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Why should companies care about Sustainability Risk Assessment now?

From the dangers of climate change to the atrocious working conditions in some countries, recent news has painted a very bleak picture of globalized supply chains. Consequently, topics such as human rights and environmental issues are gathering increasing public attention.

Individual citizens have increasingly shown an appetite for sustainable goods and consumption and now legislation is accelerating the path to sustainable supply chains. Various countries have already taken steps to address these issues such as the Supply Chain Act in Germany which will come in effect in January 2023. This will ensure companies monitor and mitigate social and environmental risks in their supply chain.

The European Commission’s initiative

On a larger scale, the European Commission has weighed in by proposing a Corporate Sustainability Due Diligence Directive, which will affect 50 000 companies. This regulation will require corporations to consider the human rights, climate change, and environmental consequences of their actions when making corporate decisions. Companies will now be subjected to independent auditing and certification, in order to check if the information they provide is reliable. Ensuring that companies adhere to the new directive will become increasingly important, which is why our new Sustainability Risk Assessment (SRA) tool is helping companies analyse and mitigate sustainability risks in their supply chains.

The social and environmental issues

The importance of these initiatives becomes evident when looking back at the corporation misconduct stories that have come out in the last few years. For example, countries like Australia, the USA and Brazil have recently been put under the spotlight for human rights violations. Stories of child labour and exploitation of illegal immigrants put to work without social rights, have necessitated regulations to be put in place, which in addition to protecting human rights, also have the aim of safeguarding the environment. Corporations now need to change the way they operate in order to adhere to the new sustainability directives. These changes range from having to make big changes like limiting CO2 emissions to simply being aware of who companies are buying their products from. While the latter may seem easily achievable, it can be tricky when dealing, for example, with complex global supply chains. Specifically in the food industry, making conscious purchasing decisions requires a lot of time and attention, since the social and environmental risks may not be easily achievable information.

How Agriplace can help?

Agriplace uncovers, measures and analyses these risks with the Sustainability Risk Assessment (SRA) module, which can give insights into environmental, social and governance risks. Using the information taken from 18 renowned databases, the SRA can provide an overview which will help companies mitigate risks in their supply chains by taking into consideration the product, volume sourced and the country or even region of the supplier.

Once the information is obtained, the system then creates customised analysis from which the user can adjust the weighting of risk dimensions according to priorities. Once all the information is gathered about its own supply chain risks, the customer can take the appropriate action on the Agriplace Supply Chain Approval platform. By doing so the user will have a clear idea of what additional evidence documentation will be needed from each supplier to mitigate potential risks. This will reassure companies, as well as their investors, that their suppliers are complying to the new due diligence laws, as well as knowing that they are behaving in a moral and sustainable way.


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