Development of CSR Due Diligence Framework for a European Construction Company

Our client, a European construction company, was in the process of evaluating potential plywood suppliers in China and needed external assistance in crafting a comprehensive due diligence framework to authenticate the wood’s origin. This undertaking was twofold: firstly, it was intended to ensure compliance with the new European Timber Regulation (EUTR), mandating the sustainable sourcing of timber. Secondly, it aimed to satisfy the company’s internal corporate social responsibility (CSR) criteria.

The client also sought hands-on assistance in assessing identified suppliers and ensuring optimal control of the entire supply chain, in accordance with the newly created framework.

Transporting timber in a forest

The client faced the complex task of aligning with new EU regulations and local timber-related regulations. In addition, with the escalating expectations from end customers, the client recognized the need to appraise the sustainability performance of their suppliers. The primary goal was to protect the client from possible legal liabilities, while maintaining their brand reputation among the targeted customer base.

ARC Consulting, with extensive experience in China, a skilled team of consultants, and a track record of conducting CSR due diligence, was well positioned to provide the client with the necessary expertise needed for developing the CSR due diligence framework.

The ARC Consulting team developed a framework by listing and prioritizing key EUTR metrics and applying these parameters to the requirements of China’s wood industry.

Subsequently, the ARC Consulting team conducted comprehensive interviews with relevant industry experts and key regulatory stakeholders in the EU. The team then determined which concerns needed to be integrated into the framework to achieve EUTR compliance. This approach considered legal/CSR aspects as well as maintaining the client’s profitability.

ARC Consulting delivered a detailed ten-step due diligence framework, enabling the client to meet all regulatory requirements and assisting the client in meticulously evaluating the identified suppliers and their respective supply chains. Followingly, the client was able to identify and remove several non-compliance suppliers, while securing their optimal control and a profound understanding of supplier capabilities.

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