The European Parliament recently adopted new anti-greenwashing laws, making it illegal to make vague or misleading environmental claims in marketing. The EU Commission found that many companies were using unproven generic claims to promote their products, without providing any real data to support their statements. The new legislation aims to make product labels more explicit and only allow sustainability labels based on official certification schemes or established by public authorities.
The new laws must be approved by the EU Council before passing into law, giving member states two years to integrate the rules into national law. The Corporate Sustainability Due Diligence Directive (CSDDD) was also officially approved in March, creating legal liability for companies in relation to environmental and human rights violations within their supply chain. This directive applies to a company’s direct operations, subsidiaries, and end-to-end supply chain, making companies responsible for the actions of their suppliers.
One of the challenges of complying with the new sustainability and human rights regulations is gaining visibility into an n-tier supply chain, as suppliers are often reluctant to disclose information about their first-tier suppliers. However, modern supply chain risk solutions that utilize artificial intelligence can help companies with this task. Companies like EverstreamAI and Exiger use AI technology to analyze large amounts of data from online publications and other sources to identify reputational risks and supply chain disruptions in real-time.
These supply chain risk solutions have been using AI technology in various ways for years, such as natural language processing to contextualize data and assess risks. For example, Exiger subscribes to 90,000 publications and has partnerships with Google and Microsoft to analyze 7 billion records related to companies and markets. These AI technologies can help companies track and mitigate negative human rights and environmental impacts within their operations, subsidiaries, and extended value chain.
The implementation of these new regulations will have a significant impact on companies’ supply chain teams, as they will now be required to ensure that their suppliers also comply with sustainability and human rights standards. Companies will need to identify, prevent, mitigate, and account for negative impacts within their supply chain to comply with the new laws. By utilizing AI technology and supply chain risk solutions, companies can gain visibility into their n-tier supply chain and ensure compliance with the evolving sustainability regulations in the EU and beyond.
Overall, the new anti-greenwashing laws and the Corporate Sustainability Due Diligence Directive in the EU are pushing companies to be more transparent and accountable for the environmental and human rights impacts of their operations. With the help of advanced AI technology in supply chain risk solutions, companies can effectively monitor and mitigate risks within their supply chain, ensuring compliance with the new regulations and promoting sustainability throughout their operations.
