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In the world of today, businesses are facing many challenges such as ramifications of the pandemic, the Ukraine war, and high inflation rates (IMF, 2023). While such crises are keeping the world on tenterhooks, prioritizing the climate crisis is of even greater importance. Emissions of carbon and other greenhouse gases are causing our planet to warm, resulting in melting icecaps, rising sea levels, and severe weather events. Choosing to overlook safeguarding our planet will affect everyone‘s ability to thrive here, and this, in turn, will significantly affect the business landscape.

In the Paris Climate Agreement, 196 countries pledged to limit global warming to an increase of at most 1.5°C by the end of this century, underscoring the importance of reducing carbon emissions. The scientific consensus is that not only governments, but also heavily emitting companies must now act to even come close to achieving this goal (UNFCCC). Furthermore, a shift in society is becoming evident, with consumers placing a growing importance on sustainable products. More and more are paying attention to how companies address sustainability, not only when buying their products but also when choosing their employer (Am, J.B. et al., 2023). 

In reaction to the Paris Climate Agreement and the changing societal attitude, legislators across many countries are raising the standards for businesses regarding their sustainability efforts. When we analyze a business impact on our planet, it becomes clear that solely focusing on the company’s operations is not enough to truly address the issue. The high demand for products comes largely from wealthy countries, where more stringent regulations are in place already. However, companies are sourcing substantial portions of their materials and products from countries with unregulated environmental rules. To give more weight to a company’s supply chain, regulators are enacting measures such as the German Supply Chain Due Diligence Act (CSR – Supply Chain Act) and the European Corporate Sustainability Due Diligence (Corporate sustainability due diligence) …