ESG in supply chains: Sustainability factors clearly subordinate

In May 2024, following fierce controversy, the EU adopted a supply chain directive (CSDDD) that obliges large companies to provide evidence of how environmental and social standards (ESG) in particular are complied with within their supply chains. The EU directive supplements the equally controversial German regulations on supply chain due diligence (LkSG). Documentation obligations are intended to exert pressure on all companies involved in supply chains to contribute to compliance with sustainability goals – not least in the expectation that important business partnerships would otherwise be terminated. However, the GBP data shows that this expectation is only partially true: when selecting business partners, sustainability factors currently only play a subordinate role compared to hard financial factors. The new ESG reporting obligations hardly change this finding – unless the non-financial KPIs are embedded in management and strategy.

Find the full report here. Please note that this report is in German.