Pillsbury: Sustainability & Due Diligence in Supply Chains

Over the past decade, global supply chain regulation has evolved significantly with authorities worldwide introducing stricter measures to ensure corporate accountability.
Companies now face a more demanding landscape, with legislation mandating transparency and due diligence in their operations, reshaping how businesses manage supply chains.
From limited frameworks to comprehensive legislation
Nancy Fischer, International Trade Partner at Pillsbury Winthrop Shaw Pittman, sets out some of the early legislative frameworks relevant to supply chains.
"The EU Conflict Mineral Regulation, French Duty of Vigilance Law and UK Modern Slavery Act were among the first to impose obligations on companies to address human rights and environmental impacts within their global supply chains," she explains.
"While these laws introduced new expectations for corporate responsibility, their scope was relatively narrow, their compliance requirements less stringent and their overall impact limited."
The EU's Corporate Sustainability Due Diligence Directive (CSDDD) requires companies to identify and mitigate adverse human rights and environmental impacts across their supply chains.
Meanwhile, the EU Deforestation Regulation (EUDR) imposes strict traceability rules on specific commodities, such as soy, palm oil, cocoa and wood, to ensure they are sourced sustainably.
In the United States, the Uyghur Forced Labor Prevention Act (UFLPA) has set new standards for supply chain accountability.
"The UFLPA introduces a rebuttable presumption that goods from China's Xinjiang region involve forced labour, requiring importers to provide clear and convincing evidence to the contrary," Nancy notes.
"This represents a significant shift in how authorities approach supply chain compliance, with enforcement becoming increasingly robust and technology-driven."
Compliance challenges in a complex supply chain world
These new regulations can present significant challenges for companies operating global supply chains.
Nancy emphasises that many supply chains "involve complex networks, with raw materials sourced from multiple countries, processed in various locations, and handled by numerous intermediaries".
This process demands considerable investment in data collection and technological tools to meet compliance requirements. Moreover, non-EU suppliers selling to EU companies must also comply by providing detailed, verified supply chain data.
"Inaccurate or incomplete reporting could result in the termination of commercial relationships or even contractual disputes, underscoring the need for transparency and proactive risk management," she says.
Strategies to tackle regulatory demands
To navigate this increasingly stringent regulatory landscape, Nancy outlines key strategies for businesses.
"Companies must assess their regulatory exposure early on," she advises.
Companies should map their supply chains to pinpoint high-risk areas and develop compliance plans accordingly.
Technology plays a critical role in achieving these goals.
AI-driven platforms and blockchain systems are particularly useful for improving traceability and ensuring regulatory adherence.
Additionally, companies must establish robust internal compliance systems, including appointing specialised teams, developing clear policies, and implementing regular monitoring processes.
"Companies need to provide their suppliers with the guidance and resources necessary to meet regulatory requirements," Nancy emphasises.
"Treating suppliers as partners in compliance, offering training and support to help them align with regulatory standards, is essential for building robust and compliant supply chains."
Preparing for the future
As global regulations evolve, businesses must remain agile in their approach to compliance.
The future of supply chain management is likely to emphasise even greater transparency, accountability and sustainability.
Companies investing in robust compliance strategies today will be better equipped to handle tomorrow’s challenges.
"In today's regulatory environment, compliance is not optional; it is a critical operational requirement," Nancy concludes.
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