Who knew? The first World Sustainable Procurement Day was held this year on March 21. Like most of you, I find the number of national and international celebratory days mind boggling and humorous, to say the least. This includes days to celebrate beer, wine, whiskey, ex-spouses, gardening, pecans and even stupid toys. Really, stupid toy day is celebrated on December 16 every year. With the increasing focus on sustainability, I guess we should not be surprised that sustainable procurement now has its own day on the calendar.
Sustainability is a topic that is seeing growing importance for customers, investors, governments and enterprises across the globe. It’s often been reported that consumers have been the primary factor in pushing for change in this area. However, a 2021 BearingPoint Procurement Pulse Check indicates that the main drivers are regulatory with 85% of respondents that this is the primary reason for implementing sustainable procurement practices.
Impending Supply Chain Regulations
Supply chain compliance is increasingly dynamic. Environmental concerns, shareholder expectations, border disputes and import/export compliance requirements are common factors that organizations have to navigate. One impending piece of legislation is the German Supply Chain Act. This Supply Chain Due Diligence Act was approved in July 2021 and is planned to take effect on January 1, 2023. The legislation states that companies with 3,000 or more employees must take appropriate measures to respect human rights and the environment with their supply chains. Additional legislation includes both pending and existing requirements:
- European Commission (EU) Corporate Sustainability Due Diligence Directive – The draft legislation has passed and will require large EU organizations to detect, prevent and mitigate breaches of human rights, such as child labor, as well as environmental hazards in their supply chains.
- California Transparency in Supply Chains Act – Signed into law in 2010, it requires large retailers and manufacturers to disclose activities focused on eradicating human trafficking from the supply chain and educating consumers on how to purchase goods from responsibly managed supply chains.
- New York Fashion Sustainability and Social Accountability Act – If passed, it will require New York fashion retailers and manufacturers with over $100 million in annual revenue to make required social and sustainability information available.
- Swiss Code of Obligations – Effective in January 2022, supply chain reporting requirements relating to conflict minerals and child labor were added to the Swiss Code of Obligations.
Are You Prepared?
Ultimately, enhancing sustainable supply chain and procurement activities boosts a company’s reputation with the ethical sourcing of materials, a focus on fair labor practices and a genuine concern for the environment. Sustainability drives growth when companies commit to more sustainable practices and establish effective strategies and meaningful objectives. What is the current status of your sustainability initiatives? How would you like those initiatives to progress? How will you confirm suppliers are not violating human rights and environmental standards? How are you preparing for future procurement and supply chain sustainability regulatory requirements?