The 2024 KPMG CEO Outlook survey found that supply chain issues were identified by more than 1,300 global business leaders as the top threat to growth. Notably, supply chain risk has averaged only sixth place over the past decade, underscoring how critical and relevant risk management in supply chain management has become in more recent years.

Global supply chains are evolving rapidly, and companies must balance cost-effective operations while ensuring responsible sourcing and compliance with ESG frameworks. The COVID-19 pandemic and the current tariff debate exposed critical supply chain vulnerabilities, from disruptions in sourcing and logistics to dependence on single suppliers.

At the same time, climate change continues to exacerbate these risks through extreme weather events, resource scarcity, and regulatory pressures, making transparency, risk assessment, and sustainable resilience more urgent than ever.

These disruptions can significantly affect order fulfillment and delivery times, ultimately impacting customer experiences. While reactive fixes may offer relief in the short term, long-term sustainability demands strategic transformation.

Adrian Stoll
Adrian Stoll

Director, Lead ESG Advisory

KPMG Switzerland

Joy Jadam
Joy Jadam

Senior Manager, ESG Advisory

KPMG Switzerland

Supply Chain Due Diligence

Supply Chain Due Diligence

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Understanding sustainable supply chains and supply chain management

Sustainable supply chains integrate environmental, social and governance (ESG) principles to create ethical, efficient and resilient operations. By embedding sustainability across the entire value chain - from raw material sourcing to final distribution - companies can improve transparency, comply with evolving regulations and reduce their environmental footprint.

Key practices include minimizing waste, lowering emissions and ensuring fair labor conditions. These efforts not only support environmental and social goals but also drive business benefits such as cost savings, operational efficiency and risk reduction.

Sustainability in supply chain management goes beyond regulatory compliance. As customer demand for responsible products increases and regulatory expectations rise, companies that lead with ESG principles gain a competitive advantage. They strengthen stakeholder trust, enhance brand reputation, and build the resilience needed for long-term success in a rapidly evolving global marketplace.

Key challenges in sustainable supply chains

Improving supply chain sustainability is a complex undertaking that involves overcoming several key challenges. Chief among them is the difficulty of mapping large, often fragmented supplier networks and understanding the relationships and interdependencies among different business partners. Many organizations struggle to obtain complete, accurate, and timely data, which hampers their ability to identify and assess priority risks - environmental, social or governance-related - across multiple supply chain levels.

This lack of transparency and visibility makes it challenging to pinpoint where action is most needed. Companies must often balance limited resources against multiple and evolving risk factors, while aligning supply chain decisions with broader strategic and sustainability goals. As a result, building a robust, data-driven scm management process becomes essential for driving both resilience and long-term sustainability.

Key challenges and considerations include:

Key challenges and considerations:

1. Transparency and traceability

2. Sustainable supply chain strategy

3. Responsible sourcing

4. Environmental and human rights risks

5. Supply chain due diligence

    • Transparency and traceability

      Achieving end-to-end supply chain visibility is critical to tracking the origin of goods, assessing the conditions under which they were produced and understanding their environmental impact throughout their lifecycle, enabling informed and responsible decision-making.

    • Sustainable supply chain strategy

      Developing a holistic approach that covers the entire product lifecycle, including initiatives for decarbonization, waste reduction, minimization of environmental and social impact and alignment with global sustainability frameworks, is essential.

    • Responsible sourcing

      Selecting suppliers who adhere to ethical practices, such as fair labor standards and environmental stewardship, to ensure that the procurement of goods and services does not contribute to environmental degradation or social exploitation.

    • Environmental and human rights risks

      Proactively identifying and mitigating risks to ecosystems, climate and communities is essential for maintaining a supply chain that aligns with global environmental protection and human rights standards.

    • Supply chain due diligence

      Conducting thorough investigations and ongoing monitoring of supply chain partners ensures adherence to legal and ethical standards, minimizing reputational and compliance risks of companies.

    The regulatory landscape driving sustainable supply chains

    If the business case for responsible supply chains alone isn't enough, regulatory pressure accelerates the shift toward mandatory supply chain due diligence. Several new and emerging European and Swiss regulations are shaping the future of supply chain responsibility:

    Swiss Code of Obligations (CO) and the related Child Labor and Conflict Minerals Ordinance (DDTrO)

    Requires companies operating in Switzerland to implement risk-based due diligence in their end-to-end supply chains. The requirements include identifying and addressing child labor and conflict minerals risks, publishing annual reports and taking measures to prevent or mitigate harm, thereby promoting compliance with labor and environmental standards.

    EU Corporate Sustainability Due Diligence Directive (CSDDD)


    Ensures companies identify, prevent and mitigate human rights violations and environmental damage throughout their operations and supply chain management. This directive reinforces the legal responsibility to respect people and the planet beyond the immediate business operations. Learn more here.

     

    EU Deforestation Regulation (EUDR)


    Applies to companies that place high-risk commodities (e.g. soy, palm oil, wood) on the EU market. It requires proof that these products are not linked to deforestation, reinforcing the need for traceability and due diligence throughout their supply chain. Learn more here.

     

    Corporate Sustainability Reporting Directive (CSRD)

    expands sustainability reporting requirements, mandating the disclosure of environmental and social impacts, including supply chain information. It aims to enhance transparency and comparability across industries.

    The future of sustainable supply chains

    Building a sustainable supply chain requires companies to proactively integrate ESG supply chain management principles while ensuring compliance with evolving regulations such as the CSDDD. For long-term success, companies must focus on supply chain due diligence, transparency, and innovation.

    Companies can use digital tools, strong supplier partnerships and clear sustainability goals to build resilience, improve efficiency, and stay competitive in the global market.

    Supply Chain Due Diligence

    Supply Chain Due Diligence

    Why companies can’t afford to ignore sustainability in their value chains

    Download our factsheet

    How KPMG can help you build a sustainable supply chain

    Supply chain resilience and building a more sustainable supply chain requires proactive integration of ESG principles backed by compliance with evolving regulations and the adoption of innovative digital solutions. At KPMG, our sustainable supply chain and ESG team helps you improve your operations by providing cutting-edge thinking on sustainable supply chain management, supported by leading digital solutions and tools. 

      Plan

      • Set your strategy and design your future-fit supply chain

        We work with you to develop a strategic blueprint that aligns your supply chain with both business objectives and sustainability goals. This includes optimizing supply chain processes, governance, organizational structures and technology usage to boost efficiency, adaptability and compliance with market changes and regulatory demands.

         

      Assess

      • Identify and manage human rights and environmental risks

        We help you map and assess human rights and environmental risks throughout your operations and value chain in ESG, from deforestation and biodiversity loss to labor rights and compliance gaps. Our risk assessments enable better monitoring, reporting and mitigation strategies.

      • Boost climate resilience and accelerate decarbonization

        We assess climate-related risks, including both physical and transitional risks, and identify emission hotspots in your supply chain. This enables your company to take targeted, data-driven and effective actions to build long-term resilience to climate change. 

      article

      Climate, Nature and Decarbonization

      Navigate climate risks and seize opportunities for a sustainable & resilient future.

      Find out more

      Activate

      • Embed circularity in your business model

        We support your shift to adopting the principles of a circular economy, which focus on extending the lifecycle of products and maximizing resource efficiency. By embedding circularity, your company can reduce waste, drive innovation and open new revenue streams while contributing to a more sustainable world.

      • Advance responsible sourcing and transparency

        We help you put responsible sourcing at the heart of o your procurement management and strategy, mitigating legal and reputational risks. Using advanced ESG tech, we map your supply chain and provide real-time data for visibility and actionable insights into your operations, improving compliance and cost efficiency.

      • Empower suppliers and build shared accountability

         

        We help you co-create supplier engagement strategies - setting expectations, providing ESG training and incentivizing sustainable practices. This fosters a supplier network that is aligned with your values and committed to joint progress on sustainability.

         

         

      article

      Circular economy

      Improve the footprint of your products.

      Find out more

      Accelerate

      • Elevate your ESG performance

        We support you in leveraging ESG ratings such as EcoVadis and CDP to evaluate and improve your supply chain's sustainability performance. This helps you demonstrate commitment, identify improvement areas and enhance stakeholder trust -giving your brand a competitive edge in a purpose-driven market.

      • Track progress and optimize performance over time

        We help you develop robust ESG KPIs and integrate performance tracking into decision-making processes. This ensures you can measure what matters, adjust in real-time and stay on track with your sustainability commitments.

      Start your journey toward a sustainable supply chain

      Companies that prioritize business supply chain management with ESG principles gain long-term benefits, from risk mitigation to enhanced brand value. By adopting circular economy and supply chain strategies, businesses can achieve regulatory compliance while fostering innovation and resilience.

      KPMG's team of ESG and sustainable supply chain experts can guide you through every step of supply chain compliance.

      Meet our experts

      Adrian Stoll
      Adrian Stoll

      Director, Lead ESG Advisory

      KPMG Switzerland

      Joy Jadam
      Joy Jadam

      Senior Manager, ESG Advisory

      KPMG Switzerland

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