8 mins read
Published Dec 4, 2025
Proving Sustainability in Supply Chains: Navigating External Pressures
Proving Sustainability in Complex Supply Chains – Part 2: Navigating External Pressures
In Part 1, we tackled the in-house hurdles to gather and trust sustainability data. In this second part of our series, we’ll explore the external factors driving the need for credible sustainability proof.
From new regulations, to customers and investors demanding transparency, external pressures are mounting.
Rising Regulatory Expectations – From Voluntary to Mandatory
Perhaps the most urgent external driver is the wave of new regulations around sustainability. Governments and international bodies are pushing companies to account for environmental and social impacts, especially across supply chains.
A prime example is the European Union, which in recent years has been rolling out directives to enforce corporate sustainability. The EU’s Corporate Sustainability Due Diligence Directive (CSDDD) is one such regulation in the pipeline. Entered into force on 25 July 2024, it will require large companies to identify and address human rights and environmental issues in their supply chains, with obligations starting between 2027 and 2029. In essence, companies will have a legal duty of care for what happens in their upstream supply networks, not just their own operations. That’s a big shift.
Another EU regulation already in force is the Corporate Sustainability Reporting Directive (CSRD), which mandates that companies (meeting certain size/financial criteria) publicly disclose detailed information on their ESG (Environmental, Social, Governance) performance. This includes reporting on supply chain emissions, climate risks, and other sustainability metrics.
Other EU rules like the Renewable Energy Directive already demand verifiable proof: biofuels and renewable fuels must show documented greenhouse-gas savings via approved certification (e.g. an ISCC “proof of sustainability” for each batch of SAF or biodiesel). In practice, this demands any fuel exporter or bio-based product supplier to the EU market to have rigorous chain-of-custody data or certificates before those goods can be counted as “sustainable.”
It’s not just Europe. In Australia, new laws are coming into force requiring almost all large companies to report on climate-related risks and emissions across their entire value chain. A landmark climate disclosure law passed in 2024 mandates mandatory reporting starting in 2025 for the country’s biggest firms (over 500 employees or >A$500M turnover). These rules put a strong emphasis on Scope 3 emissions, the indirect emissions from suppliers, logistics, and product use, meaning companies must gather data from their upstream suppliers or face non-compliance.
Across Asia-Pacific, regulators are likewise raising the bar. Stock exchanges and governments in Hong Kong, Singapore, Japan, South Korea, Thailand and beyond are mandating sustainability disclosure for listed companies. For example, HKEX will require all listed issuers to report their Scope 1 and 2 GHG emissions from 2025, and large issuers must add Scope 3 by 2026. Singapore will phase in ISSB-aligned climate reporting from 2025 (Scope 3 for bigger listed firms by FY2026. South Korea, and Thailand are drafting new human-rights and environmental due-diligence laws that will compel companies to manage (and disclose) supply-chain risks.
Voluntary promises are giving way to mandatory accountability. Companies will need documented evidence at every step of the chain or risk fines, trade restrictions, or loss of market access.
Customer Trust and ESG Reporting – Earning It, Not Just Claiming It
Beyond regulators, customers, whether consumers or B2B clients, are demanding more transparency and proof of sustainability. It’s no longer enough to market a product as “eco-friendly” without backing it up. We’re seeing a rise in customer skepticism about green claims. A global report found that more than half of consumers are skeptical of brands’ sustainability claims. People have become wary of greenwashing, where companies overstate or fabricate their environmental benefits. In this climate, trust is earned by evidence.
Building customer trust involves showing, not just telling. For example, consumers increasingly look for labels or certifications on products – like organic, Fair Trade, or carbon-neutral badges – as a shorthand for proof. But even beyond labels, consumers want details. A 2024 study by BSI (the British Standards Institution) revealed that 76% of consumers are more likely to purchase from companies that can verify their environmental credentials through evidence or certifications. In other words, roughly three out of four people would favor a product or brand that proves its claims (say, by having an ISO 14001 certification for environmental management, which the survey specifically mentioned as an example).
Consider a case: a clothing brand advertises a line of “sustainable recycled fabric” apparel. If they provide a QR code or web link where customers can see the journey of the product – e.g., proof that the polyester came from recycled bottles, data on water saved in production, verified by a third party – customers are more likely to believe and value it. If, instead, the brand just makes the claim in marketing copy with no backup, today’s savvy shoppers may doubt it or even call it out on social media. Thus, providing an accessible story of sustainability with proof builds trust and can differentiate your brand.
In B2B relationships, trust and proof are also crucial. Large companies are under their own pressures (from both regulators and consumers) to ensure their suppliers are sustainable. The benefits of that are evident. When buyers enhanced their visibility into their value chain, through methods such as traceability, mapping, and transparency, suppliers were 1.7 times more likely to engage their own suppliers on climate related issues.
ESG reporting is another piece of the puzzle. Many companies now publish annual sustainability or ESG reports aimed at investors, customers, and the public. These reports are increasingly scrutinised. Stakeholders want to see quantified results and third-party validation in these reports. A company that can include externally verified supply chain metrics – like “100% of our key raw materials are certified sustainable by XYZ standard” – will likely fare better in earning stakeholder confidence than one that provides generic statements.
Moreover, frameworks such as GRI already explicitly require disclosures about supply-chain / value-chain impacts, and the ISSB’s investor-focused standards increasingly require companies to address sustainability-related risks in their supply chain. In that context, robust traceability and evidence will enhance credibility and ease of reporting.
Demand for Verifiable Low-Carbon Products – New Markets, New Requirements
Demand for sustainable products is creating new markets, but entry often requires proof of low-impact sourcing. Consider bio-based fuels: airlines and governments around the world are setting mandates for Sustainable Aviation Fuel (SAF) and renewable diesel. However, these fuels only count toward climate goals if accompanied by proof of their emissions reductions. Under EU rules (RED II/III), fuel suppliers placing certified biodiesel or SAF on the market must hold documentary evidence, typically a Proof of Sustainability (PoS) issued by a recognised certification scheme (e.g., ISCC), proving that the fuel batch complies with sustainability and GHG-saving criteria.
In practice, this means producers in Asia-Pacific who want to sell fuel to Europe or to offset airlines must join an approved certification system and provide batch-level certification. No certificate = no market access.
The same logic applies to recycled and circular materials. A textile mill cannot simply label its yarn “recycled” without third-party verification, or risk regulatory penalties for false claims. Global standards such as the Global Recycled Standard (GRS) or SCS’s Recycled Content Certification allow suppliers to prove the percentage of post-consumer or post-industrial material in a product.
In many industries – apparel, electronics, packaging, building materials, etc. – major customers explicitly require such recycled-content certificates or chain-of-custody audits. For example, an electronics OEM sourcing aluminium might demand an Environmental Product Declaration or “green” certification to prove it used low-carbon recycled metal.
Furthermore, critical-raw-material supply chains (for batteries, semiconductors, etc.) are under scrutiny. Governments and consumers are increasingly demanding responsibly sourced and low-carbon materials (e.g. “low-carbon lithium” from renewable-powered plants). As a result, suppliers are offering carbon-footprint data or certified claims for their inputs. A battery-anode producer might get audited against a standard or partner with an independent verifier to certify its output as “100% recycled copper” or similar. Achieving these certifications can let suppliers access premium segments – for instance, EV manufacturers will pay more for verified low-carbon cathodes than for standard commodities.
In summary, across product categories the rule is: if you want to sell a “green” product or raw material, you’ll need verifiable documentation of its sustainability credentials. These market rules are becoming as real as any technical specification.
Let’s illustrate with a scenario: EcoChem Co. produces a specialty chemical used in cosmetics. Traditionally, the market only cared about price and quality. Now, big cosmetics brands are aiming for “sustainable formulations” and ask suppliers about ingredients’ carbon footprints and if they use renewable feedstock. EcoChem sees a chance to stand out. They invest in converting part of their production to use bio-based inputs and power from renewables. They also get certified under ISCC Plus for their mass balance approach, meaning they can allocate a certain tonnage of output as “sustainable certified” based on the bio-input used. Now EcoChem can go to cosmetics brands and offer a certified low-carbon ingredient. Because they have the documentation and ISCC Plus certificates for each batch, the cosmetics client can in turn label their product accordingly (and meet any upcoming disclosure rules). EcoChem wins a new contract, even at a price premium, because it could prove the sustainability of its product where competitors could not. This opens a new revenue stream and strengthens its relationship with a high-value customer.
Attracting Investment and Capital – Sustainability as a Value Driver
The external pressure isn’t just from governments and customers, it’s also coming from investors and financial markets. ESG (Environmental, Social, Governance) factors have moved from niche to mainstream in investment decisions. Many investors now actively seek companies that perform well on sustainability metrics or at least manage their ESG risks diligently. But investors have also become more sophisticated, they don’t take companies’ sustainability claims at face value; they want data and proof.
When companies can demonstrate sustainability with evidence, they may find it easier to attract investment, whether it’s equity investment, loans, or even insurance underwriting. Why? Because strong sustainability performance, backed by proof, signals lower risk and often better management quality. For example, a company that has mapped its supply chain emissions and ensured all high-risk suppliers are certified or audited is less likely to suffer a sudden scandal or disruption.
Leading investors increasingly view ESG as a value lever: they combine an understanding of regulatory and stakeholder expectations with financial discipline, focusing on areas such as decarbonisation and supply-chain risk management to secure cost savings, mitigate risks and enhance return potential. But they rely on companies to furnish solid data during due diligence to trust those improvements.
Companies that credibly prove their sustainability position themselves as forward-thinking and lower-risk investments. This can attract capital more easily and possibly at better rates. It can also broaden the pool of investors interested in the company. For instance, certain pension funds or sovereign wealth funds might have strict ESG criteria – meeting those through verifiable actions opens the door to those large investors. Moreover, companies strong in ESG often enjoy better stakeholder relationships overall, which investors view positively. They may have fewer regulatory fines, less risk of boycotts, and more innovation, all of which can translate to financial performance in the long run.
Compliance, Markets, and Beyond
We’ve examined several external factors individually, but it’s worth summarising how proof of sustainability translates into real business gains when done right:
Regulatory Compliance: By having the data, documentation, and certifications ready, you ensure continued access to markets under new regulations. You avoid fines or disruptions. Think of it as a compliance passport – your shipments and operations won’t get stuck because you can quickly provide evidence to authorities. This reliability can save huge costs (for example, avoiding a halt in sales to the EU) and free up management from fire-fighting mode.
Market Access and Expansion: With credible proof, you are in a better position to enter high-growth sustainable product markets (like SAF, recycled materials, organic products) that you might otherwise miss. In many cases, demonstrating sustainability is now a prerequisite to even bid on certain contracts or participate in supply chains for greener products. Meeting standards like RSB, ISCC, RefuelEU, or others can be your ticket to new revenue streams.
Customer Loyalty and Brand Differentiation: Transparency and proof help build a loyal customer base. Consumers and B2B clients stick with brands they trust. If you can show your product is genuinely sustainable and you’re not just greenwashing, you stand out in a crowded market. Over time, this can justify premium pricing or at least secure your market share as more competitors jump on the sustainability bandwagon (with varying degrees of substance).
Investor Attraction and Better Financing: As discussed, robust sustainability proof can attract investment and potentially improve financial terms. It signals good governance and future readiness. Companies with strong sustainability credentials might also find it easier to get insurance or might get better ratings from credit agencies factoring ESG, which can subtly improve business conditions.
One more scenario to illustrate a holistic win: Global Electronics Inc. sells consumer gadgets and faces pressure from all sides – the EU battery regulations require recycling and carbon footprint disclosure, consumers ask about ethical sourcing of minerals, investors question its climate impact. Global Electronics embarks on a comprehensive proof strategy. It partners with its battery suppliers to certify under a responsible mining standard (for cobalt, lithium) and uses blockchain tracing for those materials. It also measures the carbon footprint of each product and gets third-party assurance on the calculations. When they must report, Global Electronics easily provides the required product carbon reports and documentation of recycled content. Meanwhile, their marketing team uses this data to create a consumer campaign: “Know Your Gadget,” where customers can scan a code and see where the materials came from and what the carbon footprint is. This transparency boosts brand trust among eco-conscious buyers. Finally, in the next investor call, Global Electronics highlights that their proof-of-sustainability efforts have cut costs (through energy savings, for example) and avoided any regulatory non-compliance costs, painting a picture of a well-managed, future-proof company. Their stock gets a subtle boost as ESG analysts upgrade their ratings. In this scenario, proving sustainability became a value driver for the company.
Conclusion
Across Parts 1 and 2 of this series, we’ve seen how internal efforts (accurate data collection, new processes) feed into external demands (regulation, market expectations). The common theme is that transparency and credibility are now essential in supply chains. For supply-chain leaders, think of sustainability proof as the new foundational capability, much like quality management or just-in-time were in past decades.
Building effective proof systems requires more than dashboards. It needs clear strategy, robust data, and engagement with standards. However, the payoff is tangible: access to markets, customers, and capital that many competitors will not enjoy. Sustainability is not just a cost center; when you can show the numbers, it becomes a competitive advantage and value driver.
For next steps, consider how you can integrate these requirements into your supply-chain strategy. To explore tools that can help, visit our Carbon Central page. And if you’re ready to meet tomorrow’s regulations and customer demands today, contact us, our team can help you turn sustainability proof into performance.
