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Zulema Townsend, Associate in the Environment and Climate Law Group at A&O Shearman, highlights the shift from voluntary sustainability reporting to mandatory, detailed disclosures, and the growing due diligence obligations companies face.
- Corporate reporting: The EU’s Corporate Sustainability Reporting Directive (CSRD) and the International Sustainability Standards Board (ISSB) standards are setting new expectations for detailed sustainability disclosures, including supply chain impacts.
- Supply chain due diligence: The EU’s Corporate Sustainability Due Diligence Directive (CSDDD) introduces obligations to identify, address, and mitigate human rights and environmental impacts across supply chains.
- Product stewardship: EU regulations on forced labour, conflict minerals, and deforestation raise potential liability for unsustainably sourced products and components entering the EU market.
As Zulema notes, this direction of travel demands that companies not only understand their regulatory exposure but also take proactive steps to embed sustainability and accountability deep into their supply chains.
🎙️ Recorded in partnership with ITFA Education Day, held in London
Key Topics
- Supply chain transparency and sustainability reporting are becoming central to how organisations operate and communicate risk.
- There is a growing emphasis on mandatory due diligence, particularly in relation to human rights and environmental impacts within supply chains.
- There is a growing emphasis on mandatory due diligence, particularly in relation to human rights and environmental impacts within supply chains.
Expert Analysis
Zulema Townsend, Associate in the Environment and Climate Law Group at A&O Shearman, outlines how supply chain regulation is evolving in response to growing sustainability expectations. She notes that corporate reporting has moved away from voluntary frameworks towards mandatory disclosure regimes. Initiatives such as the EU Corporate Sustainability Reporting Directive and the standards developed by the International Sustainability Standards Board are setting a more consistent global baseline, requiring companies to report in greater detail on sustainability risks, including those linked to supply chains. Townsend also highlights the increasing importance of supply chain due diligence. Under the EU Corporate Sustainability Due Diligence Directive, companies are expected not only to identify risks but to take meaningful action to prevent and address adverse human rights and environmental impacts. In addition, product stewardship measures are expanding regulatory oversight across global supply chains. Regulations relating to forced labour, conflict minerals and deforestation are placing greater responsibility on businesses for the origin and sustainability of the products they bring to market. Overall, the direction of travel is clear. Organisations must adopt a more proactive and integrated approach to managing supply chain risk, with transparency and accountability at its core.— Zulema Townsend
Key Findings
- Mandatory reporting frameworks are increasingly replacing voluntary approaches to sustainability disclosure.
- Human rights and environmental risks within supply chains are a central focus of new regulation.
- Product related rules are expanding accountability across the entire value chain.
Implications
- Organisations will need to strengthen internal systems to meet more detailed reporting and compliance requirements.
- Due diligence processes must become embedded within day to day supply chain management rather than treated as a standalone exercise.
- Global regulatory developments are likely to drive greater consistency, requiring businesses to align practices across multiple jurisdictions.
