Cost allocation and incentives for sustainable supply chains

Since the adoption of the United Nations Guiding Principles on Business and Human Rights in 2011, there have been increasing demands from customers, investors and civil society for companies to make their global supply chains publicly transparent. On the one hand, to address impacts on human rights and the environment, and on the other hand, to avoid, mitigate or remedy violations wherever possible. These expectations regarding the protection of human rights and compliance with environmental criteria in global supply chains are increasingly resulting in legal regulations. Legal requirements present all actors in the entire supply chain with the challenge of identifying and managing human rights and environmental risks. In parallel to the tightening of legal regulations, there are a number of voluntary approaches to help companies better protect human rights and the environment in their global supply chain operations. These range from voluntary commitments at company level (codes of conduct) to initiatives at sector level, multi-stakeholder initiatives (MSI), government-initiated standards and certificates from non-governmental organisations.

The project "Cost allocation and incentive mechanisms for environmental and climate protection and resource conservation along global supply chains" investigates which incentives and barriers exist for the implementation of environmental and social measures as well as the exchange of information between different actors along global supply chains. For this purpose, existing power structures, supply chain structures and effects of world market prices/exchanges etc. are analysed with regard to the implementation of environmental upgrading measures. Based on the findings on existing barriers, incentives for effective climate and environmental protection measures and an improvement of transparency and cooperation along global supply chains will be elaborated. Identified solutions will be translated into roadmaps for practical implementation in selected supply chains of specific raw materials. In addition, the project team will formulate target group-specific recommendations for the design of operational instruments for supply chain management and approaches for action for industry initiatives, governments and intermediaries.