How to Mitigate Risk in Your Supply Chain

In addition to Germany’s Act on Corporate Due Diligence in Supply Chains, there is also the Modern Slavery Act of 2018 in Australia. Moreover, the United States Securities and Exchange Commission is also considering environmental, social, and governance reporting rules and requirements on climate disclosure, and the European Commission adopted a proposal for new rules on corporate sustainability due diligence in February, 2022. There is a clear trend of expanding legislation, which will make compliance challenges more acute.

Almost all of the 800 businesses surveyed recognize that more open and transparent data sharing would help them to accurately assess ESG risk and compliance in their supply chain partners across the globe. Moreover, the lack of data sharing is the top factor preventing nearly half (48%) of businesses from accurately assessing the ESG standards of their supply chain partners. Coupa is already addressing the issue of data sharing when it comes to assessing ESG risk. Coupa’s community-based approach to data sharing has already proven to be very effective in enabling companies to share diversity, equity, and inclusion data on suppliers to ensure supply chain diversification. Coupa has one of the largest databases of diverse suppliers, and as a result many companies have been able to make great progress on their diversification goals. In the same way, Coupa aims to empower companies to more easily and accurately identify ESG risk in their supply chains.

In short, the German Act on Corporate Due Diligence in Supply Chains (commonly referred to as the German Supply Chain Act) requires that, starting in January 2023, companies operating in Germany with 3,000 or more employees must fulfill due diligence obligations by monitoring supply chains for human rights violations and compliance with environmental standards. By 2024, the law will extend to companies with more than 1,000 employees.