COMPLIANCE & RISK ASSESSMENT
A MORE TRANSPARENT SUPPLY CHAIN
More than three years after the chaos caused by the pandemic, supply chain disruption remains a challenge for all industries with ongoing labour and materials shortages, unpredictable lead times and spiralling costs. While current global uncertainty is defying any sort of complete recovery, attention is turning to how supply chains can be ‘cleaned up’, leaving them more resilient to further disruption and less exposed to risks.
For businesses, current and pending regulations are increasingly focused on supply chain accountability, which goes beyond achieving health and safety compliance. The UK’s Procurement Bill, alongside new and pending EU laws, signal a clear direction of travel when it comes to increasing scrutiny in supply chains. So, what do businesses need to know to prepare themselves and manage their supply chain risks?
THE PROCUREMENT BILL The new Procurement Bill is going through
parliament, with Royal Assent expected in early 2024. Its aims are to provide a new set of guiding standards for public procurement which focus on delivering environmental targets, social value and value for money, information sharing and equality. While the rules apply to public procurement, there are lessons to learn for the private sector.
Some of its key features include a new single digital platform which will allow suppliers to see all opportunities in one place and provide details of key performance indicators to incentivise good practice. A debarment list will record those who are excluded during the procurement process for reasons of poor performance or inappropriate/criminal behaviour such as fraud and conviction of modern slavery.
Supporting public procurement law is the updated procurement policy note PPN0203 which emphasises applying more stringent risk management standards to supply chains by requesting declarations on health and safety, data protection, modern slavery, carbon emissions reduction and finances. These are all risk areas covered by the Common Assessment Standard, which may in future, be mandated as the accreditation requirement for public sector contracts.
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Both the UK and Europe are forging ahead with their environmental sustainability and social priorities via a raft of new legislation which puts supply chain visibility at its core. Alex Minett, Head of Global New Markets at CHAS, a Veriforce company, looks at the changes being brought in and how they could impact supply chain networks in the facilities management sector.
INTENSIFYING GLOBAL FOCUS ON SUPPLY
CHAIN DUE DILIGENCE AND ESG The German Supply Chain Due Diligence Act (GSCA) came into force on 1st January 2023, obligating companies to assess and evidence due diligence on human rights and environmental risks across the entire supply chain. For UK businesses, the GCSA applies to any company employing over 3000 staff (dropping to 1000 from 2024) with a registered branch office in Germany. The GCSA applies to all suppliers, directly or indirectly, so if there is any German customer within the supply chain, then they will need to ensure compliance with the Act.
The European Union’s goal to transition all economic sectors to a sustainable economy has also been laid out. Under the umbrella term ESG (Environmental, Social and Governance), EU companies will be expected to take responsibility for the rights of foreign workers and the global environment when doing business. The European Parliament have agreed on the Corporate Sustainability Reporting Directive leading to the implementation of individual laws for member states within the next few years. The Directive means companies operating along the supply chain of EU countries will be obliged to establish a due diligence process that will effectively identify and tackle actual and potential adverse impacts on environmental and human rights issues.
HOW CAN BUSINESSES STAY AHEAD? Overhauling supply chains is no mean feat, but
for companies looking to build resilience, increase transparency and mitigate risk, there is support available. Engaging a supply chain management service like CHAS can take the stress out of the procurement process by helping to identify vetted contractors who already meet risk management best practices in areas such as health and safety, modern slavery and environmental regulations. CHAS membership for clients provides instant access to a complete prequalified contractor list via the CHAS Client Portal, using a variety of search parameters. It also offers companies complete visibility of their projects, the subcontractors in their network, and their compliance.
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