A publication by the Competence Center for Business Controlling & Accounting at FHWien der WKW shows the wide-ranging impact of the EU Supply Chain Directive on smaller IT companies and why transparency is becoming a key success factor.
With the planned introduction of the Corporate Sustainability Due Diligence Directive (CSDDD), sustainable supply chains are becoming more important than ever for European companies. In the future, the directive will require not only large companies but also, through indirect effects, numerous smaller businesses, such as those in the Austrian IT industry, to ensure comprehensive transparency along their value chains.
What EU due diligence requirements mean for Austria’s IT industry
Even though many IT companies are not directly affected by the EU Supply Chain Directive, they will still be indirectly affected through their clients, which are mostly large corporations or public institutions. Initial requests for sustainability data have already been reported for the 2024 financial year.
The latest publication by the Competence Center for Business Controlling & Accounting in „RWK – Reporting und Wirtschaft kompakt” (in German)“ on the impact of the CSDDD confirms key assessments made in the 2022 commissioned study published by researchers at FHWien for the Austrian Ministry of Economy, “Supply Chain Responsibility in Austria (in German)”. Even then, it was determined that only a negligible proportion – around 0.06% – of all Austrian companies are likely to be directly affected by future due diligence obligations; however, many more could be indirectly confronted with requirements via supply chains.
In the future, companies will have to assess risks along their supply chains, collect sustainability-related data, and take measures to minimize risks if necessary. For IT companies, this can be particularly challenging when it comes to hardware, server capacities, and computing power, as their supply chains are often global, complex, and difficult to verify.
Competitive advantages despite considerable administrative effort
Respondents are primarily concerned about the considerable administrative effort involved. Smaller companies see the risk of losing contracts if they are unable to provide the required data in sufficient quality. At the same time, however, the CSDDD also opens up opportunities: sustainability-oriented companies can secure competitive advantages – both in tenders and in their positioning on the labor market.
In the long term, the directive could lead to greater transparency, more resilient supply chains, and fairer competition within the EU. However, the study emphasizes the need for clear framework conditions and support measures, especially for SMEs, to make the requirements of the directive manageable. After all, addressing supply chain responsibility at an early stage can be a strategic advantage for companies that proactively address sustainability – provided they can deliver the necessary data in a timely and transparent manner.