True Diligence

Preparing for a new era of corporate responsibility

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True Diligence is based on opinion research amongst 1,200 C-suite leaders from companies with a minimum global turnover of €150 million that are based in France, Germany, Italy, Poland, Spain, or the UK.

Job roles included: Chief Executive Officer, Chief Financial Officer, Chief Operating Officer, Chief People/Human Resources Officer, Chief Sustainability Officer, Chief Ethics/Compliance Officer, Chief Risk Officer and General Counsel. The research focused on the following sectors: consumer and retail; energy; insurance; private equity; real estate; and transport and logistics.

Research criteria

1,200 C-suite leaders over 6 Countries:

6 key sectors:

Companies with a minimum turnover of at least €150m

Focusing on Environmental and Human Rights Impact

“To unlock real change, we must embrace a holistic approach to due diligence. By pinpointing and addressing the areas of greatest risk to people and the planet within their value chain, leaders can cement the credibility of their commitment to ‘doing the right thing’.”

Joseph Bailey, Senior Analyst, Bloomberg Tax and Accounting

Chain (re)action

‘True diligence’ requires businesses to assess environmental and human rights impacts across their entire supply chain.

“Businesses want to make a positive contribution to society and the environment, but they are currently grappling with ambiguity in regulatory requirements. Compliance is achievable, but only when businesses are given clear guidance and sufficient time to implement necessary changes. Ultimately, a collaborative approach between businesses and regulators is needed to drive meaningful progress towards sustainable and socially responsible practices.”

Hilary Ross, UK & Ireland Regional Managing Partner, DWF

The realities of regulation

say their organisation’s leadership team is too busy handling immediate business priorities or economic pressures to put a plan in place to measure the human rights impacts across its value chain.

Just 27% of C-suite leaders say their organisation understands the application of CS3D to their business.

C-suite leaders estimate that 9% of their revenue will be required to achieve a full CS3D compliance on average.

Vs. the cost of non-compliance: Failure to comply with CS3D could result in a maximum average penalty of nearly €216 million per company for the organisations in our research.

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Tracey Groves

Head of Sustainable Business & ESG Advisory Practice, DWF M. +44(0) 7842 324 547 E. tracey.groves@dwf.law

Mind the integrity gap

The lack of clear, consistent standards is a major contributor to this, meaning that regulation has a central role to play in closing the gap. 72% of C-suite leaders say the environment is embedded in their organisation’s core strategy, and; 68% say human rights are embedded in their core strategy.

When it comes to measuring an organisation’s environmental and human rights impacts, there is a gap between what businesses commit to do and what they actually do.

of organisations currently measure greenhouse gas emissions (GHG) as part of their due diligence processes.

have sought to identify fair wages across their value chain.

have sought to identify modern slavery.

Six in 10 C-suite leaders say their business needs clear regulation to drive immediate action when it comes to addressing its impact on climate change, the environment and human rights*.

Collaboration and communication between companies, their subsidiaries and supply chain partners will be essential for implementing robust transparency measures and driving the urgent transformation required.

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Businesses face a tsunami of incoming sustainability-related regulation to comply with.

Identifying priorities and planning ahead will be increasingly important for economic success, safeguarding organisations and driving transformation to ensure a future-proofed value chain. Bridging knowledge gaps among the C-suite regarding the rationale behind regulations and the benefits of compliance is crucial to drive meaningful change.

The road ahead

Businesses are ready to embrace greater accountability and participate in transformative collaboration on preventing and addressing adverse harm.

However, they are calling for clear and consistent regulation to help them define boundaries and meet expectations.

identify a lack of globally consistent measurement and reporting standards as a significant barrier to their organisation measuring its human rights impacts.

of C-suite leaders believe the CS3D is the biggest incentive for organisations to assess the human rights impacts of business.

believe that the CS3D will spark similar pieces of legislation to be enacted across the globe.

51% say their organisation currently measures the negative human rights impacts of its operations.

32% say it measures the human rights impacts of its immediate suppliers.

C-suite leaders predict that at least half of their supply chain will not be CS3D compliant in the next two years.

57% of C-Suite leaders predict that most businesses will not be CS3D compliant by 2030.

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€216m

*This data point is based on the responses of 50 C-suite leaders from the original sample (with a minimum global turnover of €450 million) that were recontacted following the latest iteration of the CS3D in March 2024.

Tracey Groves, Head of Sustainable Business & ESG Advisory Practice, DWF

France, Germany, Italy, Poland, Spain and the United Kingdom

Consumer and Retail, Energy, Insurance, Private Equity, Real Estate, and Transport and Logistics

“Businesses have put too much focus on measurement and reporting, at the expense of concrete practical action. While this gives businesses a snapshot of where they are, in order to get to where they want to be, it is vital to get into the implementation and remediation phase and do something about it. We can’t let the perfect be the enemy of the good.”

Nadine Robinson, Sustainability and ESG Director, DWF