As one of the world’s fastest-growing economies, India is increasingly integrating into the global supply chain network. With the country projected to have a global export share of around 4% by 2030, Indian companies are poised to play a significant role in the international market. However, this integration brings with it the need to adhere to global standards of business practices as they move towards sustainability and ethical conduct.
Supply chain due diligence (SCDD), also known as corporate sustainability due diligence, is a comprehensive framework designed to ensure sustainable business practices along the supply chain. It involves implementing policies and processes that identify, assess, and mitigate risks related to human rights, labour conditions, environmental impact, and ethical conduct. At its core, SCDD is about fostering transparency, accountability, and sustainability in business operations.
Effective SCDD requires businesses to conduct thorough assessments of their supply chains, engage with suppliers to enforce compliance, and continuously monitor and report on due diligence activities. This proactive approach not only helps in meeting compliance requirements, but also builds a resilient and ethically sound supply chain that can withstand scrutiny from stakeholders and regulatory bodies.
The Drive Towards SCDD: German Supply Chain Act and EU CSDDD
The German Supply Chain Due Diligence Act and the introduction of the EU Corporate Sustainability Due Diligence Directive (CSDDD) mark a significant shift towards mandatory SCDD for companies operating within or trading with the European Union. These regulations require businesses to identify and address adverse human rights and environmental impacts in their supply chains.
For Indian companies exporting to Germany and other EU countries, understanding and complying with these regulations is crucial. The German Supply Chain Act mandates that companies implement effective due diligence processes, including risk assessments, preventive measures, and grievance mechanisms. The EU CSDDD further extends these requirements to include broader sustainability criteria and stricter enforcement measures.
The Business Case for SCDD
Adopting strong SCDD practices offers several competitive advantages for Indian companies. Firstly, it opens doors to global markets, particularly in Europe, where compliance with due diligence regulations is becoming a prerequisite for trade. Companies that demonstrate robust SCDD practices are more likely to attract international partners and investors who prioritise sustainability and ethical conduct.
Secondly, SCDD enhances a company’s reputation and brand value. Consumers and stakeholders are increasingly aware of the role and responsibility of business, and companies that prioritise human rights and environmental sustainability are viewed more favourably. This positive perception can translate into increased customer loyalty and market share.
Furthermore, effective SCDD can lead to operational efficiencies and cost savings. By identifying and mitigating risks early, companies can avoid disruptions, legal penalties, and damage to their reputation. This proactive approach also fosters innovation and continuous improvement in business processes.
Training as a Means to Gain Competitive Advantage
To fully leverage the benefits of SCDD, Indian companies must equip their teams with the necessary knowledge and skills. The Indo-German Chamber of Commerce (IGCC) offers a comprehensive Sustainability Due Diligence Intermediate Training course tailored for professionals from various departments and positions, whether senior or junior. This course covers essential aspects of SCDD, including risk identification, assessment, and mitigation, aligned with German and EU regulations.
The training combines virtual sessions and self-learning components, designed to fit into busy schedules. Participants will gain practical insights into developing effective due diligence processes, preparing human rights policy statements, and setting up grievance mechanisms. By enhancing their understanding of international due diligence laws, participants can develop actionable strategies to manage and mitigate risks, ultimately strengthening their company’s competitive position in the global market.
Learn more about the Sustainability Due Diligence Intermediate Training course and register today to gain a competitive edge through supply chain due diligence knowledge and practices!
In case of queries, please write to sustainmarkets(at)indo-german.com
