“Doing the right thing” and “doing things right” are two essential principles that can help companies to strengthen human rights and protect the environment in their supply chains.

By “doing the right thing,” I am referring to acting ethically and following moral principles, such as respect for human rights and the environment. This concept means that companies should strive to make decisions and take actions that are consistent with their values and that reflect a commitment to social and environmental responsibility.

“Doing things right” refers to following good practices and processes to achieve desired outcomes. In the context of protecting human rights and the environment in supply chains, companies should implement robust systems and processes to ensure that their suppliers meet their standards and commitments. Examples of these standards can include:

• establishing clear policies and expectations for suppliers,
• monitoring and evaluating their performance, and
• taking corrective action as needed.

By “doing the right thing” and “doing things right,” companies can demonstrate their commitment to protecting human rights and the environment in their supply chains and can work to ensure that to uphold these principles throughout their operations.

Personally, I find the recently implemented German Supply Chain Due Diligence Act and the upcoming EU Directive on Corporate Due Diligence and Accountability a significant step forward to help companies “do the right thing.” Regarding “doing things right,” the administrative burden is an ongoing point of discussion, but I am confident that all involved parties will find a way forward.

Lastly, this is new territory also for the regulators. Especially considering the great care the German BAFA (the Federal Office for Economic Affairs and Export Control, which is enacting control on the implementation of the Supply Chain Due Diligence Act) has acted so far and published several helpful and well-written documents for managing expectations.

Notwithstanding regulatory aspects, what benefits do commercial enterprises receive when following a “moral compass” or an “ethical business compass?” How does actively monitoring human rights and environmental protection risks in their supply chain affect direct and indirect suppliers?

There are several benefits for commercial enterprises to follow a business ethical compass and actively monitor supply chain risks in terms of human rights and environmental protection:

• Reputation: By following a moral compass and taking a proactive approach to monitoring and addressing supply chain risks, businesses can enhance their reputation and build trust with customers, investors, and other stakeholders. This aspect is critical today, where consumers and investors increasingly demand that companies act responsibly and sustainably.
• Legal compliance: Many countries have laws and regulations that require businesses to respect human rights and protect the environment in their operations and supply chains. By following a business ethical compass and monitoring supply chain risks, businesses can ensure that they follow these laws and regulations and avoid the costs and risks associated with non-compliance.
• Cost savings: Implementing effective risk management processes for a supply chain can help businesses identify and address potential issues before they escalate into costly problems. This risk management can help businesses avoid supply chain disruptions, reduce product recalls risk, and minimize remediation costs.
• Risk management: By actively monitoring supply chain risks and addressing them, businesses can mitigate the risk of negative impacts on their operations, reputation, and financial performance.
• Innovation and competitive advantage: Adopting sustainable and responsible practices can drive innovation and help businesses differentiate themselves from their competitors. This practice can be beneficial in markets where consumers and investors are increasingly seeking out companies that are proactive in addressing social and environmental issues.

Conclusion

“Doing the right thing” and “doing things right” can assist companies in improving human rights and environmental protection in the supply chain. Companies should develop solid systems and processes to ensure suppliers meet these requirements and commitments. Following a business ethical compass helps companies develop confidence with consumers, investors, and other stakeholders. Sustainable and responsible practices can boost innovation and set companies apart. This methodology is crucial in areas where consumers are increasingly looking for socially and environmentally responsible companies.