Soon, the EU will be requiring thousands of large companies to proactively seek and address human rights abuses and environmental damage within their supply chains.
While this initiative is an EU law, it’s noteworthy that it will also extend its coverage to foreign businesses, including those of western origin. The European Parliament gave its approval to the draft of these new rules in June 2023. Currently, EU member states and the European Commission are in the process of negotiating to finalize the law. The rollout is expected to take place in phases over the next few years.
Traditionally, governments have relied on voluntary compliance from companies regarding human rights efforts. However, the forthcoming EU law represents a significant departure from this approach, as it is poised to be one of the most extensive attempts to legally mandate compliance in the areas of human rights and environmental responsibility.
Here at UR Bazaar, we closely follow developments in global regulations. We keep an eye on the negotiation process, we aim to keep you informed about potential impacts and any adaptations that may be necessary for your business. So, how will these new changes impact the manufacturing and global supply chain industry?
1. A Closer Look Across the Supply Chain:
Picture this: businesses turning into ethical detectives. The new human rights policies mean that manufacturers and supply chains are rolling up their sleeves for some serious supply chain investigation. It’s not just about their main suppliers; it’s about the entire family tree of suppliers – ensuring everyone’s playing nice and fair.
2. Shake-Up in Supplier Friendships:
Ever had a best friend who turned out not to be so great? Well, businesses might be going through something similar. With the mandate in full swing, companies will be reevaluating their relationships with suppliers. Those that don’t match up to the new ethical standards might be getting the boot, paving the way for a whole new set of supplier BFFs.
3. Legal and Reputational Rollercoaster:
Let’s talk consequences. Non-compliance with the new rules could mean a trip down the legal rabbit hole. Penalties and fines might become the new norm for businesses that don’t play by the rules. And don’t even get us started on the reputational rollercoaster – nobody wants to be the company known for turning a blind eye to human rights.
4. Boost for Sustainability:
But it’s not all doom and gloom! The human rights policies are like a friendly push towards a more sustainable future. Businesses are now encouraged (and required) to be more environmentally friendly and treat their workers like the superheroes they are. It’s a win-win for the planet and the people making the magic happen.
5. Rise of the Ethical Champions:
Here’s the silver lining – companies that embrace the change and champion human rights in their supply chains could become the new heroes in town. Consumers are getting more conscious, and they’re rooting for businesses that walk the talk on ethics. Being an ethical champion might just be the secret sauce for standing out in the competitive market.
Get ready for a positive change! The upcoming rules are turning businesses into ethical detectives, checking not just their main suppliers but the whole supply chain to make sure everyone’s playing fair. Some supplier relationships might get a shake-up if they don’t meet the new ethical standards.
In a nutshell, the new EU law is a game-changer, moving away from the old “do it if you want to” approach. UR Bazaar is keeping a close eye on it and playing its part in maintaining ethical sourcing, fair trade practices and human right policies, so you stay in the loop. What’s the impact? It’s big news for manufacturing and the global supply chain. Companies will need to adjust, but it’s also a step toward a more sustainable future.