Skip to main content

In an era dominated by environmental, social, and governance (ESG) principles, UK businesses, especially in the retail, manufacturing, and hospitality sectors, face an increasingly complex landscape of supply chain risks. As global scrutiny intensifies, propelled by regulatory shifts and heightened consumer awareness, this article sheds light on recent and anticipated changes that will impact UK businesses and underscores potential litigation hazards. Inspire Legal Group, a leading solicitor in North Yorkshire, can assist you with commercial property.

The evolution from ‘soft law’ standards to stringent “hard law” obligations underscores the growing need for businesses to identify and address human rights and environmental risks along their supply chains. This transition carries implications not only for businesses within the jurisdictions imposing regulations but extends its reach to entities based in the UK. The impending regulatory changes necessitate vigilance from businesses to prepare for heightened scrutiny by both regulators and contracting parties bound by these new rules.

Supply chains in these sectors, often stretching across borders, frequently rely on labour or raw materials from less regulated jurisdictions, making monitoring challenging. Previously, businesses downstream in the supply chain may have felt insulated legally and reputationally if not directly contracting with parties in these jurisdictions. However, regulatory scrutiny and the specter of ESG litigation, initiated by affected complainants, activist groups, or shareholders, pose imminent risks.

Anticipated Regulatory Changes:

The European Union (EU) is at the forefront of introducing mandatory supply chain due diligence proposals as part of its “Green Deal” program. With extra-territorial reach, these measures aim to ensure commodities traded through the EU adhere to responsible sourcing and manufacturing practices. For instance, the Deforestation Regulation will compel companies trading commodities with the EU to verify their supply chains are not linked to illegal deforestation.

Germany has already implemented its Corporate Due Diligence Obligations in Supply Chains Act, requiring companies to assess and report on ESG risks within their own operations and throughout their supply chains. UK companies trading with German counterparts will be subject to scrutiny and must account for their supply chains or risk losing business.

Litigation Risks for UK Businesses:

Directly bound by local laws in other jurisdictions, UK businesses face legal claims or regulatory action overseas, including challenges to their ESG-related obligations. Disputes between contracting parties can arise, such as German companies seeking contractual warranties from UK suppliers regarding compliance with statutory codes of conduct.

Recent cases, like Begum v Maran and Dyson’s ongoing legal battle, demonstrate the potential for claims against UK companies for actions or defaults in their supply chains. The landscape may witness further litigation in areas such as shareholder actions, consumer claims, and challenges to regulatory decisions.


As the global trend towards supply chain due diligence intensifies, UK businesses in key sectors must proactively assess and address risks in their current processes and partnerships. Regulatory rigor is poised to increase, courts may become more receptive to claims, and contracting parties will demand greater scrutiny from their suppliers. In this evolving landscape, businesses need to be agile, responsive, and committed to aligning with emerging ESG standards to mitigate risks and ensure sustainability across their supply chains.

Natalie Foster – Owner

Connect with us: Facebook – Inspire Legal Group Twitter – @InspireLegal_ Instagram – inspirelegalgroup LinkedIn – Inspire Legal Group