By Marieke de Jong, Project officer at MVO Nederland (the Dutch member of Ecopreneur.eu)
Brussels, 30 March 2021 – This month, the European Parliament voted overwhelmingly in favour of the legislative proposal on corporate due diligence and corporate accountability. This blog explains why now is the time to make your supply chain transparent.
The vote is great news. The law obliges companies to protect human rights and the environment throughout their supply chain. After the introduction of the law, companies have to perform a risk analysis of their supply chain and take careful measures in case of abuses. And although this law has not yet been officially implemented, it is an extra reason for you as an entrepreneur to make your supply chain more transparent. Why? I have listed three reasons.
1. YOU ARE AHEAD OF LEGISLATION
Thanks to the new law, it is even more important that you have your ‘due diligence’ in order. This means: identify potential risks in your supply chain in the field of human rights and the environment. And then act accordingly by avoiding or reducing those risks. The European law is not the only one of its kind. In Germany, for example, a chain responsibility law has recently been adopted. A bill of initiative concerning responsible and sustainable international business has also been presented in the Netherlands. The idea is the same: make sure you know your value chain and reduce or prevent negative impacts on people and the environment. Companies are asking for a level playing field. Therefore, many companies welcome the European law. In short: what is stopping you from preparing right now?
2. IT STRENGTHENS YOUR POSITIONING
A second reason to increase your transparency is that consumers are attracted by a good story and are increasingly sensitive to a company’s reputation. Take for instance the Dutch companies Tony’s Chocolonely, Seepje and Wakuli. By being aware of risks in their own supply chain and by positioning themselves accordingly, they are able to act differently and occupy a unique position. Because even though the new law will soon force all companies to be more transparent, it doesn’t stop you from already acting on it. In combination with good marketing, this can lead to a powerful positioning of the brand. And who knows: a higher turnover as well.
3. A STRONG TRADE RELATIONSHIP HAS OTHER ADVANTAGES
Insight into your supply chain calls for more intensive trading relationships. And guess what? These are not only good for people and the environment, but a several studies have shown that companies with intensive trade relationships also bounced back better during the corona crisis. Good contact and mutual trust ensure that companies look for solutions together when problems arise. That leads to more flexibility in determining delivery times or paying wages. In short: trust is worth something. With external threats that are still to come, a good relationship with your trading partners and suppliers can make all the difference.
My advice is clear: do not wait any longer and prepare now. And you certainly don’t have to do that all by yourself. Among others, MVO Nederland offers support. For instance, we are working hard every day on the CSR Risk Check. This online application allows you to do a quick and free check of your supply chain; within a few minutes you have a general overview of the risks in the field of human rights and environment in your supply chain.