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Feb 6, 20237 min read

Everything nice and transparent: The sustainable supply chain in practice.

Updated: Jun 29, 2023


look through a hole into a warehouse


Introduction


Sustainabilty influences

business relationships


Did you know that the AOK now requires pharmaceutical manufacturers and their suppliers to strictly adhere to environmental and occupational health and safety standards when bidding for drug rebate contracts? Those who fail to ensure them risk sanctions. German pharmaceutical companies are therefore working hard to optimize their supply chain management (see, for example, the Pharmaceutical Supply Chain Initiative for transparency and traceability in the supply chain).


But looking into one's own supply chain is not that easy. Data on the origin of raw materials alone - whether they are mined, recycled or renewable - may not be readily available. Moreover, most companies barely have insight into the structures of their direct suppliers. And could you tell off the top of your head what environmental damage your own supply chain is doing? To make a long story short:


Times are over,

where the knowledge about the delivery of a supplier is sufficient.

Read the following:

  • What do "sustainable supply chains" mean?

  • What are the legal requirements for sustainable supply chains today?

  • What are the biggest pitfalls when "screening" supply chains?

  • How can you make your supply chain more digitally transparent?


Crucial supply chains


There is now a common sense that a large part of all ethical risks, as well as the management of a company's carbon footprint, lie in its own supply chain. For example, the supply chain generates far greater social and environmental costs than a company's own activities. At the same time, the supply chain is responsible for more than 80% of greenhouse gas emissions. So it was time to turn a conventional supply chain into a sustainable one. But what does that actually mean?


Creating a sustainable supply chain means working in compliance with human rights and environmental protection rules, and creating long-term economic benefits for all parties involved. And that sounds just as simple as the practical implementation is complex.



Critical supply chains


In recent years, the term "sustainable supply chain" has increasingly found its way into the boardrooms of German companies. Here, of course, standardized compliance targets and sustainability benchmarks were needed. The United Nations Global Compact is one of the best known here. This formulated ten criteria for measuring the sustainability of supply chains. They cover environmental responsibility, labor standards, human rights and corruption, and are binding on companies. The goals of the UN Global Compact are also being used more and more in ESG reports.


Under the European Green Deal, sustainable products are to become the norm. The Supply Chain Sourcing Obligations Act (LkSG), which will initially only apply to companies with more than 3,000 employees and will come into force in January 2023, takes the matter of "standardizing sustainable products" very seriously.


For example, the Supply Chain Act requires companies to disclose and be transparent about where they source which materials and raw materials and under what conditions they were produced. In detail:

  • Companies must work with their direct and indirect suppliers and subcontractors to ensure that appropriate compliance measures are taken throughout their supply chain and that these measures are appropriately documented for reporting purposes.

  • This internal documentation on compliance with due diligence must be made public.

  • In addition, the measures taken and any violations must be reported annually to the German Federal Office of Economics and Export Control (BAFA).


More legislation will follow, and it all boils down to one explosive point: if I want to design a sustainable supply chain, how do I get the appropriate insight into my supply chain?


Non-transparent supply chains


Where and how do you monitor working conditions?

How much does your supplier in Pakistan pay attention to environmental protection issues?

What do you know about your suppliers,

service providers and subcontractors?


To put it bluntly: Initiatives, directives and laws around the promotion and demand of sustainable supply chains are by no means about closing factories. At its core, it is about obliging companies to proactively look into their supply chain structures and to try to improve the situation and conditions when disparities are identified. In concrete terms, this means:



From raw material procurement and logistics to product returns and recycling processes, companies must document and store all manufacturing and production conditions and make them accessible to their stakeholder groups. This includes not only the actions of the company's own business unit, but also the actions of direct and indirect suppliers!r!

But while most companies have a good view of their top-tier suppliers, on the other hand they still complain about a severely limited insight and visibility into the lower levels of their supply chains. They simply don't know who they are doing business with! Let alone what conditions and working conditions prevail locally.


And data on the origin of raw materials alone - whether they are mined, recycled or renewable - is often not readily available.


„Our spinning is the abolsute d Blackbox!“ Stefan Niethammer, Managen Direktor of the textile company " 3Freunde"

The transparency of the entire supply chain, and in particular its lower levels, is of crucial importance in the transformation of a conventional supply chain into a sustainable one. But what does "creating transparency" mean for companies in concrete implementation?


Paths to transparency: digital risk management


For continuous, secure and fast monitoring of partners and suppliers, a corresponding digital infrastructure is needed.

For continuous, secure and fast monitoring of partners and suppliers, data should be captured in real time, allowing risks to be identified quickly. Digitalization is an inescapable helper here, and traditional tools such as spreadsheets are a thing of the past.


Big data management, artificial intelligence (AI), and security tools such as blockchain and RFID sensors are providing a sustainable modernization push in terms of transparency and control in supply chains. For example, detailed mapping of the sub-levels of their supply chains and connecting them digitally is advised, especially when capturing information for products that span multiple multi-level supply chains, personal risk audits are advised.


laptop on a glass table with data on its monitor

My Tier-5-Supplier I'll look at myself with my own eyes.


However, technologies, frameworks and standards are always only a mirrored side of the coin, so to speak. Seeing something with your own eyes often opens up a whole new background. Therefore, a trip to a partner is highly recommended, especially at the deeper levels of the supply chain. It is enlightening and allows deductions that probably would not have been made at the conference table in Frankfurt am Main.



Quellennachweise und zum Weiterlesen (Stand Februar 2023)


Lieferkettensorgfaltspflichtengesetz (LkSG)


Hembach, Holger (2022): Praxisleitfaden Lieferkettensorgfaltspflichtengesetz (LkSG) (CB - Compliance Berater Schriftenreihe). Fachmedien Recht und Wirtschaft in Deutscher Fachverlag GmbH; 1. Auflage.


Jürgens, Max / Harings, Lothar (2022): Das Lieferkettensorgfaltspflichtengesetz: Umsetzung und Auswirkungen des LkSG in der Praxis. Reguvis Fachmedien; 1. Edition.


Grabosch, Robert (Hrsg.) (2021): Das neue Lieferkettensorgfaltspflichtengesetz. Nomos; 1. Edition.


Falder, Roland / Frank-Fahle, Constantin / Poleacov, Peter (2022): Lieferkettensorgfaltspflichtengesetz: Ein Überblick für Praktiker

Springer Gabler; 1. Aufl. 2022 Edition (7. Mai 2022)


BMAS Das Lieferkettensorgfaltspflichtengesetz


CSR in Deutschland - Das Lieferkettensorgfaltspflichtengesetz


Deutscher Bundestag verabschiedet Lieferkettensorgfaltspflichtengesetz


Deloitte: Lieferkettensorgfaltspflichtengesetz in der Praxis


Bayerischer Rundfunk: EU-Länder einigen sich grundsätzlich auf Lieferkettengesetz


Die Initiative Lieferkettengesetz: https://lieferkettengesetz.de


Absatzwirtschaft: Nachhaltigkeit in der Lieferkette: Zeit für Gerechtigkeit


Kreislaufwirtschaft


Rau, Thomas / Oberhuber, Sabine (2021): Material Matters: Wie eine neu gedachte Circular Economy uns zukunftsfähig macht | Die Antwort auf die Klimakrise ist die Kreislaufwirtschaft. Econ; 1. Edition


Münger, Alfred (2021): Kreislaufwirtschaft als Strategie der Zukunft: Nachhaltige Geschäftsmodelle entwickeln und umsetzen. Haufe; 1. Auflage


Beckmann, Martin (2022): Kreislaufwirtschaftsgesetz: Kreislaufwirtschafts- und Abfallgesetz mit Verordnungen, Abfallverbringungsrecht. beck im dtv; 23. Edition


Europäisches Parlament: Recht auf Reparatur: Für Produkte, die langlebiger und reparierbar sind


VDI: Zirkuläre Wertschöpfung. Werkstoffliches und chemisches Recycling von Kunststoffabfällen


Europäisches Parlament Ökodesign-Richtlinie: Steigerung der Energieeffizienz und Recyclingfähigkeit



Europäische Kommission: Circular economy action plan (CEAP): https://environment.ec.europa.eu/strategy/circular-economy-action-plan_en


Europäische Kommission zum neuen Aktionsplan der Kreislaufwirtschaft: https://ec.europa.eu/commission/presscorner/detail/de/ip_20_420


Recyclingnews: EU-Kommission will nachhaltige Produkte zur Norm machen


EUR Lex (Zugang zu den Originaltexten) A new Circular Economy Action Plan:


Umweltbundesamt: Abfall- und Kreislaufwirtschaft


NABU: Kreislaufwirtschaft:


Koalitionsvertrag ZWISCHEN SPD, BÃœNDNIS 90/DIE GRÃœNEN UND FDP: MEHR FORTSCHRITT WAGEN. BÃœNDNIS FÃœR FREIHEIT, GERECHTIGKEIT UND NACHHALTIGKEIT:


United Nations Global Compact: https://www.unglobalcompact.org/library/205


United Nations Global Compact: Nachhaltigkeit in der Lieferkette:



Europäer Green Deal


BMUV Den ökologischen Wandel gestalten. Integriertes Umweltprogramm 2030.


brand eins Sonderausgabe Der neue grüne Deal Dezember 2020


Europäisches Parlament Ökodesign-Richtlinie: Steigerung der Energieeffizienz und Recyclingfähigkeit


Europäische Kommission: Der Grüne Deal


Bundeszentrale für politische Bildung: The European Green Deal:


DIHK: Worum geht es beim Green Deal?


Ökodesign-Richtlinie


EUR Lex (Originaltexte): On making sustainable products the norm


Umweltbundesamt: Ökodesign-Richtlinie


Süddeutsche Zeitung, 28. März 2022: Wie die EU Produkte ökologischer macht


Europäisches Parlament Ökodesign-Richtlinie: Steigerung der Energieeffizienz und Recyclingfähigkeit


Sustainable Development Goals (SDG)


BMZ: Die globalen Ziele für nachhaltige Entwicklung


IHK: Die UN Nachhaltigkeitsziele (SDGs) als Maßstab für verantwortungsvolles Unternehmertum


United Nations Global Compact: https://www.unglobalcompact.org


Recycling


BMUV: Kreislaufwirtschaftsgesetz


BMBF (Plastik): WErtschöpfungsketten gestalten



Stiftung zentrale Stelle Verpackungsregister: Mindeststandard recyclinggerechtes Design: https://www.verpackungsregister.org/stiftung-behoerde/mindeststandard-21/grundlegende-informationen


Europäisches Parlament: Recht auf Reparatur: Für Produkte, die langlebiger und reparierbar sind


VDI Zentrum Ressourceneffizienz: https://www.ressource-deutschland.de


Recyclingnews: EU-Kommission will nachhaltige Produkte zur Norm machen


Europäisches Parlament Ökodesign-Richtlinie: Steigerung der Energieeffizienz und Recyclingfähigkeit

ESG & Nachhaltigkeitsberichterstattung


Rat der Europäischen Union: Neue Vorschriften für die Nachhaltigkeitsberichterstattung von Unternehmen: vorläufige politische Einigung zwischen Rat und Europäischem Parlament


Regularien zum Greenwashing


BMUV Den ökologischen Wandel gestalten. Integriertes Umweltprogramm 2030.


Europäische Kommision: Unfair commercial practices directive


Europäische Kommision: Kreislaufwirtschaft: Kommission schlägt neue Verbraucherrechte vor und will Greenwashing verbieten


NKS / Bundesministerium für Bildung und Forschung: EU legt Vorschläge für nachhaltige Produkte vor


Digitaler Produktpass (DPP)

Digtler Produkpass

Europäisches Parlament Ökodesign-Richtlinie: Steigerung der Energieeffizienz und Recyclingfähigkeit


BMUV Der BMU Design-Sprint zum Digitalen Produktpass für die Elektromobilität


Umweltbundesamt Förderung des nachhaltigen Konsums durch digitale

Produktinformationen: Bestandsaufnahme und Handlungsempfehlungen


BDI Der „Digitale Produktpass“ auf dem Prüfstand


Recyclingnews: EU-Kommission will nachhaltige Produkte zur Norm machen


DKE Digitaler Produktpass: Förderung der Digitalisierung und Kreislaufwirtschaft durch standardisierte Daten


Europäische Kommission: Circular economy action plan (CEAP): https://environment.ec.europa.eu/strategy/circular-economy-action-plan_en


NCF

NF



How NFC can help your business become more sustainable. Download des Whitepapers.


Apple includes NFC in MagSafe accessories for new iPhones


Blockchain


Schneider, Nathan (2022): Proof of Stake: The Making of Ethereum and the Philosophy of Blockchains Seven Stories Press



Sandner, Philipp / Tumasjan, Andranik / Welpe, Isabell (2020): Die Zukunft ist dezentral: Wie die Blockchain Unternehmen und den Finanzsektor auf den Kopf stellen wird. BoD – Books on Demand; 1. Edition








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