EU businesses: Are you ready for the upcoming due diligence requirements?

Due diligence regulations in the European Union are moving full steam ahead after a big week in Parliament and businesses must prepare for compliance. ?

What is the latest??

• On Tuesday, European Parliament approved the European Union Forced Labour Regulation (EUFLR), which will?prohibit the sale, import, and export of goods made using forced labour from the EU market. The law states companies that violate the ban may face fines, however, goods may be allowed back on the EU single market once the company eliminates forced labour from its supply chain.?The EUFLR must get a final formal?approval from the EU Council, before being published in the Official Journal. EU countries will then have to start applying the forced labour law three years after its publishing.?

• On Wednesday, Parliament then passed the Corporate Sustainability Due Diligence Directive (CSDDD), after many delays and revisions to the directive since its original proposal in 2019. The law mandates that companies operating in the EU must implement due diligence strategies to mitigate human rights violations and negative environmental impacts from their operations. The CSDDD will receive final sign off from member states in May before its implementation.?

• Already in force: The EU Deforestation Regulation (EUDR), is already in force and requirements will start applying to companies as of 30 December this year. The EUDR prohibits relevant commodities and products from being sold on the EU’s market unless they are deforestation-free. Companies have only a few months left to establish a robust due diligence system that allows them to demonstrate that their products are compliant. There’s still time to register for our upcoming webinar on 14 May to help you prepare for the EUDR.?

Stay informed about current and upcoming regulations, along with how to comply with our latest guide.?

Establishing your due diligence foundation ?

Supply chain due diligence requires not only rigorous site assessments, but continuous risk monitoring and foundational improvement to promote change within your programme. ?

It is important to first have a good understanding of what specific ESG issues your organisation prioritises and the severity level of those issues. Non-compliances identified in supplier assessments can range from instances of forced labour to health and safety violations such as insufficient emergency exits.?

Developing and enhancing your supply chain ESG due diligence strategy requires taking a proactive, tailored approach. Each supply chain and its coinciding risks and exposure to risks are highly individualistic, and therefore a ‘one-size-fits-all' method will not suffice. Companies should begin by gaining a better understanding of the individual needs and priorities of their supply chains and implementing credible, verified data to conduct a deeper diagnostic of risks. Once there is a clearer view of the risks and areas of potential risks, organisations can then implement the right tools and technologies to monitor, mitigate, and deploy corrective measures to the ESG risks present in their supply chain.?

Below is our recommended framework for conducting end-to-end supply chain ESG due diligence.?

Need help understanding your supply chain ESG risks? Get a free demo of EiQ and a trial scan of your supplier base.?

Speaking of risk, our 2024 supply chain ESG risk outlook will launch next month?

Each year, we provide insights on the latest ESG risk trends based on our dataset of more than 20,000 annual onsite audits from across the globe. ?

In this risk report, we aim to dissect the current risk landscape, giving businesses a wider view of both current and emerging risks to support them in their responsible sourcing decision-making and due diligence efforts. ?

Stay tuned for the report next month to find out more about the most prominent risks and from which sourcing regions risk exposure may be highest.?

New supplier training course available in EiQ Learn?

Do you have employees in Germany? Or German suppliers? If so, you may be affected by Germany’s Supply Chain Due Diligence Act. Like many emerging due diligence laws, Germany’s law requires companies to identify and minimise risks of human rights violations and environmental damage in supply chains.?

In response, we added 13 new digital supplier training courses available in the German language – with more on the way. These courses span due diligence topics and allow for a comprehensive German training programme.?

Our digital learning service promotes site improvement and empower suppliers to implement business best practice. ?? ?

We're excited to bring you this newsletter here on LinkedIn. Hit subscribe to make sure you don't miss the next edition of EiQ Insights.?