Op-ed by Jon Hancock, CEO, Sedex.
Throughout 2026, one truth about supply chains will be impossible to ignore. Risk, including serious ethical and environmental concerns, cannot be avoided – only managed.
Geopolitical instability, climate disruption, labour shortages, and policy uncertainty continue to reshape how companies source, manufacture, and deliver goods. For retailers and brands, supply chain performance is increasingly scrutinised from multiple angles by multiple stakeholders for its potential to impact reputation, access to capital and business continuity in a turbulent macro-environment.
In this context, the most effective leaders are not those attempting to avoid supply chain risk altogether. They are the ones working to identify it early, respond quickly, and learn from it over time.
Driving resilience
The shift now underway is not simply about compliance, but how a business can utilise strategic governance and multi-tier intelligence to drive resilience, agility and competitive advantage.
For years, many companies have focused on subsections of direct or strategically significant suppliers for the bulk of their due diligence efforts. While these groups remain important, this is not sufficient.
The problems that most often disrupt supply chain operations or damage reputations are rarely confined to direct suppliers. They surface in Tier 2 and beyond, domestically as well as overseas, and in services providers such as logistics, catering, and facility management.
These areas have historically received less scrutiny, yet can each be sources of serious risks with the potential for operational, reputational and financial damage. Internal teams are increasingly conscious of this, with the most proactive expanding their visibility and assessment activities in response: 30% of SMETA audits are now at our customers’ indirect supplier sites (beyond Tier 1).
Tangible benefits
Data from Sedex shows that companies investing in deeper visibility, longitudinal data capture and site-level assessment are already seeing tangible benefits.
Our analysis shows a 24% reduction in the average time taken to resolve audit-identified issues year-on-year, while a 5-year view reveals a 30% reduction in issues found at agriculture, forestry and fishing sites – evidence of improvement over time even in upstream activities.
At the same time, our data also shows a 35% year-over-year increase in audit-identified issues directly related to forced labour. This does not necessarily mean exploitation is increasing; we know that forced labour exists in commercial supply chains.
Uncovering it means companies are looking in the right places – and in doing so, can act swiftly to tackle the most serious concerns, protecting supply chain operations and their brand. Forced labour also remains an area of high interest for legislators, with UFLPA enforcement continuing in the US and the EU’s own forced labour product ban applying from next year.
Decision making
With all of the above in mind, boards and investors are paying close attention, not only to whether ethical and environmental risks exist, but to how companies identify, mitigate and remediate them.
As a result, supply chain due diligence has moved firmly into the boardroom. Leading companies don’t treat this as a sustainability-related silo or a box-checking exercise. They are embedding these activities and the resultant insights into core decision-making, using standardised data from right across their supply chain to inform sourcing strategies, investment priorities and crisis response.
Major global events taking place this year, including the FIFA World Cup and the America 250 celebrations, will place additional strain on supply chains, particularly in sectors such as construction, food, hospitality and logistics.
These will further test whether companies have the intel to manage the demand shifts that come with trying to leverage the associated market opportunities – new suppliers still need vetting for viability and compliance.
Ultimately, supply chain success in 2026 will not be defined by the absence of problems but by how prepared companies are to meet them. Those that invest in multi-tier intelligence, credible data, proactive risk management and measurable improvement are better equipped to withstand sudden disruption and satisfy stakeholders’ demands, from consumers to investors.
Risk is inevitable. Poor visibility is not. The leaders who understand that distinction are the ones who will be successful in this unpredictable, uncertain environment.
Learn more about Sedex at www.sedex.com.
