How the incoming US administration could impact the ESG landscape
New administrations and shifting policies can impact our approach to corporate sustainability strategies and reshape how we manage supply chain risks. Organisations must stay agile and proactive to navigate these changes effectively. ?Following the recent United States presidential election, we anticipate potential shifts in corporate sustainability and an evolving risk landscape for supply chains. ??
Prior to this year’s election, backlash against ESG movements and scrutiny over corporate responsibility was rising, specifically in the United States. Despite this, new regulations being implemented worldwide, combined with increasing investor interest in ESG considerations and rising consumer demands for ethical sourcing show that sustainability efforts are still being prioritised among organisations. While ESG dialogue may further shift with the incoming administration, state-level laws, along with an increased global focus on due diligence strategies and ethical sourcing will keep sustainability at the forefront of corporate agendas.??
State-level climate requirements expected to remain in place, global legislation to apply to US businesses??
While president-elect Donald Trump may impact federal climate policies, after indicating he will pull the United States out of the Paris climate agreement after he takes office in January,2 state-level laws are already in place and being implemented at a state-level, such as climate reporting laws in?California. ??
The?Climate Corporate Data Accountability Act (CCDAA) was signed into law in September 2024 and will require companies?doing business in California to disclose their scope 1, 2, and 3 emissions.? ??
Meanwhile, regulations like the European Union’s Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence Directive (CSDDD) will still have an impact on US businesses with operations there.???
Stay up to date with the latest due diligence regulations worldwide with our interactive map: Supply Chain Due Diligence Legislation Map | LRQA?
Rising tariffs, decoupling could increase supply chain complexities?
As global trade policies evolve, supply chain complexities can increase. The US is expected to impose increased tariffs on China – up to 60% - what could this mean for future risks? ??
Higher tariffs may lead companies to reassess their supply chains, potentially shifting sourcing away from China to other regions. ?This shift could expose businesses to new social risks, as operations may shift to emerging, less regulated markets, increasing the risk of labour and human rights violations. ???
More links in the supply chain due to production decoupling = increased risk around transparency and management systems??
Businesses may face increased vulnerability to:??
Companies will need to ensure that their suppliers adhere to ethical labour standards and environmental regulations, which would require enhanced due diligence and monitoring.?
Contact us to learn more about optimising your supply chain due?diligence: Contact the experts at EiQ | LRQA
New labour policies bring potential impact to foreign migrant worker risks??
Proposed tighter border controls from the incoming administration may expose migrant workers to heightened human rights violations. Research indicates that stricter immigration policies often push vulnerable workers into informal employment, increasing their risk of exploitation and reducing protections. ?
The previous Trump administration's increased border enforcement resulted in significant labour shortages in agriculture and construction, leading to higher consumer prices and greater pressure on existing workers, which can exacerbate labour exploitation. While EiQ data shows an improvement in migrant worker risk in the US over the past year, new policies could reverse this progress.??
Businesses can improve risks for foreign migrant workers in their supply chains by prioritising fair recruitment processes in their due diligence strategies, supplier collaboration and engagement and risk remediation efforts. This may include implementing grievance mechanisms to ensure worker issues are being heard and remediated, as well as ensuring suppliers are aligned with best practices and fair working conditions. ?
See how EiQ helps businesses monitor and manage their supply chain ESG risks and increase supply chain visibility with a free demo of the platform.? ??
Aligning suppliers with ethical labour practices
Supplier collaboration and training can improve responsible sourcing and risk management by aligning supply chain partners with ethical hiring best practices. Our digital learning service offers supplier training courses to achieve this alignment, such as through the Working with Migrant Workers course, which teaches employers and recruiters how to implement ethical hiring processes for migrant workers.
This course will help you and your suppliers to develop an understanding of ethical recruitment while supporting informed decision-making that protects migrant workers from potential exploitation.
Access this course, and other digital training courses for FREE by clicking here and entering the branch code ‘insights’.
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