Sustainability strategies remain valid

July 2022

In the first half of 2022, almost all industrial companies were in crisis mode. Ensuring the availability of raw materials, intermediate products and energy in combination with price increases clearly dominated the tactical agenda of purchasing entities. Nevertheless, the topic of sustainability remains unchanged on the strategic agenda.

Almost all the larger companies have made a commitment to their investors in their sustainability report to achieve specific sustainability targets. Environmental goals clearly predominate, such as the reduction of greenhouse gas emissions, with initial milestones to be achieved as early as 2025 to 2030. In most industries, these emissions occur in what is known as "Scope 3," i.e., in the value chain. Insofar as these are upstream, i.e., caused by the purchase of materials or long transport routes, target achievement depends heavily on upstream suppliers.

Companies are therefore looking for ways to encourage their suppliers to behave in a sustainable manner. It makes sense, for example, to agree on corresponding targets in the respective supply contract in conjunction with a bonus or malus regulation regarding target achievement. Supply chain finance offers are suitable for motivating upstream suppliers to do this. This gives the supplier additional financial leeway for necessary investment measures or compensation for the higher costs incurred as a result of the switch to lower-emission production and transport processes. CRX Markets actively supports its customers in structuring individual solutions and placing them with suitable financing partners.

Stringent EU supply chain law in preparation

In February 2022, the EU Commission presented its proposal for the so-called EU Supply Chain Act. It will probably take until 2025 before it is implemented into national law, but the proposal goes far beyond the German supply chain law that will apply from 2023:

  • Companies with 250/500 employees or more are already required to implement it.
  • The entire supply chain will be examined, not just direct suppliers.
  • Civil liability is to enable claims for damages by affected parties before European courts.

Civil liability is to be possible if companies fail to take appropriate measures to fulfill their own corporate due diligence. This includes, for example, the agreement of a code of conduct and its regular monitoring and compliance. Thus, the monitoring of the supply chain takes on even greater importance. Here, too, it is important to incentivize suppliers to cooperate. The partnership between CRX Markets and EcoVadis, which has been in place since April 2022, offers flexible options for implementing a financial incentive system. In addition to EcoVadis, KPIs or ratings from other providers that make sustainability measurable can also be integrated on the CRX Marketplace.