Fitting the Pieces of the Puzzle

The research paper identifies six recurring themes in due diligence regulations: risk management, transparency, traceability, legality, accountability, and stakeholder engagement. It highlights the challenges faced by Global South actors and SMEs in complying with these often unilaterally developed laws. The author suggests a 'smart-mix' approach, where voluntary sustainability standards (VSSs) and digital tools (such as satellite imagery and traceability platforms) complement public policies to reduce the compliance burden.

• Due diligence regulations are increasingly adopted by governments, primarily in the Global North, to promote responsible business conduct, but they are often developed unilaterally without collaboration with affected countries in the Global South.
• Value chain actors in the Global South, particularly micro, small, and medium-sized enterprises (MSMEs), face significant challenges in complying with due diligence requirements due to a lack of resources and understanding.
• Analysis of selected regulations reveals six recurring themes: risk management (proactive vigilance), transparency (public disclosures), traceability (end-to-end tracking), legality (compliance with national and international laws), accountability (enforcement and responsibility), and stakeholder engagement (two-way communication).
• Specific regulations illustrate these themes: the EU Deforestation-free Regulation (EUDR) requires geolocation for traceability and risk assessments; the German Supply Chain Act (LkSG) mandates annual risk analyses and internal complaints procedures; and the EU Corporate Sustainability Due Diligence Directive (CSDDD) requires climate change mitigation transition plans aligned with the Paris Agreement's 1.5°C goal.
• Voluntary sustainability standards (VSSs) can serve as tools to help companies meet regulatory requirements by supporting risk assessment, traceability, and accountability, though their effectiveness and transparency remain subjects of concern.
• A 'smart-mix' approach is recommended, combining public policies with private instruments and digital tools—such as satellite imagery (e.g., Starling, Palmoil.io) and traceability platforms (e.g., TrusTrace, Koltiva)—to address supply chain risks.

APA

Verma, R. (2024). Fitting the Pieces of the Puzzle. International Institute for Sustainable Development. https://www.iisd.org/system/files/2024-10/due-diligence-regulations.pdf

Chicago

Verma, Rupal. Fitting the Pieces of the Puzzle. International Institute for Sustainable Development, 2024. https://www.iisd.org/system/files/2024-10/due-diligence-regulations.pdf.

Wikipedia

{{cite report |last1=Verma |first1=Rupal |title=Fitting the Pieces of the Puzzle |publisher=International Institute for Sustainable Development |date=October 2024 |url=https://www.iisd.org/system/files/2024-10/due-diligence-regulations.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{verma2024fitting, author = {Verma, Rupal}, title = {{Fitting the Pieces of the Puzzle}}, institution = {International Institute for Sustainable Development}, year = {2024}, month = oct, url = {https://www.iisd.org/system/files/2024-10/due-diligence-regulations.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }