New EU Laws Impact Supply Chain Beyond Borders

Supply chain disclosure can be the most challenging part of non-financial reporting for companies. The ever increasing length and complexity of global supply chains drives global organizations to rethink common practices and consequently increase efficiency and security. According to the EU Directive on disclosure of non-financial and diversity information by certain large companies, environmental, social and employee related reporting is mandatory for all EU based companies with more than 500 employees by 2017.

The main challenge for global organizations is to increase visibility of suppliers and to bring them in line with your sustainability targets, code of conduct and actual framework requirements. Modern integrated software can help to track and manage key environmental and social indicators but also keep a sharp eye on suppliers’ plans for improvement. For example, by using regular questionnaires suppliers can give feedback on their policies and how they meet overall business and sustainability goals. This will help organizations to better understand issues and risks within their supply chain and shifts the focus on specific issues such as safety incidents or labour conditions.

Moreover, the EU directive encourages businesses to report against well established and overall recognised frameworks such as GRI, UNGC, ISO 26000 or ILO Tripartite Declaration. Even though this is not a necessity, it gives an opportunity for companies to professionalize their non-financial reporting and simplify their data management.

Meeting the EU directive on disclosure of non-financial and diversity information provides an opportunity not only to safeguard a company’s reputation for sustainability but also to increase efficiency in order to unwrap benefits for the entire business – in terms of cost savings, regulatory compliance, and engagement opportunities.