Search Results (13)

The European Commission’s Directive on Corporate Sustainability Due Diligence, adopted in 2022 and approved in 2024, mandates that companies identify, prevent, and mitigate hostile human rights and environmental impacts across their operations and supply chains, integrating sustainability into corporate governance. This article examines the directive’s influence on European entrepreneurial activity, ecosystems, and innovation using a qualitative descriptive literature analysis, comparative frameworks, impact assessments, policy recommendations, and case studies. Findings suggest that while the directive imposes compliance challenges and costs, particularly for startups and small and medium-sized enterprises, it offers significant long-term benefits, such as improved risk management, enhanced reputation, and market differentiation. The directive promotes accountability and ethical practices, harmonizing due diligence across the EU and fostering a culture of sustainability. It concludes that companies addressing these impacts can gain a competitive edge and attract sustainability-focused investors, necessitating support mechanisms for startups and small and medium-sized enterprises to mitigate burdens and encourage compliance. Full article

Due to the European Regulation on Deforestation-Free Products (EUDR), coffee and other commodities and their derived products from deforested areas will be prohibited from being placed on the European Union (EU) market starting in December 2024. With the “EUDR Coffee Check”, a comprehensive tool was developed, in collaboration with the German Coffee Association (DKV), combining a database solution with automated analysis methodologies, combined with a web-frontend, to support the EUDR compliance of the coffee industry. The tool supports the gathering of verifiable information to ensure that coffee is deforestation-free after the 31 December 2020 EUDR cutoff date. To determine deforestation-free status, deep learning-based mapping methods on satellite imagery along with open access local and global datasets were applied to develop a 2020 forest reference map that aligns with the defined EUDR forest categories and the cutoff date. The tool can be used to conduct automatic deforestation checks by comparing coffee farm locations with reference forest maps from 2020 and raises a potential deforestation alert. Potential deforestation alerts are identified as critical cases based on the annually updated series of land use changes and/or deforestations observed within the base 2020 forest areas after the cutoff date. The tool also allows users to conduct a structured risk assessment of the provided geo-coordinates of production areas and the supply chain to document the complete exercise of the required EUDR due diligence process. The tool uses internationally recognized indices and statistics, such as UNDP, UNICEF, World Bank, and many more, to calculate a risk score to evaluate governance and human rights risks such as child labor, forced labor, or corruption associated with the sourcing regions. The presence of forests, deforestation risk, and maps providing information on the protected areas of indigenous people are used to identify the coffee production areas’ proximity and relative risk exposure to provide a full picture of the risk factors in line with the EUDR requirements. In addition to the detailed analysis of deforestation risk alerts, the EUDR Coffee Check provides a questionnaire that guides the user through the structured process to supplement the risk assessment and documentation of legality. Following focused questions and providing potential answers, the user is enabled to evaluate the risk for non-compliance according to the exact requirements of the EUDR and provides guidance on risk mitigation measures, such as the implementation of internal due diligence strategies, the usage of third-party verification schemes to increase reliability through on-site audits, or the usage of traceability platforms. The developed EUDR Coffee Check supports companies to comply with the EUDR due diligence obligations by analyzing, documenting, and reporting on individual shipments and the associated production areas and can be used by operators, traders, or any actor along the supply chain, including authorities, to control the checks at their discretion. The tool is offered at a nominal fee structure based on a customized term of usage. Full article

At COP26, the Glasgow Leaders Declaration committed to ending deforestation by 2030. Implementing deforestation-free supply chains is of growing importance to importers and exporters but challenging due to the complexity of supply chains for agricultural commodities which are driving tropical deforestation. Monitoring tools are needed that alert companies of forest losses around their source farms. ForestMind has developed compliance monitoring tools for deforestation-free supply chains. The system delivers reports to companies based on automated satellite image analysis of forest loss around farms. We describe an algorithm based on the Python for Earth Observation (PyEO) package to deliver near-real-time forest alerts from Sentinel-2 imagery and machine learning. A Forest Analyst interprets the multi-layer raster analyst report and creates company reports for monitoring supply chains. We conclude that the ForestMind extension of PyEO with its hybrid change detection from a random forest model and NDVI differencing produces actionable farm-scale reports in support of the EU Deforestation Regulation. The user accuracy of the random forest model was 96.5% in Guatemala and 93.5% in Brazil. The system provides operational insights into forest loss around source farms in countries from which commodities are imported. Full article

The EU’s regulatory framework for genetically modified organisms (GMOs) was developed for “classical” transgenic GMOs, yet advancements in so-called “new genomic techniques (NGTs)” have led to implementation challenges regarding detection and identification. As traceability can complement detection and identification strategies, improvements to the existing traceability strategy for GMOs are investigated in this study. Our results are based on a comprehensive analysis of existing traceability systems for globally traded agricultural products, with a focus on soy. Alternative traceability strategies in other sectors were also analysed. One focus was on traceability strategies for products with characteristics for which there are no analytical verification methods. Examples include imports of “conflict minerals” into the EU. The so-called EU Conflict Minerals Regulation requires importers of certain raw materials to carry out due diligence in the supply chain. Due diligence regulations, such as the EU’s Conflict Minerals Regulation, can legally oblige companies to take responsibility for certain risks in their supply chains. They can also require the importer to prove the regional origin of imported goods. The insights from those alternative traceability systems are transferred to products that might contain GMOs. When applied to the issue of GMOs, we propose reversing the burden of proof: All companies importing agricultural commodities must endeavour to identify risks of unauthorised GMOs (including NGTs) in their supply chain and, where appropriate, take measures to minimise the risk to raw material imports. The publication concludes that traceability is a means to an end and serves as a prerequisite for due diligence in order to minimise the risk of GMO contamination in supply chains. The exemplary transfer of due diligence to a company in the food industry illustrates the potential benefits of mandatory due diligence, particularly for stakeholders actively managing non-GMO supply chains. Full article

The European Union (EU) has impacted regulation worldwide in areas ranging from data protection to trade or antitrust. In select fields, it has defined stringent standards and has had an impact on global business because of the size of its market and the price of participating in it. The purpose of this paper is to analyze the main provisions of the EU regulation on Environmental, Social, and Governance (ESG) and determine whether and how it will have an impact on business globally, including regulations around disclosure for companies, taxonomy for the asset management sector, supply chain due diligence requirements, new mechanisms such as carbon markets, or non-tariffs restrictions on international trade. For this, our analysis includes an in-depth review of the literature on EU regulation of the past 20 years, complemented with interviews with experts in the field, in order to understand the main tools used by European policymakers in ESG regulations to understand their effect. The analysis adds to the body of research pertaining to the impact of regulation on business and the growing body of research on sustainable finance. We find that the new ESG regulation impacts countries outside of the EU, influencing regulation worldwide, and raising the question of possible regulatory arbitrage. Full article

The challenge to maximize resource efficiency requires the optimal use of all products leaving a mine—not only ore but also waste products—and calls for contributions from and cooperation with every discipline involved as efficiently as possible. These interdisciplinary and transdisciplinary interactions between practitioners and scientists are also an act of learning and take time. They should be initiated at the start of the exploration phase and continue to the postmining stage. This paper focuses on the interactions of geologists and mining engineers, with examples in the exploration phase (preliminary economic evaluations at milestones using the rule of thumb), the feasibility and mine-design stage (bulk testing, test mining, mine design to minimize dilution and losses), the mining stage (grade control, selective mining, especially in smaller-scale deposit mining, and further exploration to extend a mine’s life), waste management during the lifecycle of a mine, and the postmining closure and land-use stage. An additional section addresses the beneficial cooperation in helping small-scale and artisanal miners in developing nations to meet obligations under new laws in industrialized nations regarding due diligence in supply chains and, thereby, support them in retaining their markets and incomes. Full article

To address the negative externalities associated with global trade, countries in the Global North have increasingly adopted supply chain regulations. While global supply chains cause or contribute to interconnected environmental and human rights impacts, I show that supply chain regulations often exclusively target one policy domain. Furthermore, an analysis of the first experiences with the implementation of the French Duty of Vigilance law, which covers and gives equal weight to environmental and human rights risks, reveals that the inclusion of environmental and human rights standards in legal norms is not sufficient to ensure policy integration. The empirical focus here is on the soy and beef supply chains from Brazil to the European Union (EU), and the findings rely on an analysis of legal norms and company reports, field research at producing sites in Brazil and semi-structured interviews with civil society, business and state actors. For analyzing the data, I draw on the literature on environmental policy integration (EPI) and apply a framework that distinguishes between institutional, political and cognitive factors to discuss advances and challenges for integrating human rights and the environment in sustainability governance. The study concludes that more integrated approaches for regulating global supply chains would be needed to enable ‘just sustainability’. Full article

Organisations are challenged with executing innovation for sustainable development within the context of their operations and value networks—networks which are increasingly fuelled by mergers and acquisitions (M&As), and which accounted for USD 4 trillion in global deal value in 2019. While outcomes from M&As may produce mixed results, merger synergies fundamentally change the environmental, social and governance (ESG) footprint of an organisation and its product-supply chain. These compounding challenges of innovation for sustainability and ESG product-supply chain due diligence are not adequately explored in the operations management literature or practically considered during M&As. In this article, we consider those factors that determine “how innovative is the deal?” and explore how environmental supply chain innovation for sustainability might inform M&As. A case study approach is adopted, drawing upon an exemplar deal within the global food product-supply chain for ingredient production, where high M&A deal-interest and ESG sustainability considerations exist. The theoretical lens is the resource-based view (RBV) of the firm. A deal analysis framework, integrating key concepts from strategic environmental supply chain management and the M&A process literature, is defined. These findings suggest that product design and technology selection factors represent sources of M&A value creation when exploring an innovation for sustainability deal thesis. The implication for firms with ambitious environmental agendas or motives is that the M&A process needs to be reconfigured, such that product design and technology selection, currently secondary factors, are considered primary drivers. Together, these drivers form substantive strategic considerations and new merger motives of both theoretical and practical relevance, informing a new perspective of operations sustainability targeted M&A. Full article

Within due diligence concepts for raw material supply chains, the traceability of a shipment is a major aspect that has to be taken into account. Cassiterite and coltan are two so-called conflict minerals for which traceability systems have been established. To provide additional credibility to document-based traceability systems the German Federal Institute for Geosciences and Natural Resources (BGR) has developed the analytical fingerprint (AFP) for the minerals coltan, cassiterite, and wolframite. AFP is based on the analysis of a sample from a shipment with a declared origin and evaluates whether the declared origin is plausible or not. This is done by comparison to reference samples previously taken at the declared mine site. In addition to the generation of the analytical data, the data evaluation step, with the aim to state whether the declared origin is plausible or not, is of special importance. Two data evaluation approaches named “Kolmogorov–Smirnov distance (KS-D) approach” and “areas ratio approach” are applied to coltan and cassiterite and result in very low rates of false negative results, which is desired for AFP. The areas ratio approach based on hypothesis testing and a more sophisticated evaluation of the multivariate data structure has some advantages in terms of producing lower rates of false positive results compared to the KS-D approach. Full article

The stable isotope ratios of oxygen, hydrogen, carbon and sulfur from extracted wood of 87 samples of oaks from the United States were analysed. Relationships with climate variables and the stable isotope ratios of the 69 training dataset samples were investigated to a monthly resolution using long-term monthly mean climate data from NASA and the University of East Anglia’s Climate Research Unit, in conjunction with forecast data for hydrogen and oxygen isotope ratios in precipitation. These relationships were used to construct model isoscapes for oxygen, hydrogen, carbon and sulfur for US oak with the aim of using them to forecast isotopic patterns in areas that were not sampled and predict values in samples not used to construct the models. The leading predictors for isoscape generation were oxygen isotope ratios in January precipitation for oak oxygen isotope ratios, hydrogen isotope ratios in July precipitation for oak hydrogen isotope ratios, water vapour in April for carbon isotope ratios, and reflected shortwave radiation in March in combination with sulfate concentration in May for oak sulfur isotopes. The generated isoscapes can be used to show regions an unknown sample may have originated from with a resolution dependent on the rarity of the stable isotope signature within the United States. The models were assessed using the data of 18 samples of georeferenced oak. The assessment found that 100% of oxygen, 94% of hydrogen, 78% of carbon, and 94% of sulfur isotope ratios in the 18 test dataset samples fell within two standard deviations of the isoscape models. Using the results of the isoscapes in combination found that there were 4/18 test samples which did not fall within two standard deviations of the four models, this is largely attributed to the lower predictive power of the carbon isoscape model in conjunction with high local variability in carbon isotope ratios in both the test and training data. The method by which this geographic origin method has been developed will be useful to combat illegal logging and to validate legal supply chains for the purpose of good practice due diligence. Full article

Deforestation and forest degradation driven by Agriculture, Forestry and Other Land Use (AFOLU) are important sources of carbon emissions. Market globalization and trade liberalization policies reinforce this trend and risk deforestation to be embedded in global value chains. Due to the complexity of global production and trade systems, deforestation risk is also embedded in the supply chains of the products and sectors that are not direct deforestation drivers. Bovine leather is a commodity closely entangled in the debates about deforestation as it is a by-product of cattle. This research focuses on leather trade between Brazil and Italy to demonstrate the channels through which Italian imports of Brazilian leather could possess embedded Amazonian deforestation and related risks. The data employed for the analysis was searched at three different levels for the leather trade between Brazil and Italy: (a) the country level annual leather trade statistics for the years 2014–2018 taken from the Comtrade database; (b) the state level leather trade data, for the years 2014–2018 taken from the Comexstat database; and (c) the exporter–importer level leather trade data for the period of August 2017–August 2018, based on customs declarations. The analysis helps to demonstrate that the Italian leather trade with Brazil possesses the risk of deforestation unless the proper traceability and due diligence systems are in place to claim the opposite. The European and Italian leather industry need to be more proactive in acknowledging the existence of the risk at different levels, putting full traceability systems in place and sending out clear market signals that deforestation is not tolerated, and that sustainability is valued. Full article

Global manufacturing firms are engaging distant suppliers of critical raw materials to participate in responsible sourcing. Downstream firms are concerned about risks in mineral supply chains of violent conflict, human rights violations, and poor governance, but they are limited in seeing their suppliers. Descriptive data on 323 smelters and refiners of tantalum, tin, tungsten, and gold (the “conflict minerals”) were complemented by interviews with downstream firms in the electronics industry. Results provided a narrative of supplier engagement, describing tactics used to identify “deep suppliers” at chokepoints in metals supply and to persuade producers into joining due diligence programs. Top-tier firms collaborate through a standards program to overcame barriers of geography and cultural distance in supply chain management beyond the visible horizon. Curiously, manufacturers do not need line-of-sight transparency to lower-tier suppliers. Rather, top-tier firms are “jumping the chain” to engage directly with “deep suppliers” who may—or may not—be their own actual physical suppliers. The research contributes empirical evidence to understanding multi-tier supply chains, examines how power is exercised by top-tier firms managing suppliers, and provides insights on supply chain transparency. Responsible sourcing, based on due diligence guidance and standards, is becoming expected of companies that are involved in supply chains of raw materials. Full article

The first objective of this paper was to provide an inventory of developments of certification schemes for sustainable biomass production, following recent EU legislation (both formalized and under development). One main pillar is the EU Timber Regulation for legal harvesting; a second one is the EU’s 2010 recommendations for sustainable woody biomass sourcing for energy; the third one is the EU Waste Directive. The second objective was to benchmark the coverage of this (draft) legislation, when wood product certificates for sustainable forest management (SFM) are used as proof of the related legislative requirements. We studied North America, as it is a major biomass supplier to the EU-28. Together with existing forest legislation in the US and Canada, SFM certificates are actively used to cover the EU’s (draft) legislation. However, North American forests are only partially certified with fibers coming from certified forests; these are referred to as forest management (FM) fibers. Other certified fibers should come from complementary risk assessments downstream in the supply chain (risk based fibers). Our benchmark concludes that: (a) FM fiber certification by the Forest Stewardship Council (FSC) and the Program for the Endorsement of Forest Certification (PEFC) international standards show the highest level of coverage with EU’s (draft) legislation; (b) There is insufficient coverage for risk based fibers by FSC Controlled Wood (FSC-CW), PEFC Due Diligence (PEFC-DD), or SFI-fiber sourcing (SFI-FS). Other weaknesses identified for elaboration are: (c) Alignment in definitions are needed, such as for primary forest, high carbon stock, and wood waste (cascading); (d) Imperfect mass balance (fiber check downstream) needs to be solved, as non-certified fiber flows are inadequately monitored; (e) Add-on of a GHG calculation tool is needed, as GHG life cycle reporting is not covered by any of the SFM frameworks. Full article