How ESG Regulations Are Reshaping Supply Chains and Driving Compliance

Navigating the complex world of ESG regulations has become a top priority for businesses everywhere. Companies face growing financial and operational risks as wage compliance, waste management, and supply chain transparency come under greater scrutiny. We spoke with Audrey Clavedon, Head of ESG Leadership and Consulting at Sedex, about evolving regulations, compliance challenges, and strategies for achieving ESG goals.

Supply Chain 24/7: How have you seen ESG regulations evolve over the past few years, particularly in sectors like agriculture and manufacturing?

Audrey Clavedon: We have seen a significant trend emerge from frameworks like the Taskforce for Climate-Related Financial Disclosure (TCFD), which have escalated into broader, more demanding ESG regulations – with implications for businesses in every region. The EU Green Deal marked another pivotal moment, pushing for deeper sustainability commitments. With the availability of standardized frameworks such as the Global Reporting Initiative (GRI) and greater supply chain visibility technology, translating due diligence into regulatory requirements has become more accessible. 

There is also a growing focus on biodiversity and nature-related risks, driven by frameworks like the Taskforce for Nature-Related Financial Disclosure, pushing companies in sectors like agriculture and manufacturing to assess their environmental impacts more rigorously. For example, we’re seeing many large businesses increasing their commitments to deforestation. These frameworks significantly inform regional laws and market shifts, particularly in the EU – but also impact companies operating internationally. US businesses in these industries (agriculture and manufacturing) often find themselves indirectly impacted by EU regulations through their supply chain relationships, both when selling directly into EU markets and selling to EU-headquartered corporate customers. 

Carbon pricing mechanisms are further incentivizing businesses to reduce their carbon footprints, while mandatory reporting and stricter environmental standards are becoming the norm, particularly in the EU and UK. We often see the US follow these regions in developing sustainability-related legislation – indeed, some states already have similar laws and continue to introduce new regulations.  

Similarly, import regulations around forced labor have become more stringent in the EU, US, and Canada, compelling companies to ensure ethical practices across global supply chains. Regulations such as the EU Corporate Sustainability Due Diligence Directive, the US Uyghur Forced Labor Prevention Act (UFLPA), and Canada’s modern slavery Act are forcing bus…

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