Introduction to the contract clause
Contract clause
The contract clause on due diligence for sustainable supply chains is based on the following frameworks:
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OECD Due Diligence Guidance for Responsible Business Conduct
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ILO Tripartite Declaration on Multinational Enterprises and Social Policy.
When the UN Guiding Principles on Business and Human Rights were adopted in 2011, they became the first international framework for corporate human rights due diligence. Since then, both the OECD Guidelines and the ILO Tripartite Declaration, which predate the UN Guiding Principles, have been updated to align with them. The OECD has also developed its own due diligence guidance. The OECD Guidelines and the OECD Due Diligence Guidance are broader than the UN Guiding Principles, as they also cover areas such as environmental impact, corruption, and taxation.
Here is a short video about the UN Guiding Principles:
Within the scope of the contract clause on due diligence for sustainable supply chains, the concept includes identifying, assessing, preventing, mitigating, and remedying actual and potential adverse impacts on people, the environment, and society in your own operations and in your supply chains.
The contract clause is complemented by commitments in the regions’ Suppliers' Code of Conduct, which aims to ensure that contracts are fulfilled in accordance with human rights, workers' rights, the environment, and business ethics. The code is based on the ten principles of the UN Global Compact.
Upcoming legislation
On 25 July 2024, the Corporate Sustainability Due Diligence Directive (2024/1760) entered into force. The aim of the directive is to foster sustainable and responsible coporate behaviour. It is part of the EU Green Deal and based on the UN Guiding Principles, OECD Guidelines, and related guidance.
According to the directive, member states have to transpose it into national law by 26 July 2026. One year later, the rules will start applying to the first group of companies, with full application by 26 July 2029. However, the directive is currently undergoing renegotiation as part of an omnibus regulation aimed at simplifying the Corporate Sustainability Due Diligence Directive, the Corporate Sustainability Reporting Directive, and the Taxonomy Regulation.
Read more about the directive as it currently stands on the European Commission's website.
Corporate Sustainability Due Diligence Directive
Read more about the omnibus regulation in the European Commission's questions and answers.
Support from international organisations
Here you will find free training and support from the UN, OECD, ILO, and the Ethical Trading Initiative.
Getting started
Good planning makes it easier to participate in a public procurement that requires due diligence for sustainable supply chains. Here are some steps to ensure you are well prepared.
Understand the requirements
Find out what the contract clause means for your company by using the support available here in the guidance.
Map exisiting processes
Identify which due diligence processes you already have in place and which need to be developed to meet the requirements.
Participate in dialogues
Communicate with the regions and other public buyers to understand their requirements and expectations.
Ensure that you have clear policies
Ensure that you have clear policies on human rights, workers' rights, the environment, and business ethics for your own operations and supply chains.
Analyse the supply chain
Start mapping your supply chain and gather information on the countries and regions where your products are final assembled or manufactured.
Collaborate and certify
Investigate whether you can collaborate with other companies or industry initiatives and if there are certifications you can use. Examples can be found in the Swedish National Agency's risk analysis service.
By working proactively, you can strengthen your competitiveness and contribute to more sustainable supply chains.