What is due diligence?
What is due diligence?
And what does it mean to "do one's due diligence?".
There are many different ways of practicing due diligence. In fact, there can be as many as there are companies.
But the general idea is simple: it is the systemic process of taking responsibility for risks and their consequences in your supply chain.
This means you continually assess your supply chain and seek out information on possible issues, and do your best to either prevent or fix them.
For good measure, we have come up with a step by step guide, inspired by the one suggested by OECD.
1. The first step so to speak, is in fact not a step at all. It is a general foundation, and something that must be done before starting the due diligence process.
First, you must include and implement responsible business behaviour into your policies and management systems.
That might be child labour, anti-slavery and environmental policies and ethical sourcing requirements. These policies are sent to suppliers.
2. Then it is time to build knowledge on the risks and their impact present in your supply chain in through business relations.
Where could something dangerous, harmful or illegal be happening? Where is our production located?
Map your suppliers and make a thorough risk assessment based on selected criteria
3. Based on the findings in your risk assessment, you must now take action to ensure that the impacts are either prevented, stopped or decreased.
4. To ensure progress, you should track and monitor the actions taken in the previous step and their consequences.
This way you can learn what works and what does not.
5. Communicate about your approach and the actions you have taken to address impacts.
6. If you discover that your company has caused or contributed to a negative impact, you must work to remediate it or cooperate in the remediation.
And then you do it all over again!
Due diligence is a continuous task, and you should at the very least conduct a mapping and risk assessment once a year to stay up to date on the situation in your supply chain.
Want to know more about due diligence? Or do you need help practicing it?
You're in luck!
Our e-learning platform, Sustainawear Community, is structured exactly like a due diligence process, and provides you with the video lessons, tools, templates and documents, to make the process smooth sailing.