Impact of EU sustainability directive on supply chains

Eighty four percent of pharmaceutical and healthcare companies consider that the new EU Corporate Sustainability Due Diligence Directive (CSDDD) directive is an opportunity to “align human rights and environmental protection with their business objectives”, findings from a survey by supply chain specialist INVERTO has found.

EU operations must comply with the new directive. Specifically, European companies with a turnover over €450 million and over 1,000 employees will be required to share details of sustainability throughout their supply chains and adopt effective policies to comply with the directive.

UK-based pharmaceutical companies with European clients or operations within the bloc will “be legally liable for the non-compliance of their subsidiaries and/or suppliers, INVERTO explained.

Survey results

Compliance with the directive is “achievable”, according to 74 percent of the companies who responded.

Measures already implemented by these firms include:

• Developing compliance procedures (77 percent)
• Issuing an annual financial report (69 percent)
• Collaborating with other companies in the same sector (63 percent)
• Monitoring performance indicators (63 percent).

The survey found that 60 percent of participants thought that in the long-term, “the financial impact of the directive will be positive and anticipate a return on investment”.

Furthermore, fifty five percent expect that stricter regulations could have a positive influence on the company’s image.

Another key benefit highlighted by the participants was greater environmental responsibility (51 percent).

Notably, 47 percent of respondents from the pharma and healthcare sectors considered that financial performance was “the main task of procurement”.

Despite these potential benefits, responding companies in the healthcare sector believed that practically, two major challenges of implementing the measures were a lack of capacity (25 percent) and unclear directive guidelines (20 percent).

Sustainability of the future pharma supply chain

“UK [healthcare] businesses with international operations need to consider carefully how they need to align their operations with that of the EU,” shared Sabrina Morton, Principal at INVERTO.

By creating transparency, companies can identify opportunities for cost savings and reallocate resources. This contributes to operational efficiency and thus promotes innovation and competitiveness, Morton explained. 

The survey gained insight from more than 680 decision-makers from B2C and B2B companies with more than 500 employees, between November and December 2023, INVERTO shared.