Supply chain ESG diligence is now a board issue. The ground rules.
Five practical questions every board should be able to answer about supplier ESG exposure — and the diligence depth required to answer them.
The European Supply Chain Due Diligence Directive has moved the legal threshold, but the practical challenge for most boards is not compliance — it is credibility. The gap between what companies are required to say and what they can actually demonstrate is growing, and regulators, investors and counterparties are beginning to notice.
Five questions define the minimum standard of board-level literacy on supplier ESG. Can you name your top twenty suppliers by spend and map their tier-one sub-contractors? Do you have independent verification of your most material supplier's environmental and labour practices, or only self-attestation? Has your legal counsel reviewed the scope of your due diligence obligation under current and pending regulation in each jurisdiction where you source?
The honest answer for most companies is that the first question alone reveals significant gaps. Supply chain mapping at the depth required for credible ESG diligence is an operational exercise, not a documentation exercise. It requires on-the-ground engagement, not desktop research.
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