The advancement of sustainability regulations will likely impact your value chain. Here is how to stay ahead of them. First, establish a team to monitor legislative trends.5 Consider also using regulatory tracking software or joining industry groups to stay informed.6, 7 Additionally, keep an eye on evolving industry practices and voluntary agreements that may not be legislated but are becoming the norm. For example, agreements that exclude the use of particular chemicals.8
To better understand the implications of new legislation, you may want to consult legal experts for clarification and proactively engage regulators. Scenario planning can also be a useful tool for assessing potential regulatory impacts.
Taking a proactive, systematic approach to monitoring regulatory trends will help you manage risk and recognise new opportunities. For instance, it can help you align with emerging consumer values and prepare for future legislation. Regulatory changes may also present opportunities, such as rewards and subsidies for sustainability efforts or investment.9
EXAMPLE: US Senate Bill on Xinjiang forced labour
The US Senate bill restricting goods manufactured in Xinjiang, China, demonstrates the trend towards increasing regulatory focus on social issues in global value chains. As a starting point, the bill assumes goods from Xinjiang are produced with forced labour, placing the burden on companies to provide evidence that their value chain is free of forced labour.10, 11
EXAMPLE: Germany's Supply Chain Due Diligence Act
Germany's Supply Chain Due Diligence Act (SCDDA)12 forces companies to identify and manage environmental and human rights risks in their supply chains, including child and forced labour. Procurement planners must adapt by ensuring the compliance of direct and indirect suppliers, annually reporting on their due diligence, and potentially facing fines or exclusion from public tenders for non-compliance.13
