EU Supply Chain Transparency

This week, the European Parliament aimed to increase supply chain transparency into human rights and environmental impacts by approving the Corporate Sustainability Due Diligence Directive (CSDDD). CSDDD, which still needs to be further negotiated by EU states, would require large companies to put checks in place to find instances of child labor or other abuses from their suppliers; it would also require them to publish net-zero transition plans.

Under CSDDD, companies will need to regularly assess their supply chain through procedures like site visits, supplier policy, and regulatory reviews. Failure to do so, or to address any found human rights or environmental risks, could result in legal action along with reputational damage.

CSDDD is closely linked with the Corporate Sustainability Reporting Directive (CSRD), which outlines reporting requirements around sustainability. Both policies will mean that companies doing business in Europe must pay close attention to their value chain impacts.