Supply chain due diligence

He European Parliament Just consent Diligence due to Directive Corporate Sustainability -o CSDDD- Companies and their activities must prevent, end or reduce human rights and their adverse impacts, including supply, production and distribution. environment.

This harm includes slavery, child labour, labor exploitation, loss of biodiversity, pollution or destruction of natural heritage.

It is the clearest and strongest regulatory measure ever established in response to the growing needs of organizations in enforcement. Consistency In the field of business and strengthening ESG practices (Environment, Sustainability and Good Governance) in supply chains.

Member States will have two years to transpose the new provisions into their national laws. So the law is well-intentioned, but its draft does little more than monitor suppliers from start to finish in supply chains. Achieving it by 2027, the law is intended for major companies (more than 5,000 employees and sales of more than 1.5 billion euros).

Therefore, organizations must develop technologies to monitor and track the effectiveness of practices, as well as report them publicly and transparently.

A ‘technological’ path has yet to be taken

Only a digitized company is capable of tracking this. Most companies cannot do this in-house with the technology, people and resources and need a digitized process and external support to comply with these laws.

At a recent conference on CSDDD organized by the Spanish Association of Purchasing Professionals (AERCE), one of the participating companies from the energy sector, concluded with the following comment: “Without digitalization you can comply with the standard, but it is unsustainable.” .

Everyone involved in this phase of necessary change in technology agrees on this: companies (both suppliers and customers), their stakeholders and investors, regulators and, of course, public administrations.

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This challenge is less for large companies that are used to disclosing data in financial statements Sustainability reports, but for SMEs. However, 100% of the companies do not fill the questionnaires or they cannot audit all of them.

Because if it is true that the EU is setting the standard, shareholders and investors are already forcing companies to step up themselves, not just the big ones: the directive will, in principle, affect companies with higher revenues. Employees will gradually affect SMEs as well.

Companies must follow a plan to change their business model to comply with the 1.5°C global warming limit. Paris Agreement.

And yet, they all take it very quietly: according to a study by the European Commission, only 35% of large European companies ESG principles By 2021, only 15% of supply chains have applied ESG principles.

Sustainable suppliers win

We recall the case of a famous automobile company that halted its production chain after discovering that one of its vehicle components was purchased in a country at risk of human rights abuses. Digitization helps to avoid

But following the rules is not just behaving ethically, it represents a commitment DecarbonizationPromote labor force participation… and measure it Carbon footprint. Also, as Achilles, experts in risk management and improving sustainability in the supply chain were recalled by more than 80%. Emissions target is 3, purchased goods and services produced in a company’s value chain; Travel and relocation, waste disposal or transportation and distribution.

And, if there are no reasons to use these sustainability criteria, we add purely economic ones: investors and stakeholders already prefer these types of policies and have ‘green’ suppliers, to have better access to guarantees and financing.

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Member States should provide companies with detailed online information on their due diligence obligations through Commission-directed portals. They will create or appoint a supervisory authority to investigate and impose sanctions on non-compliant companies, with fines of up to 5% of the companies’ global net revenue.

*Carlos Toure, Jager Country Manager for Spain and Portugal

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