Businesses are increasingly recognizing the need to integrate sustainability standards required by national laws deep within their international supply chains.

Companies are facing pressure from all sides: governments enforcing stringent corporate sustainability regulations, consumers demanding transparency, and investors insisting on reporting across environmental, social, and governance (ESG) criteria. Attention is extending bBeyond national borders and head offices into the depths of supply chains and raw-material hotspots.

With this attention, the landscape of global supply chain regulations is becoming more complex. Companies must keep on top of new requirements, such as the U.S. Uyghur Forced Labor Prevention Act, German Supply Chain Due Diligence Act and the European Union’s newly passed Corporate Sustainability Due Diligence Directive (CSDDD).

Each of these laws demands that a company identify and address human rights and environmental risks throughout its supply chain — not just its own operations. Failing to comply can pose serious business risks, including fines and product seizures.

As we look to 2025, organizations must prioritize strategies that comply with emerging regulations, positively impact societal and environmental outcomes, and navigate supply chain disruptions — all while thriving in a competitive global market. It can feel like a tall order, but by recognizing the common requirements across these objectives and the activities needed to meet them, companies can build a streamlined approach that maximizes time and resources.

Across ESG frameworks, sustainability goals and supply chain regulations, risk-based prioritization is a core underlying principle. It involves addressing the environmental and ethical risks that are the most severe, widespread or likely to impact business operations.

Building extensive supply chain visibility is fundamental to this effort. To identify the biggest sustainability risks, companies need to understand their supplier base beyond direct partners, even down to individual supply chain sites. This level of transparency allows them to assess compliance, manage risks proactively and use those insights to build resilience against potential disruptions. Visibility facilitates a deep understanding of the supply chain, enabling companies to take action on critical areas for intervention and improvement.

Mapping a supply chain in detail can be challenging. Modern technology offers in-depth data and analytics from global sources, so that firms can better understand their supply chains, manage sustainability risks, and adapt to the evolving demands of corporate responsibility. These intelligent tools help to prioritize ESG areas, conduct comprehensive risk assessments, allocate resources in line with company goals, and compile detailed data.

To navigate sustainability standards across multiple regions, companies should aim to meet the most stringent requirements that apply in each area of ESG. An effective strategy includes the following best practices:

A sustainable supply chain management strategy. One that focuses on minimizing risks related to environmental harm and labor violations can aid in both legal compliance and operational efficiency. Companies that integrate responsible sourcing practices into their procurement decisions can see cost savings of up to 16%. By setting goals for supplier performance, they can obtain credible data that can serve as evidence of meeting multiple sustainability-related requirements.

Measurement and monitoring. A sustainable supply chain strategy begins with gathering data on key social and environmental performance indicators, such as energy consumption, modern slavery risks, wages and anti-corruption. This data-driven approach pinpoints risks and opportunities throughout a supply chain. For example, by capturing environmental data from suppliers and implementing ongoing tracking, companies can monitor their Scope 3 emissions and identify opportunities for reduction. This comprehensive monitoring enhances an overall sustainability strategy, and is essential to demonstrating progress towards science-based carbon footprint reduction or net-zero emissions targets.

Supplier engagement. Clear communication and collaboration on compliance expectations and sustainability standards to suppliers is crucial. This level of transparency fosters trust between suppliers and buyers, and contributes to the development of sustainable solutions that benefit everyone.

Supplier assessment program. This is essential for improving sustainable practices and monitoring compliance against legal labor and environmental standards. The program should include regular reviews of supplier performance on the key metrics outlined in a company’s sustainable supply chain strategy. Using an integrated supply chain sustainability platform to store, share, schedule and analyze these assessments can save both time and resources.

Informed procurement decisions. Consider factors beyond price, such as labor conditions, carbon footprint and material traceability. Studies indicate that nearly half of millennial and Gen Z consumers are willing to pay more for environmentally friendly products. Engaging suppliers to develop more sustainable products supports legislative compliance and improved ESG performance, while delivering quality goods and services at competitive prices.

The journey toward more sustainable supply chains is about more than compliance. It demands a commitment to creating future-proofed processes that improve both corporate responsibility and operational efficiency.

By adhering to these best practices, businesses can lead the way in creating sustainable supply chains, becoming leaders in the new global economy, and ensuring long-term success. 

Jon Hancock is chief executive officer of Sedex.