From paper compliance to proactive, preventive practice

This module helps you turns sustainability commitments and sustainability due diligence expectations into day-to-day practice under the logic of the CSDDD. Contractual responsibility is not created by adding more requirements, but by building a workable, user-friendly, collaboration-oriented contract package that enables effective action and prevents disputes. Here the ideas of proactive contract theory may become handy.

Earlier modules have introduced human rights due diligence and highlighted typical contract-related problems that make reaching sustainability goals meaningful due diligence difficult in global supply chains. This module focuses on how contracts can be redesigned to support goal-reaching prevention and continuous improvement in practice. Contractsual expectations should reflect

• proportionality (risk- and leverage-based requirements),
• feasibility (realistic timelines, resources, and evidence), and
• fairness (reasonable commercial terms and balanced risk allocation).

Due diligence cannot be credible if price and lead time are set in ways that predictably push suppliers toward harmful shortcuts, nor if buyers demand continuous cost reductions while simultaneously increasing compliance and reporting burdens.

Responsibilities are best mademust be explicit on both sides: covering not only the supplier’s obligations but also the buyer’s role in enabling implementation (for example through information-sharing, training, capacity-building support, and realistic planning).

A practical set of contracts should integrate supplier requirements, supplier codes of conduct, and relevant policies into one coherent set of expectations, with clear prioritisation and an order of precedence to avoid contradictions. Requirements should be translated into operational language: what is expected, by whom, by when, how progress is reviewed, and what evidence is sufficient.

Instead of relying primarily on sanctions and termination, the contract should also include promotive mechanisms that make good performance more likely. This can mean embedding product or service related requirements or due diligence action plans directly into the contract (as an annex or performance schedule), agreeing milestones and review cycles, and using incentives such as renewal/extension options or commercial benefits linked to meeting or exceeding agreed human rights and sustainability objectives. Such mechanisms help move sustainability due diligence from a “paper compliance” model to a system that turns sustainability as a core strategic value and that supports prevention, mitigation, and measurable improvement over time.

Moreover, contracts should be designed and tested with their actual users - procurement, sustainability, operational teams, and, where feasible, first-tier suppliers and other relevant stakeholders - so that requirements reflect practice and are understandable and implementable in real working conditions.

Finally, dispute prevention is treated as part of due diligence effectiveness: the contract should include stepwise escalation, collaborative problem-solving, and learning loops that identify root causes, agree corrective actions, and update processes and clauses to reduce the likelihood of repeated harm.