Supply Chain Due Diligence
Companies need to be aware that several methodologically distinct forces are reshaping the global supply chain. From environment, social, and governance (ESG) policies, to trade bans—including what experts are terming forces of “deglobalization”—and attempts by the United States government to emphasize “green investigations,” the policing and enforcing of issues related to the entire supply chain have never been more prevalent.
In general, ESG policies assume that private capital will mobilize around value-adding behavior and chill behavior or activities that undermine long-term business value. For example, in February 2022, the European Commission promulgated a proposal for a Corporate Sustainability Due Diligence Directive. This proposed directive would establish new obligations for large companies to ensure that their own activities, and those of their supply chains, comply with human rights and environmental sustainability criteria, including addressing the risk of forced labor in their supply chains.
In contrast, trade bans—like those in the U.S. and EU against Russia—seek to punish state actors and individuals who have been alleged to violate international and national legal regimes. In the U.S., these bans are not just limited to Russia. The recently enacted Uyghur Forced Labor Prevention Act seeks to prohibit goods from the Xinjiang Uyghur Autonomous Region of China that have been produced with force labor.
As a result, corporations must conduct adequate due diligence of their supply chains within a complex web of legal risk. Companies that believe they are immune from such risks because they are only based in the U.S. will do so at their own peril. Instead, all employees throughout the supply chain, from the procurement department to the C-suite, will need to have the necessary knowledge about relevant rules and regulations. In addition, compliance departments will need to engage in active policing of their supply chains. Standard “check-the-box” compliance policies are ill-equipped to navigate this ever-changing legal environment and will likely not be deemed sufficient by regulators.
Lewis Brisbois recognizes companies need trustworthy legal advice to navigate these multi-faceted legal issues, and so it has established this Supply Chain Due Diligence resource page. With its expansive network, Lewis Brisbois is well-positioned to help companies navigate and address these complex and multi-disciplinary legal issues.
This page will be updated regularly with relevant information about rules and regulations, alerts on developing issues, and links to related practice areas, including Lewis Brisbois’ ESG Practice and our newly formed Ukraine Conflict Response page.
Related Laws & Regulations
- Russia Sanctions
- Uyghur Force Labor Prevention Act
- EU Corporate Sustainability Due Diligence Directive
- Trade Links
- UK Modern Slavery Act
- California Transparency in Supply Chains Act
- EU Conflict Minerals Regulations
- Dodd Frank Act Section 1502 (conflict minerals disclosures)
- Supply Chain Ministerial Forum Fact Sheet
- Supply Chain Accountability: New Dimensions of Business and Legal Risk,” Risk & Compliance Magazine, Jan-Mar 2016
- Quoted in “Conflict Minerals: The Pressure Remains On,” Supply & Demand Chain Executive, September 2015
- “Conflict Minerals: A Second-Year Update,” ABA In-House Counsel Committee Newsletter, August 2015
- “Conflict Minerals: Why SEC Compliance Should Be the Least of Your Worries,” CSR Wire and Lexology, April 2014