CSRD does not only affect companies directly subject to the directive – it also has significant implications for their supply chains. With the CSRD requirements, we are seeing a marked increase in focus on sustainability-related due diligence, including supplier screening and the inclusion of sustainability clauses in supplier contracts.

Supply chain due diligence need not be viewed solely as a compliance exercise. When combined with an effective procurement strategy and clearly defined procurement policies, it can ensure compliance with CSRD requirements while also creating value for your business by freeing up capital and potentially supporting a more sustainable business profile.

BDO offers a unique advantage by combining the expertise of our ESG specialists with our procurement experts. We ensure that your company not only conducts the necessary supply chain due diligence but also helps you optimize or develop a procurement strategy that ensures your sourcing is environmentally conscious, socially responsible, and cost-efficient.

If you prefer not to combine the two approaches, we can of course support your company with separate services, tailored in collaboration with you.

Supply Chain Due Diligence

Supply chain due diligence refers to the systematic process through which a company investigates and assesses its suppliers and subcontractors to ensure compliance with legislation, ethical standards, and sustainability criteria. This is a critical component of corporate risk management and responsible business conduct.

In general, supply chain due diligence ensures that companies not only comply with applicable laws and standards but also actively promote responsible and sustainable business practices – which is essential for long-term success and credibility.

Below are some of the key aspects of supply chain due diligence:

Identification and evaluation of suppliers, including thorough screening to identify risks and opportunities. Companies must assess risks across the supply chain, such as environmental, social, and governance (ESG) risks. This may involve evaluating suppliers’ labor practices, environmental performance, human rights compliance, and corruption risks.

Compliance with standards and legislation, ensuring that suppliers comply with all relevant laws and regulations and meet the company’s internal requirements, for example regarding labor law, environmental legislation, and international standards.

Control and monitoring help ensure suppliers meet the agreed-upon standards. This may include internal audits as well as third-party assessments. Ongoing performance monitoring is supported by data collection and reporting.

Improvement of supplier relationships. For large companies, it can be beneficial to provide training and resources to suppliers to help them improve their practices and compliance with standards.

Reporting and transparency require companies to annually disclose their due diligence processes and results to stakeholders and auditors, enhancing accountability and transparency across the supply chain.

Issue management and sanctions come into play when problems are identified. Companies typically work collaboratively with suppliers to resolve issues through action plans and improvement initiatives.

Sustainable procurement optimization

Procurement optimization is a step toward building a more sustainable business. The 12th of the UN Sustainable Development Goals focuses on responsible consumption and production, and when your company calculates Scope 3 emissions, consumption and procurement often account for a significant share. We can help your company formulate and develop procurement policies that reduce your environmental footprint. Environmentally conscious and socially responsible purchasing – combined with a structured and practical focus on procurement optimization – can support a more sustainable business profile and a long-term strategy that reduces purchasing costs in the most effective way. Our procurement specialists can assist you in analyzing, developing, and structuring an optimized and sustainable procurement strategy tailored to your business.

Supply chain due diligence and sustainable procurement optimization

Supply Chain Due Diligence

Sustainable procurement optimization

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