6 days Ago
Governance has long been seen as dull and the backbone of compliance. It’s the part of sustainability that most of us skim over, the least discussed area of social, environmental and ethical concerns. Yet governance doesn't have to be dry.
It can be the game-changer that helps your business stand out, improving both compliance and resilience in your supply chain. As companies face climate change impacts, human rights challenges, geopolitical tensions and local market pressures, there’s room for governance to empower a more scalable, streamlined strategy. This is where collaborative governance comes in — through the power of personal relationships and social learning in sustainability and supply chain governance initiatives.
Governance strategies are already shifting to lead transformation, scale collaboration and increase trust across industries and supply chain partners. At the heart of this transformation is collaborative governance. This is a multi-stakeholder approach where businesses, non-governmental organizations, governmental bodies, industry players and others come together to addressed shared sustainability challenges.
It’s such a powerful approach that it’s even making its way into legislation. While debate rages in Europe over the Corporate Sustainability Due Diligence Directive (CSDDD), both the current draft and proposed update of this law require companies to collaborate with a variety of chain supply-chain participants to address sustainability concerns. This means that alongside suppliers, companies must engage local communities, trade unions and NGOs to incorporate different perspectives.
We’ve seen this collaborative model succeed for years, where retailers came together to create a unified data-collection framework, or consolidated resources to develop common standards across the supply chain. But regardless of overseas laws, the real magic happens with suppliers. Building a strong relationship with them to improve their sustainability governance is one of the most effective risk-management tools available.
In the U.S., for example, there have been alarming instances of child labor exploitation taking place in recent years, in industries such as agriculture and manufacturing.
Yet our data indicates that just 12% of U.S. supply chain worksites have a remediation plan outlining what happens if child labor is found — a policy gap that, if corrected, significantly improves a supplier’s ability to address this issue.
Why a Collaborative Relationship Matters Having proactive and deeper supplier relationships enables: Increased visibility of whom your businesses is engaging with, and their policies and practices, to identify gaps in governance around high-risk concerns. Initial corrective activities to close the gaps. Companies can help suppliers update policies and action plans on child labor, support supplier staff training, and track the increase in compliance across their supply chains.
This provides documented evidence of governance improvements, while also reducing the risk of this exploitation occurring. Faster identification and resolution of severe issues when they do happen. Agility through challenge and change.
In navigating disruptions together, companies across a supply chain help to protect each other’s business. The collaborative governance approach encourages collective, connected action that not only drives progress toward the ultimate aims of sustainability laws, but does so in ways that are mutually beneficial for every stakeholder. Local communities are more protected, and large corporations benefit from stronger governance.
Where to Begin Personal connections between individuals, whether they work at large companies, small businesses, NGOs or government bodies, are where true transformation begins. For all that laws and frameworks refer to entities or organizations, it’s individual people who carry out the actions that ultimately produce change. Relationships between people from different stakeholder groups allow for shared learning on what does or doesn’t work, discussions about values, negotiations on differences, the articulation of shared goals, and the formation of practical solutions.
Businesses can lead this collaboration, going beyond a box-checking mentality or simply reacting to requirements imposed by others. They should: Discus s governance requirements with suppliers to get their support for changes. This is especially important if you’re asking suppliers to go beyond the regulatory standards they’re subject to themselves, and for reaching beyond Tier 1.
Focus on priority topics or supply chain aspects, such as double materiality assessments or existing commitments. Identify the most relevant or at-risk parts of the supply chain to prioritize for specific initiatives. Connect and consult with people from related organizations, including suppliers, industry peers, other companies purchasing from the same region, local NGOs, trade unions and community representatives.
Look at existing networks or communities you can join to access a range of views. The real story here is about proactive engagement. Customers aren’t waiting for issues to escalate — they’re working with suppliers to address concerns before they become more serious problems.
Through human connections, leading companies are creating multi-tier governance systems that are transparent, resilient and, most importantly, capable of driving real transformation in global supply chains. Building the Future One of the biggest challenges in sustainability governance today is fragmented data. With over 3,000 different regulations, standards and frameworks, businesses are drowning in complexity, leading to duplicated efforts, incompatible data and inconsistent reporting.
Companies need to economize their resources by consolidating sustainability-related requirements into a single, streamlined approach that reduces time and effort. Part of this strategy involves gathering standardized supply chain sustainability data and consolidating it into a single platform, enabling analysis and reporting on a global scale. A centralized strategy and relevant data enable companies to address sustainability challenges at a systemic level.
They can capture uniform information, build a holistic perspective, conduct integrated analysis, prioritize, connect with suppliers to communicate their governance approach, and track improvements over time. All of this can be drawn into a unified report that meets the requirements of multiple stakeholders and regulations. This strategy minimizes time and reduces duplication for everyone — including suppliers, who upload their data once and connect with multiple customers to share it efficiently.
It’s a collaborative network approach that also creates spaces for open dialogue, transparency about obstacles, and sharing ideas from different regions and industries based on what has genuinely worked. Looking to the future, we expect governance to be reshaped through multiple factors, including streamlining data even more with artificial intelligence, and continued reinforcement of the importance of collective action. By relying on human connections to define shared goals and sustainability governance improvements, companies create stronger relationships with their suppliers, and more resilient supply chains.
Audrey Clavedon is head of ESG leadership and consulting with Sedex ..
