Supply chains have been identified as an emerging area of focus across global ESG-related regulations this year in new research published by data provider Sustainable Fitch. The paper pointed to the recent passing of the EU’s Corporate Sustainability Due Diligence Directive, expected greenhouse gas target-setting requirements for US federal government contractors, and the recently enforced modern slavery legislation in Canada. In addition, the paper highlighted relevant developments across emerging market jurisdictions, such as India’s Business Responsibility and Sustainability Reporting Core Framework for Assurance and ESG Disclosures for Value Chains, which mandates the largest 1,000 companies in the country to report on key ESG metrics. “The expansion of ESG considerations and disclosure requirements across global supply chains has the potential for identifying impacts and risks that occur beyond the operational boundaries of individual companies,” the report noted. Across industries, environmental and social issues disproportionately occur along the supply chain. “Although local regulation can offer a degree of accountability over activities that occur abroad, low transparency into particularly long or complex supply chains is a significant barrier towards mitigation impacts, such as environmental degradation, resource depletion, and forced labour,” Sustainable Fitch added. More oversight of supply chain impacts will enable a significant expansion in the collection, measurement and reporting of ESG data, the paper suggested, which in turn will contribute to investor and company disclosures.
