Supply chain due diligence has become an operational necessity, driven by increasingly stringent regulations such as the proposed EU Corporate Sustainability Due Diligence Directive.
For Italian companies operating internationally, the challenge is no longer whether to implement due diligence processes, but how to structure them effectively. The transition from general principles to operational procedures requires a methodical and professional approach, integrating legal, operational, and risk management expertise.
Review of internal policies
The first step is a critical assessment of existing supplier selection processes. Companies must identify gaps in relation to their environmental, ethical, and operational goals, taking into account not only current requirements but also emerging obligations under the evolving European regulatory landscape.
Definition of the risk matrix
Creating a structured risk matrix is the strategic core of the process. This matrix should differentiate between:
Roles and responsibilities
Clearly assigning organizational responsibilities is crucial. The process must include dedicated compliance and due diligence roles, with direct reporting to management and integration into corporate policies.
1. Strategic identification of key suppliers
Not all suppliers require the same level of scrutiny. The most effective approach involves identifying suppliers that are critical to the business, evaluating:
2. Structured Due Diligence process
Developing a systematic process should include:
3. Active supplier engagement
Engagement must go beyond simple information collection. It is essential to:
4. Ongoing monitoring
Implementing a continuous monitoring and evaluation process ensures that suppliers maintain the required standards over time. This approach should combine education, incentives, and, where necessary, corrective measures.
5. Business continuity planning
Developing preventive contingency plans is essential for managing unexpected supply chain disruptions or other operational risks. These plans must be regularly tested and updated.
6. Collaboration with external stakeholders
Collaborating with third-party standard organizations and regulatory authorities, enables companies to implement best-in-class due diligence practices and stay informed about regulatory developments.
7. Continuous improvement approach
Supply chain sustainability is a long-term strategic process. Companies should regularly review the effectiveness of their due diligence process and implement improvements based on results.
An effective due diligence system requires full visibility across the supply chain. Many traditional management systems are not designed for sustainability reporting or ESG metrics. It is essential to start with first-tier strategic suppliers (Tier 1) and gradually extend visibility to second- and third-tier suppliers.
The ultimate goal is to create a sustainability “scorecard” for each supplier, enabling companies to identify strengths, gaps, and collaboration opportunities.
The complexity of supply chain due diligence demands multidisciplinary expertise ranging from international commercial law to operational risk management.
van Berings, with its solid experience in corporate law, commercial contracts, and regulatory compliance, can support companies in this strengthening process.
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