Across the world, sustainability continues to be at the forefront of consistently evolving targeted issues.
Greenwashing; tax breaks; supply chain disruptions; pandemics; wars and conflicts, to name a few…
IntegrityNext’s whitepaper highlights how supply chain due diligence is transforming rapidly, particularly as conflicting external forces continue to have an effect. These include global disruption and the need for technologies to combat and manage long-term impact. Trends and developments continue to shape supply chain due diligence legislation, bringing forth a greater awareness of digital solutions that procurement should be using.
What is ESG due diligence?
‘Supply chain due diligence is essentially a systematic approach to risk management and about identifying, preventing, mitigating and remedying risks’.
Why the increase in ESG due diligence regimes?
Due diligence helps create a level playing field for corporations, to drive accountability and mitigate the harmful social and environmental processes that are occurring across the planet.
To take just one example, as many as 28 million people are trapped in forced labour.
What’s more, ESG-related litigation figures show no signs of this decreasing either, as this number has risen by 25% over the last three decades. As this trend is strongly linked to supplier malpractice, due diligence is needed to eradicate such activities.
Why do we need ESG and carbon accounting?
Most corporate GHG emissions happen in the supply chain, from sourcing raw materials to delivering a product to the end user. In fact, upstream suppliers may be responsible for up to 90% of a company’s carbon footprint.
Due diligence is needed at every step of the product life cycle – from raw materials procurement to consumer use and end of life – to ensure people and processes are being treated with care and that decisions are being made appropriately.
The EU leads regulatory compliance when it comes to setting corporate sustainability due diligence: legislation in place to ensure companies are acting on sustainability initiatives. By making sure there are no loopholes for anyone to skip through, everyone can work together to look after the planet and its people.
‘Manual processes are commonly too cumbersome when screening highly complex supply chains. Advanced automated technical solutions should therefore be a main priority.’
Thing Big, Start Small and Scale Fast.
1. Start with the bigger picture. Consider all relevant facets of risk exposure and the entire spectrum of regulatory regimes that may affect your business.
2. Ensure a targeted approach to risk management and compliance in the beginning.
3. Incrementally expand established processes and systems and build up your capabilities.
- Invest in automated tools to aid ESG screening
- Look at your compliance: how does it fair up to your competitors?
- Build up your capabilities throughout the supply chain to help protect it
- Need for much greater supply chain visibility and data collection