How regulations and standards influence the global trade Part 1: EU sustainability directive

EU Sustainability directive

Regulations and standards influence the global trade more than ever. Thus I want to share my findings about a few novelties, last week served during a Business Breakfast Event in collaboration with our partners EcoVadis und POOL4TOOL. The event revolved around the latest EU sustainability directive and the question, which challenges and impacts companies will face.

The EU sustainability directive 2014/95/EU. As of 2016 every European company employing more than 500 employees is obliged to hand in an integrated annual sustainability report. The report follows internationally recognized guidelines like GRI (Global Reporting Initiative), DIN ISO 26.000 as well as UN Global Compact and will primarily include the companies’ strategies, risks and results regarding environmental, social and employee matters, respect of human rights, combating of corruption and more.

 

eu sustainability directive

EU sustainability directive

 

EU sustainability directive – the integrated annual sustainability report

A significant part of the report will be a statement about the sustainability of the supply chain. That means that companies must explain why they chose their suppliers and in which way suppliers are audited. It is mandatory to assess current and potential risks continuously and to declare which measures for a more sustainable supply chain are taken. This very first stage focuses the direct suppliers. But the documentation obligation will gradually be extended on information about sub-suppliers and suppliers of sub-suppliers…

When defects are identified, it is crucial to document the issue and more important: to illustrate which counter-measures are planned/initiated. Keeping defects in secret is a bad idea. As the sustainability report is part of the annual financial reporting, an auditor won’t testify the financial statement if he comes across any secret during the auditing.

 

I hope I was able to give you a first impression in which way the integration of risk and sustainability management affects purchasing processes and business relations in general. Across the next weeks I’d like to give you some information about the remaining 3 topics which were discussed at this event: the Dodd-Frank Act, new ISO Standard 9001:2015 and sanction control.

Rolf Zimmer is a founder and managing director of riskmethods, and is responsible for Finance, Product Strategy and Customer Success Management.

Rolf has been working in software business and procurement for 18 years. He has excellent knowledge in the areas of procurement, supply management and risk management – which he gained from working inside procurement departments as well as from consulting activities at SAP, Ariba and Emptoris, among others. His previous position as Sales Director at IBM included responsibility for distribution of the “Emptoris” Supplier Relationship Management suite and associated consulting services.


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