Building your cross functional PMO

A key question on many leaders’ minds when it comes to CSDDD is: which stakeholders across my organization need to be involved in order to achieve compliance? To effectively comply with the complex CSDDD requirements, establishing a cross-functional team is essential. This team will oversee the implementation of due diligence processes, ensuring that all aspects of the directive are addressed comprehensively. Many organizations will elect to create a Program Management Office (PMO) made up of cross-departmental skillsets including legal, sustainability, supply chain, procurement, finance and governance professionals. However, the first step to creating a cross-departmental team is to understand what CSDDD requires. 

Step one: Understanding the CSDDD

CSDDD requires companies to identify, prevent, mitigate, and account for adverse human rights and environmental impacts in their own operations, their subsidiaries, and their value chains. This involves conducting due diligence to assess potential risks and implementing strategies to address them. For more information on understanding CSDDD, see last month’s blog, and these resources:

• CSDDD Full Guide
• commission.europa.eu

The Importance of a Cross-Functional Team

Compliance with CSDDD spans various domains within an organization, including legal, compliance, procurement, sustainability, human resources, and operations. A cross-functional team brings together diverse expertise, ensuring a holistic approach to due diligence, not only is this best practice, but absolutely vital considering how far reaching CSDDD impact can have into an organization, it’s processes, structures and practices. This collaborative structure facilitates comprehensive risk assessments and the development of effective mitigation strategies.

Here’s a high-level overview of how to establish one effectively: 

Step 1: Secure Executive Buy-in & Define Objectives

• Obtain C-suite sponsorship to ensure funding, alignment with corporate strategy, and high-level decision-making support. Nine out of 10 CFOs are reporting that they will be heading up CSDDD reporting in their organizations, so approaching your CFO may be the best place to start.
• Define CSDDD compliance objectives, including human rights due diligence, environmental risk management, and supply chain governance.
• Establish KPIs to measure compliance progress, such as risk mitigation effectiveness and supplier transparency.

Step 2: Assemble a Cross-Functional Team

A PMO should bring together experts from multiple departments:

• Legal & Compliance: Ensures adherence to EU regulations and contractual updates with suppliers.
• Procurement & Supply Chain: Manages supplier due diligence and sustainability criteria in sourcing. Procurement teams will also ensure collaboration and open communication with suppliers.
• Sustainability & ESG: Provides expertise on environmental and social risks, including climate impact and human rights.
• Finance: Manages budget allocations and reporting related to CSDDD compliance efforts. Finance (Office of the CFO) are highly likely to be key stakeholders in CSDDD reporting.
• Operations & IT: Implements compliance tracking systems and data management tools.
• HR & Training: Ensures employee awareness and training on CSDDD principles.

Define clear roles and responsibilities for each function to ensure accountability.

Key Considerations for the Team

• Risk Assessment: Conduct thorough evaluations of potential human rights and environmental risks within the organization’s operations and value chain.
• Policy Development: Create or update company policies to align with CSDDD requirements, ensuring they reflect the organization’s commitment to sustainable and responsible practices.
• Stakeholder Engagement: Engage with stakeholders, including suppliers, customers, and communities, to communicate expectations and collaborate on mitigating adverse impacts.
• Monitoring and Reporting: Implement systems to track compliance efforts and report on progress, both internally and externally.

Key Takeaways: Establish a Cross-Functional Team

1. Executive Sponsorship: Secure commitment from top management to underscore the importance of compliance and allocate necessary resources.
2. Identify Key Functions: Determine which departments are integral to due diligence efforts, such as legal, compliance, procurement, sustainability, human resources, and operations.
3. Select Team Members: Choose representatives from each key function who possess relevant expertise and decision-making authority.
4. Define Roles and Responsibilities: Clearly outline each member’s duties to ensure accountability and prevent overlap.
5. Develop a Communication Plan: Establish protocols for regular meetings, updates, and reporting to maintain alignment and transparency.
6. Provide Training: Equip team members with knowledge about CSDDD requirements and best practices in due diligence.
7. Set Objectives and Milestones: Define clear goals and timelines to monitor progress and maintain momentum.

Conclusion

Establishing a cross-functional team is a critical step in aligning your organization with CSDDD. By leveraging diverse expertise and fostering collaboration, your company can effectively manage its due diligence obligations, mitigate risks, and contribute to sustainable and responsible business practices.

Should you need support in creating your CSDDD PMO, please contact us here and one of our CSDDD consultants will be in touch.