Implications and penalties
The Directive is a major development in corporate sustainability legislation, with significant implications for business. Failure to comply with its requirements – in whole or in part – will leave your company vulnerable to a range of consequences.
Implications for non-compliance with the Directive
Failure to comply with these requirements – in whole or in part – will leave your business vulnerable to a range of consequences, including:
What does this Directive mean for businesses?
The EU Corporate Sustainability Due Diligence Directive represents a shift in responsible business legislation and mirrors many national developments in this area.
Current legislative trends show that we are moving from non-financial reporting laws on specific issues that ask companies to disclose risk on certain topics, such as the UK Modern Slavery Act (2015) and the Australian Modern Slavery Act (2018), to reporting that gives a bigger picture of businesses' human rights and environmental due diligence. This includes reporting on what mechanisms companies have in place to deal with issues - including in the supply chain - how impact is assessed and how progress is monitored. Newer laws considering the bigger picture include Germany's Supply Chain Due Diligence Act and the Norwegian Transparency Act.
Navigating the changing legal landscape for supply chain due diligence and responsible business is critical for business survival. Companies must understand how this Directive and similar ones apply to and affect them. At Sedex, we support businesses both with meeting the requirements of an individual law and with streamlining their approach to meet multiple legal requirements.
Recent human rights and environmental due diligence national Directives and laws in force, adopted or forthcoming, or under development. Regional Directives are also mentioned.
Drivers of responsible sourcing
Governments, investors, consumers and others are all driving the demand for more responsible business practices.
Social and environmental due diligence processes allow your business to understand where the biggest threats lie, how to address and prevent them effectively, and monitor your overall social and environmental impact. They also create a competitive advantage: addressing human rights and environmental risks in global and complex supply chains brings reputational, operational and financial benefits for companies, so it's good business sense to be ahead of - and proactively managing - these. From health and safety or forced labour issues to hazardous chemical handling and carbon emissions, environmental and social risks are present in every industry and affect almost every company in the world.
Discover the return on investment of sustainability due diligence.
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