As regulations evolve and societal expectations heighten, embracing supply chain due diligence has become increasingly imperative in the contemporary business landscape. Businesses must pivot their focus from managing expenditures to ensuring compliance with dynamic supply chain regulations and upholding social responsibility standards. Ignoring Environmental, Social, and Governance (ESG) compliance can result in harming the environment, damaging reputation, and facing legal penalties. The global alignment to ESG policies, including supply chain due diligence, has accelerated due to mounting pressure from consumers and investors. 

In light of this urgency, Chevron Corporation, a petroleum refinery company, has committed to allocate $10 billion by 2028 towards transitioning from fossil fuels to emerging technologies like biofuels and hydrogen. This strategic investment not only showcases Chevron's dedication to reducing its environmental impact but also sets a precedent for other industry leaders to follow suit. By embracing innovative solutions, Chevron not only demonstrates its proactive approach to sustainability but also underscores the pivotal role of corporations in addressing global challenges such as climate change. 

Such commitment from corporations underscores the increasing importance of prioritizing ESG considerations within supply chain management. By adopting transparent policies and investing in sustainable practices, companies not only mitigate risks but enhance their reputation, drive innovation, and create long-term value for stakeholders. 

Global Initiatives and National Strategies: Advancing Supply Chain Transparency and Corporate Responsibility 

Stock exchanges and national laws alike are spearheading efforts to regulate corporate transparency, particularly in supply chain management. The European Commission's proposal for a Corporate Sustainability Due Diligence (CSDD) directive reflects this trend. Some EU members such as France and Germany have already implemented laws that may surpass EU requirements. There is no global mandatory standard for supply chain due diligence. However, governments worldwide are increasingly focusing on supply chain issues, signaling impending regulation. 

The United Kingdom has implemented its Modern Slavery Act since 2015, which applies to commercial organizations exceeding an annual global turnover of GBP 36 million. The Act mandates the preparation and publication of statements on the impact of slavery and human trafficking on their operations. Companies are required to discuss the steps taken to prevent modern slavery or state if none were taken. Additionally, the Act requires companies to detail their due diligence and remediation efforts in their statements.  

On the other hand, France imposes a duty of care on companies with significant presence, along with broader supply chain due diligence requirements under Law No. 2017-399. This mandates developing and publishing a Compliance Plan to identify and prevent serious violations of human rights and fundamental freedoms while protecting health, safety, and the environment. 

Germany enforced Supply Chain Due Diligence Act in January 2023, initially targeting companies with 3,000 or more employees, with the threshold decreasing to 1,000 employees since January 2024. This Act requires companies to take appropriate measures to respect human rights and the environment within their supply chains, with violations potentially resulting in fines of up to 2% of the company's annual global turnover.  

Meanwhile, Brazil enforces supply chain due diligence obligations through ratified International Labor Organization’s Conventions and constitutional clauses to combat forced labor and child labor. The country maintains a "dirty list" of suppliers involved in labor violations, and legal action is pursued against instances of labor exploitation. 

In the United States, disclosure requirements for conflict minerals, federal tariff act prohibitions, and legislation such as the Uyghur Forced Labor Prevention Act and the USMCA's labor standards reflect efforts to address forced labor and uphold human rights in supply chains. Additionally, anti-trafficking safeguards for government contractors, the California Transparency in Supply Chains Act, and pending legislation on supply chain audits further demonstrate the country’s commitment to transparency and accountability in combating forced labor. 

Although Singapore lacks specific national legislation dedicated to supply chain due diligence, the country is making strides in regulating corporate transparency and promoting ethical business practices. The Singapore Stock Exchange (SGX) has integrated sustainability reporting requirements into its listing rules, urging companies to disclose ESG-related information, including aspects of supply chain transparency. Additionally, Singapore is a signatory to international agreements and conventions aimed at upholding human rights and labor standards, indicating a commitment to fair labor practices. While initiatives and guidelines provided by organizations like the Singapore Institute of Directors (SID) promote corporate governance, the absence of dedicated legislation is compensated by Singapore's focus on sustainability and adherence to international standards, contributing to the global push for responsible business conduct and supply chain transparency. 

Advancing Corporate Accountability: The European Union's Drive for Sustainable Supply Chains 

The European Commission's proposal for the Corporate Sustainability Due Diligence Directive (CSDD) represents a landmark initiative aimed at bolstering corporate sustainability obligations across the European Union (EU). Unveiled on 23 February 2022, the directive seeks to compel companies to meticulously manage social and environmental impacts throughout their entire supply chain, extending beyond the confines of existing national legislation. This move underscores a growing recognition of the need for comprehensive regulatory frameworks to address the complex challenges associated with global supply chains. 

Following the agreement among European countries on an EU-wide supply chain law in December 2022, the European Parliament took a significant step forward on 01 June 2023, by voting to tighten the original legislative proposal put forth by the EU Commission. The draft legislation sets out stringent requirements for EU companies, mandating that they address social and environmental impacts across their entire value chain, encompassing both direct and indirect suppliers as well as their own operations, products, and services. It aims to ensure compliance with applicable human rights standards and environmental protection measures, thereby fostering a fairer and more sustainable global economy and promoting responsible corporate governance. 

EU Justice Commissioner Didier Reynders emphasized the imperative of creating a regulatory environment wherein the companies permitted to operate within the EU are only those that do not harm the environment and fully respect human rights. The proposed legislation, once approved, will apply to companies with 250 or more employees and an annual turnover exceeding €40 million worldwide. To accommodate varying company sizes, transition periods of up to five years will be granted for compliance. This legislative push in the EU reflects a broader global trend towards enhanced corporate accountability and responsibility. Countries such as Germany, which implemented the new LkSG law in January 2023, are taking proactive steps to revise and strengthen their own legislation in line with emerging international standards.  Additionally, France and Germany have already enacted supply chain due diligence laws that exceed the potential requirements of the EU Directive, demonstrating a commitment to robust regulatory frameworks that promote ethical and sustainable business practices. 

Pending supply chain due diligence proposals in various jurisdictions further underscore the global momentum toward promoting ethical and sustainable business practices. By enacting such legislation, governments are seeking to mitigate human rights abuses, environmental impacts, and other risks within supply chains, thereby contributing to the advancement of a more socially and environmentally responsible business landscape on a global scale.