Many organizations depend on supply chains that are critical to their operations. In response to global demands for greater transparency and accountability, new sustainability legislation, such as Norway's Transparency Act (åpenhetsloven), has emerged. This act requires businesses operating in Norway to undertake comprehensive due diligence assessments when they meet specific thresholds related to sales revenue, balance sheet total, or employee count. The objective is to identify, assess, and mitigate actual and potential negative impacts, including those within the supply chain.
In February 2022, the EU Commission introduced the Corporate Sustainability Due Diligence Directive (CSDDD), which will be effective in spring 2024. This directive parallels the Transparency Act, providing organisations that adapt to its requirements with a strategic advantage as the CSDDD is enacted. Effective supplier monitoring is integral to compliance with the Transparency Act.
Five key supply chain challenges when complying with the Norwegian Transparency Act
1. Difficulty in gaining a complete overview of the supply chain
Gaining a good understanding of the impact suppliers have on society is not an easy task. To do so, one needs information on what the supply chain actually looks like and the guidelines and routines followed. However, obtaining this information can be a challenge. Traditionally, following up the supply chain has involved using heavy Excel sheets, sending emails, making phone calls, and having physical meetings. These manual and person-dependent processes are very time-consuming and prone to human error, which makes it challenging to ensure progress, improve processes, and reduce time usage. If you have any questions or want to learn more about how Factlines can help you with the EU Taxonomy, please click the button at the bottom of this interview.
2. Difficulty in locating accurate and relevant supply chain data
Discovering the right data can be a daunting task, raising questions about what to look for, what to ask for, and how to interpret it. Naturally, having knowledge and competence in the field is crucial to ensuring a good data basis. However, many businesses struggle to hire or build the necessary competence internally to effectively handle these challenges.
If you have any questions or want to learn more about how Factlines can help you with the EU Taxonomy, please click the button at the bottom of this interview.
3. Difficulty in measuring and maintaining supply chain development
Once the data is located, the task of keeping it updated arises, especially given the constant changes in the supply chain. Continuous follow-up of the data basis is demanding and is amplified when the recipients at different suppliers do not share necessary data, do not understand which data is relevant to share, fail to prioritize essential initiatives, or neglect to maintain documentation according to standards such as the OECD framework.
If you have any questions or want to learn more about how Factlines can help you with the EU Taxonomy, please click the button at the bottom of this interview.
4. Difficulty in ensuring compliance with current laws and regulations
It is necessary to know and understand which laws and regulations one must follow and what requirements these pose. This understanding is vital to ensure that one operates within the legal framework and complies with all necessary regulations and standards. It must be built internally or purchased if one does not possess this competence.
5. Difficulty in selecting the right tools and services for supply chain management
Several options exist to follow up the supply chain and report on relevant sustainability activities. One can engage traditional consultancy agencies and take the costs that come with it, or connect internal resources with more straightforward tools like Excel and email for an overview and communication. Another solution is to use survey tools to collect and manage data. Each alternative has advantages and limitations, and the choice should be based on the specific needs and resources of the business.
No matter which solution one chooses, we recommend automating the processes so that time is freed up for what matters most. This also applies to businesses with their own sustainability department. With Factlines, a supplier can conduct a due diligence assessment once and then share it with all existing and potential customers as often as they want.
Factlines SRM: overcoming supply chain challenges with smarter risk management
Factlines’ Supplier Relationship Management (SRM) platform equips businesses to address supply chain complexity, risk, and compliance requirements. By combining customizable supplier screening, over 30 ready-to-use assessment templates (SAQs), automated risk scoring, and built-in collaboration features, Factlines enables you to collect accurate data, manage supplier follow-ups efficiently, and reduce uncertainty across multiple supply chain tiers.
Contact us to learn more or book a demo today! You can also request a free trial if you want to test our software.
