Supply chain management and sustainability: the new boundaries of the firm

Abstract

A directive on supply chain due diligence applicable to all companies operating on the European Union (EU) market is currently under consideration by the EU institutions. This project, which represents an example of harmonization at the regional level and whose presentation is expected in 2021, places the issue of enterprises’ private procurement process at the heart of the debate. Supply chain strategies are an essential element of any business ecosystem. Therefore, in order for firms to effectively address social and environmental concerns along with the economic dimension, it is necessary to adopt and spread the use of sustainable business practices across the entire supply chain. Currently, due to (i) the diffusion of the ‘triple bottom line’ approach; (ii) the reputational and economic damages arising from numerous scandals concerning the supply chain; and (iii) the growing market value of sustainability, an increasing number of firms have included sustainability requirements in their entire supply chain. This has led to the enhancement of ‘preferred procurement’ policies, such as the green, social, and sustainable procurements. After a brief analysis of the current legal framework and the best practices applied in the field of sustainable private procurement, this study offers some conclusions on (i) the impact of sustainability on the definition of the boundaries of the firm and (ii) the policy shift from self-regulation to statute law in private procurement governance and the benefit of a model statute designed to be adopted by different jurisdictions.