What's driving the need for due diligence?
LRQA's Vice President of Consulting Erin Lyon spoke with British law firm 年利达 in a podcast this month about what's driving the need for due diligence in supply chains and how to build the right framework to achieve it.
Lyon describes the three current drivers amplifying the need for supply chain due diligence, what it means to “Know Your Supplier” and the top insights LRQA risk data showed us this year.
“We can't have an assumption of risk. We've got to have a data-informed view of where my inherent risk is and how can I collate and report that information very clearly. You have to make sure that you're utilizing a full range, the suite of due diligence tools, not relying on just one sort of insight.”
Back to Basics: Supply chain disclosure standards vs due diligence regulations
There is an increase and evolution of both supply chain reporting frameworks and due diligence legislation, often complicating the process for companies disclosing their Environmental, Social, and Governance (ESG) risks and opportunities.
Companies are tasked with firstly, choosing an effective disclosure standard, and secondly, building frameworks to comply with an uptick of various due diligence regulations. But what exactly is the difference between the two?
One of the most critical reasons to understand the difference between disclosure standards and regulations is that regulations have legal implications, while supply chain disclosure standards are typically voluntary, though there are an increasing number of mandatory reporting requirements. Failure to comply with due diligence regulations can result in penalties such as fines or reputational damage.
Understanding the difference between standards and regulations can help you avoid legal consequences and understand how to choose the best reporting standard for your organization. Having a firm grasp on these two aspects for your supply chain allows you to:
Reach out to get support on choosing the right standard and building a strong framework against regulations.
Speaking of legislation...
California lawmakers approve major new climate bill requiring stricter emissions reporting
This week, California lawmakers approved a sweeping new regulation that will require large companies to report on their direct and indirect greenhouse gas (GHG) emissions. This law would apply to more than 5,300 companies, and has already been backed by major companies such as Apple, Microsoft, Patagonia, and IKEA USA.
The bill still needs final approval before going into effect, but the legislation is unique in that it is one of the country's first to mandate indirect emissions reporting, which are notoriously difficult to track.
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Need help with tracking and reporting Scope 3 emissions data in your supply chain? Let us help.
What else we're watching...
ILO says we’re facing a “critical moment” as child labor is worsening despite rising laws against it
We are at a “critical moment” for child labor as more children are being pushed into work.
War and the rising cost of living has forced some into the “worst form of child labor,” ILO Director-General Gilbert Houngbo told BBC news agency.
Despite there being a recent uptick in forced labor regulations, our supply chain ESG risk data shows the problem of child labor persists.
According to our data compiled from more than 20,000 onsite audits?per year?across more than 100 countries, child labor risk has worsened in more than 40 countries in the last year.?Among those with the most significant worsening scores, by way of our ratings, are China, Myanmar?and Vietnam. European countries like the UK, Poland, and Italy also saw worsening child labor scores, although by a lower margin.?
Latest estimates from the United Nations in 2020 showed around 160 million children were subject to child labor.
Learn more about child labor risks in your supply chain: Request a free, no obligation live demo of EiQ.
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