On 24 April 2024, the European Parliament voted in favour of adopting the Corporate Sustainability Due Diligence Directive (CSDDD). The Corporate Sustainability Due Diligence Directive builds on due diligence legislation already adopted such as LKSG in Germany, Bill S211 in Canada, BRSR Core in India and Apenhetsloven in Norway to create an aligned standard to support responsible business conduct.
CSDDD specifically recommends adopting a due diligence strategy aligned with recommendations by the Organisation for Economic Co-operation and Development (OECD) contained within the Guidelines for Multinational Enterprises and Due Diligence Guidance for Responsible Business Conduct.
In this blog we take a look at the benefits of adopting an OECD-aligned due diligence strategy.
- Global Standards and Consistency: The OECD-defined approach provides a globally recognized and consistent framework for supply chain due diligence which draws on recommendations from other international standards. This common framework facilitates communication and understanding among businesses, governments, and stakeholders worldwide, ensuring a shared understanding of responsible business conduct.
- Comprehensive Guidance: The OECD guidance covers a broad range of issues, including human rights, labour, environment, and anti-corruption. This comprehensive approach helps companies address multiple dimensions of responsible business conduct, promoting a holistic and systematic evaluation of supply chain risks.
- Legal and Regulatory Compliance: Adhering to the OECD-defined approach helps companies comply with international standards and expectations for responsible business conduct. It assists in navigating the complex landscape of legal and regulatory requirements related to supply chain practices across borders, reducing the risk of legal liabilities. It also supports more efficient reporting – as companies can collect information once and use it to meet a wide range of disclosure and reporting requirements.
- Market Access and Competitiveness: Companies adhering to the OECD guidelines may find it easier to access international markets. Many consumers and business partners prefer to engage with companies that demonstrate a commitment to responsible business conduct, providing a competitive advantage in the global marketplace.
- Stakeholder Trust and Reputation: Following an internationally recognized due diligence framework signals a commitment to responsible and ethical business practices. This, in turn, helps build trust among stakeholders, including consumers, investors, and local communities. Enhancing a company’s reputation for ethical conduct can positively impact brand value and competitiveness.
- Risk Management and Resilience: By systematically identifying and addressing risks, companies can enhance their overall risk management strategies. This contributes to the resilience of the supply chain, making businesses better equipped to handle disruptions, whether caused by natural disasters, economic shifts, or other unforeseen events.
- Alignment with Sustainable Development Goals (SDGs): The OECD-defined approach aligns with broader global initiatives, including the United Nations Sustainable Development Goals (SDGs). Companies that integrate responsible business conduct into their supply chains contribute to societal goals related to sustainability, poverty reduction, and social equity.
- Facilitating Collaboration: A standardized approach fosters collaboration among businesses, governments, and other stakeholders. Companies can share best practices, collectively address challenges, and work towards common goals, creating a more collaborative and supportive business environment.
An OECD-defined approach to supply chain due diligence offers a structured, comprehensive, and globally recognized framework. This helps companies identify and address risks, meet stakeholder expectations with greater confidence and share information to improve standards – and in doing so contribute to building a more sustainable, ethical, and resilient global business environment.
To learn more about Achilles’ OECD-aligned due diligence solution and how it can help your company comply with CSDDD and the Corporate Sustainability Reporting Directive (CSRD) contact us here.
