and does not penalise companies for the absence of data that they are not required to publish. For a fuller picture of a supplier's environmental and social practices, Senserity's attestation system allows you to ask suppliers directly about topics that the public record does not cover.
Last updated .