Reflections from the RBA European conference
The Responsible Business Alliance (RBA) held its annual European conference in Brussels on 23-24 May 2023. Our Senior Consultant, Jean-Baptiste Collovray, shares his insights from his time there.
Many discussions at the event revolved around the progress of the Corporate Sustainability Due Diligence Directive (CSDDD). The panel discussions featuring the European Parliament, Council and Commission indicated that the agreement reached and voted on within the parliament on June 1st would still be fragile and does not yet provide full harmonisation across member states.
My three key takeaways from the conference were:
Non-EU countries’ involvement is missing
This kind of event and conversations around European mandatory due diligence would be more impactful if countries outside of the European Union (EU) had a voice.
Some concerns were expressed about the directive not being welcome in non-EU countries, where many European companies source from. Although these countries will be heavily impacted by CSDDD, they seem to be the least involved in the discussions around it. The impact and challenges of due diligence implementation in these countries have not been covered by the speakers from EU institutions, and the opportunity to engage these countries early in the process seems to have been missed.
If we want to see a successful and impactful implementation of European mandatory due diligence on the ground, it is now critical for the EU to include these countries during the definition of accompanying measures and practical guidance.
There is a need to facilitate collaboration
The legislators seem to assume that customers always have leverage on, and a dominating position over, their suppliers. However, this is a misunderstanding of the actual business context. Enhanced collaboration between companies will be instrumental to break through long, complex and often opaque supply chains. Legislators should also consider adapting competition legislation to enable better collaboration between companies on sustainability due diligence.
Impact must remain the key driver to address gaps in due diligence
Despite increasing maturity across companies, there is still a significant gap to be addressed to meet due diligence requirements. Supply chain mapping appears to be the biggest challenge. It is a prerequisite to conduct due diligence beyond Tier 1, but it is one that companies have not yet figured out how to overcome.
Mapping a supply chain can be a daunting task especially when attempted all at once. Instead, supply chain mapping should be driven by risk saliency (i.e. prioritising efforts where the risks and impacts are the most significant). Otherwise, companies risk spending most resources and time on mapping and risk identification and leaving little time for mitigation and remediation.
We are navigating an increasingly complex legislative landscape for due diligence. However, companies should refrain from considering all different pieces of legislation around mandatory due diligence as separate requirements. It is much more relevant to focus on the implementation of comprehensive due diligence programmes aligned with the OECD Guidance for Responsible Business Conduct, on which mandatory due diligence legislations are based.
Kumi is supporting companies to design and implement comprehensive and impactful Responsible Sourcing Programmes that comply with the European regulations for due diligence. Get in touch if you would like to understand how we can support you.