The company perspective on challenges, needs and path forward for effective supply chain due diligence

This Deep Dive synthesizes insights from a series of engagement activities involving representatives of large companies operating across raw-materials supply chains. These engagements had two main objectives. First, they aimed to validate the findings of the gap analysis conducted by the DiliCHANCE project in 2025 (Deliverable D3.1 - Baseline and Gap Analysis), which assessed the implementation of environmental and human rights due diligence by a sample of European companies based on their publicly available reports. Second, they sought to generate deeper insights into the challenges, motivations, and support needs that companies encounter when implementing supply chain due diligence in practice. 

Reporting gaps: Interview findings suggest that shortcomings in due diligence reporting often reflect reporting gaps rather than implementation gaps, as operational details are frequently withheld for legal or reputational reasons. While due diligence is increasingly embedded in governance and policies (OECD Step 1), companies face greater challenges with implementation (Steps 3–6), particularly risk mitigation, effectiveness tracking, and remediation. Overall, due diligence remains largely compliance- and risk-driven rather than impact-oriented.

Challenges: The engagement activities revealed common barriers, including complex multi-tier supply chains, limited visibility beyond tier 1, poor data quality, fragmented regulations, limited supplier leverage, and insufficient internal capacity. Audit fatigue, confidentiality concerns, and inconsistent supplier engagement further constrain effective due diligence.

Motivation: Due diligence is driven primarily by regulatory compliance, risk management, market access, and reputation protection. While stakeholder expectations also play an important role, few companies view due diligence as a source of competitive advantage or financial value. 

Needs: Companies highlighted the need for harmonized regulatory requirements, clearer implementation guidance, interoperable traceability systems, shared data infrastructures, and stronger cross-industry collaboration. Many participants emphasized that key due diligence challenges require collective action rather than individual company efforts.

• Strengthen regulatory coherence and provide practical guidance. Policymakers should harmonize due diligence requirements across jurisdictions, minimize inconsistencies arising from national implementation, and publish practical guidance as early as possible. Greater regulatory clarity would reduce implementation uncertainty, support consistent compliance, and create a level playing field for companies.
• Adopt risk-based approaches to supplier due diligence. Companies should prioritize suppliers and commodities with the highest environmental and human rights risks using structured risk-screening systems. This enables limited resources to be directed where they are most needed and increases the effectiveness of due diligence.
• Promote collaborative supplier engagement alongside compliance. Effective due diligence should combine audits with trust-based engagement that encourages suppliers to disclose challenges and work towards continuous improvement. Regulatory frameworks and industry initiatives should recognize collaborative remediation and capacity building as essential complements to traditional compliance mechanisms.
• Embed due diligence across business functions. Responsibility for due diligence should extend beyond sustainability teams and be integrated into procurement and commercial functions. Cross-functional collaboration enables sustainability considerations to become part of everyday business decisions and strengthens companies' ability to identify and manage supply chain risks.
• Expand industry collaboration and shared infrastructure. Companies should increase participation in collective due diligence initiatives and jointly develop common assessment methodologies, supplier engagement approaches, and data-sharing mechanisms. Collaborative approaches can reduce audit fatigue, improve data quality, increase leverage over suppliers, and address systemic risks more effectively than isolated company actions.
• Develop interoperable traceability systems. Policymakers and industry should support the establishment of shared traceability infrastructures based on common data standards, interoperable information systems, and independent verification mechanisms. Such systems would improve data quality, reduce duplication of effort, and facilitate information sharing across mineral supply chains.
• Use external tools as enabling infrastructure rather than substitutes for due diligence. Certifications, audits, risk-screening tools, and supplier databases provide valuable support but cannot replace companies' responsibility for identifying, assessing, prioritizing, and addressing risks. Effective due diligence ultimately depends on internal governance, informed judgement, stakeholder engagement, and impact-oriented decision-making.