# STATE OF SOCIAL PROCUREMENTRole of Regulation in Supporting Social Procurement Regulations that drive social procurement and future developments on social impact in supply chains. ### About this section This section is a collaboration between Lex Mundi Pro Bono Foundation and the Global Alliance of Impact Lawyers (GAIL), summarizing input from top law firms in 39 jurisdictions on how regulation affects social procurement and global value chains. Regulation is a key lever to make procurement more responsible by embedding ESG, and compelling transparency, accountability, and compliance across supply chains. ### Our approach We distinguish between local regulation (within a country) from extraterritorial laws, i.e rules from one region - especially the EU - that effectively shape global supply chains. ### Overall context Because of regulatory uncertainty in the EU and an unreliable geopolitical landscape, buyers are shifting from fixed “compliance roadmaps” to more adaptive approaches (pilots, stress-testing suppliers, better data/risk mapping, capacity building). ### The role of the EU EU-led rules (notably CSDDD and EUDR, plus CSRD and EU Taxonomy) are becoming a global benchmark with extraterritorial reach, pushing companies worldwide toward mandatory due diligence. However, details are still evolving and a deeper technical analysis is planned for 2026. ## Introduction This section synthesizes legal insights gathered from leading law firms across 39 jurisdictions to examine how evolving regulatory frameworks are influencing global value chains. It reflects a first, high-level consolidation of expert input rather than a comprehensive legal assessment. Given the fluid state of the European regulatory environment and broader geopolitical developments in 2025, the analysis intentionally adopts a cautious, exploratory lens.Several initiatives launched in 2024 have slowed or stalled, underscoring the need for close monitoring rather than definitive conclusions at this stage. As regulatory expectations continue to shift, companies and policymakers are operating in a period of transition marked by uncertainty, uneven implementation, and open legal questions across jurisdictions. This section, therefore, focuses on identifying emerging patterns, areas of legal convergence and divergence, and early signals from practice, rather than prescribing fixed approaches.A second phase of work, planned for 2026, will deepen the analysis once greater clarity emerges, allowing for more technical treatment of jurisdiction-specific rules, enforcement practices, and cross-border implications. ## The role of regulation in Social Procurement To understand the impact of regulation, it is essential to distinguish between local regulations and extraterritorial laws. Local regulations, established within specific jurisdictions, set ethical standards for labor practices, environmental protections, and responsible sourcing. However, in today’s globalized economy, extraterritorial regulations - laws originating in one jurisdiction but impacting global supply chains - are increasingly significant. Companies operating in diverse markets must often adhere to these higher standards, even where local laws are weak or absent. ## Shaping decision-making in procurement Regulatory frameworks are reshaping procurement beyond formal compliance by redefining how decisions are governed, justified, and overseen. Procurement is increasingly treated as a strategic lever for managing risk, strengthening resilience, and creating long-term value rather than focusing narrowly on cost and efficiency. This shift is reflected in stronger governance structures, clearer due diligence processes, deeper supplier engagement, improved data and traceability, and greater board-level attention to social and environmental impacts. The extraterritorial reach of regulation can elevate standards across global value chains, even in jurisdictions with weak enforcement, but it also raises concerns about disproportionate burdens on smaller suppliers and impact-oriented enterprises. In response to regulatory uncertainty, governments and corporations are moving away from rigid compliance roadmaps toward adaptive approaches that combine experimentation with vigilance. These include stress-testing supplier portfolios, piloting partnerships, investing in data capabilities, and building internal capacity to apply evolving rules in a proportional and context-sensitive way. ## EU-led regulations as catalysts for change The European Union's Corporate Sustainability Due Diligence Directive (CSDDD) and complementary regulations, such as the EU Deforestation Regulation (EUDR), are redefining global procurement by embedding ESG considerations into corporate obligations. Although several of these instruments remain under active review and continue to be debated at the EU level, they already signal a shift toward far-reaching standards that transcend local regulatory approaches. Rather than operating in isolation, these EU frameworks require companies to address human rights and environmental risks across their entire supply chains, influencing global practices even before their full implementation. Why EU regulations matter globally: ### Extraterritorial reach EU regulations are expected to impose binding obligations on companies operating within its market, regardless of origin, although key elements remain under discussion and may continue to evolve. This compels businesses across continents to meet rigorous sustainability and human rights standards. ### Global benchmark The EU’s leadership is well-positioned to establish a template for best practices, even as several regulatory instruments are still being redefined, thereby driving alignment with international norms such as the UN Guiding Principles on Business and Human Rights (UNGPs) and the OECD Guidelines. ### Systemic influence By requiring transparency, accountability, and risk management, EU-led frameworks, even in their current status, are shaping a paradigm shift where compliance aligns with sustainability objectives, elevating global standards for social procurement ## DEEP DIVECorporate Sustainability Due Diligence Directive (CSDDD) The CSDDD is a cornerstone regulation aimed at embedding sustainability into global value chains. The CSDDD applies to both EU-based and non-EU companies with substantial EU operations, ensuring that global businesses adhere to uniform standards.By holding select businesses accountable for ESG impacts across their global operations and supply chains, the CSDDD represents a fundamental shift from voluntary commitments to enforceable obligations.Its original objectives included: ### Human Rights Protection Preventing issues like forced labor and child exploitation across supply chains. ### Corporate Accountability Mandating transparency and liability for companies that fail to conduct proper due diligence. ### Environmental Standards Addressing pollution, biodiversity loss, and climate risks. ### Sustainability Integration Embedding sustainability considerations into corporate risk management and decision-making. ### The Interplay between CSDDD, EUDR, and broader EU Sustainability Initiatives The CSDDD is part of a broader EU regulatory framework aimed at promoting sustainability. Together, these frameworks create a holistic approach to sustainability, ensuring businesses prioritize ESG goals at all stages of procurement and production. They include: ### EU Deforestation Regulation (EUDR) Prevents deforestation-linked products (e.g., soy, timber) from entering the EU market, aligning procurement with climate action goals. ### Corporate Sustainability Reporting Directive (CSRD) Enhances transparency by mandating detailed ESG disclosures that complement the CSDDD’s actionable obligations. ### EU Taxonomy for Sustainable Activities Provides criteria for defining environmentally sustainable economic activities. ## 2026 regulatory trajectory for social procurement The below outlines the regulatory momentum and trajectory for social procurement in key global regions. Across regions, the direction of travel is similar—towards more explicit integration of social outcomes and human rights into procurement—but the pace, legal certainty and institutional maturity differ markedly. This uneven landscape reinforces the need for a stance of “informed observation”: buyers must monitor regulatory developments closely while using social procurement strategically to build resilience and inclusion. ## Frequently Asked Questions *Common questions and answers* ## Social Procurement and regulatory frameworks Social procurement leverages an organization’s purchasing power to create social value, driving outcomes such as fair labor, gender equality, environmental protection, and community development. The CSDDD enhances social procurement practices by: ### Mandating due diligence Businesses must evaluate and address supplier impacts on human rights and the environment. ### Promoting fair value chains Ensuring procurement practices prioritize ethical sourcing, workers’ rights, and equitable partnerships. ### Enabling social value chains Procurement aligns with broader social goals, supporting marginalized communities and fostering inclusive economies. ### Ensuring transparency Public disclosure requirements reinforce accountability, ensuring procurement reflects commitments to ESG principles. ### Turning regulation into opportunity Regulations are often perceived to be complex compliance hurdles. However, transformative legal frameworks like the CSDDD and EUDR demonstrate how regulation can drive innovation, inclusivity, and economic resilience. By aligning business strategy with sustainability goals, companies can: ### Improve stakeholder trust Improve stakeholder trust through ethical and transparent practices. ### Gain competitive advantage Gain a competitive advantage by meeting global ESG expectations. ### Contribute Contribute to a greener, more equitable global economy. In addition, regulation can serve as a practical roadmap for procurement transformation. The evolution of regulatory frameworks like the CSDDD and EUDR underscores the growing role of governments and international institutions in advancing social procurement as a cornerstone of sustainable business. By mandating corporate accountability, due diligence, and transparency, regulations create clear pathways for embedding ethical and sustainable practices into global value chains. ## Exposure and challenges EU sustainability regulation substantially increases exposure for companies operating in or connected to the EU market, making the costs of non-compliance more tangible and consequential. Large multinationals, firms with complex or high-impact value chains, and companies with significant EU market presence face the greatest scrutiny. These organizations are expected to demonstrate credible sustainability governance, maintain reliable data systems, and apply consistent risk-management practices across their operations. Regulators are likely to examine sustainability disclosures closely, with deficiencies potentially triggering administrative penalties, remediation requirements, or prolonged supervisory oversight. Beyond formal enforcement, non-compliance carries reputational and commercial consequences that influence investor confidence, access to capital, procurement opportunities, and broader stakeholder trust. The interaction of regulatory enforcement, potential liability at the Member State level, and market-driven expectations creates a layered risk environment. To comply, organizations must navigate evolving technical standards, country-specific implementation measures, and the challenge of aligning internal practices with an expanding set of global reporting and due diligence requirements. ## Initial Guidance and Emerging Practices for Compliance The following are preliminary recommendations and emerging practices for navigating key sustainability regulations highlighted by our research: ### Leverage innovative technology Advanced technology is increasingly essential to meet transparency and traceability requirements under CSDDD, EUDR, and related regulations. Blockchain, satellite monitoring, and centralized data platforms enable companies to track high-risk commodities and manage complex global value chains. Solutions from TraceXTech and TRST01 support supply-chain traceability, ESG reporting, and carbon credit management, while Factlines simplifies ESG reporting and due diligence. These tools can materially reduce compliance challenges, but high implementation costs remain, making green bonds and sustainability-linked finance important enablers for adoption. ### Integrate compliance into contracts Integrating sustainability requirements into supplier contracts clarifies expectations through contractual clauses and recognized certifications while documenting alignment strategies. To avoid excluding suppliers, companies may opt to reduce compliance burdens through training, capacity building, and financial or administrative support. Walmart’s supplier inclusion program combines supplier training with access to financing for small and diverse businesses. Starbucks uses Fair Trade and Rainforest Alliance to standardize expectations across its supply chain. Patagonia strengthens accountability through public supplier disclosure. Unilever incentivizes ethical practices by offering preferential contracts to compliant suppliers. ### Organize for compliance Effective ESG implementation relies on strong internal governance, skills, and systems. Training programs, awareness initiatives, and dedicated ESG leadership improve accountability and regulatory adherence, while multidisciplinary teams help integrate sustainability across functions. Structured frameworks such as the Global Reporting Initiative support consistent measurement and disclosure, complemented by regular sustainability reporting and accessible grievance mechanisms. Secure data systems are essential for audits and compliance. While internal capacity is critical, companies still require external support. Legal counsel can clarify overlapping regulatory obligations, while specialist consultants and auditors assist with human rights and environmental due diligence. ### The role of government Governments play a decisive role in enabling effective compliance with CSDDD and EUDR. Clear and consistent regulatory frameworks, supported by detailed guidance on timelines, obligations, and enforcement, are essential to reduce uncertainty for companies. Strengthening regulatory authorities' capacity improves oversight and enhances enforcement credibility. Structured dialogue among regulators, businesses, and civil society helps address shared challenges and encourages the development of workable solutions. Aligning national legislation with EU sustainability rules minimizes legal conflicts and streamlines compliance. Finally, digitalizing bureaucratic processes can significantly reduce administrative burdens and improve efficiency for companies seeking to meet regulatory expectations. ## Social procurement improves compliance As sustainability regulations raise expectations for due diligence, transparency, and supplier conduct, procurement is becoming a central compliance lever. Social procurement offers a structured way to translate regulatory requirements into day-to-day purchasing decisions while strengthening resilience and accountability across value chains. Social procurement provides the following benefits in light of increasing compliance pressures: ### Supplier base Integrates social and environmental criteria into supplier selection, directly supporting due diligence and disclosure obligations. ### Risk management Strengthens risk management by diversifying supplier bases and reducing dependency on high-risk or concentrated suppliers. ### Transparency Builds transparency and accountability through closer supplier engagement, traceability, and remediation pathways. ### Embedded impact Goes beyond raising standards for traditional suppliers by sourcing from social enterprises, where impact is embedded. ## Conclusion Regulation is shifting social procurement from voluntary intent to operational practice by embedding ESG, transparency, and due-diligence requirements into supplier selection, risk management, and contracting. A key dynamic is the growing impact of extraterritorial rules, particularly from the European Union, which are raising procurement standards even where domestic regulation remains limited. In 2025, regulatory uncertainty and geopolitical volatility have pushed governments and companies toward adaptive approaches, including pilots with social enterprises, stronger data and traceability systems, and internal capacity building. Despite uneven regional progress, the direction is clear: deeper integration of social outcomes and human rights into procurement, requiring informed observation today and readiness to scale when legal clarity increases. ## Explore more regulatory trends Read the full legal chapter below to access the full chapter, including an additional section on Initial Guidance and Emerging Practices for Compliance. [Read more](https://weforum.box.com/s/3paeq3kcwyzo7k6srfak8vdibg268c88) ### Our Partners This section, developed in collaboration with the Lex Mundi Pro Bono Foundation and the Global Alliance of Impact Lawyers (GAIL), analyzes how regulatory frameworks, particularly from the European Union (EU), are shaping global value chains. Questionnaires were sent to Lex Mundi member firms worldwide, receiving responses from law firms in 39 jurisdictions. This section provides a high-level summary of their contributions but does not fully reflect the scope of their input. A more comprehensive analysis will be available later this year for deeper exploration into specific jurisdictions and cross-border implications. *Partner organizations and sponsors* Last update was made on 13 January 2026.