Dieter Overath on ESG and Ethical Supply Chains

As expectations from stakeholders, including consumers, investors, regulators, and employees grow, businesses are being pushed to adopt more sustainable and responsible practices. This shift is driven by increasing concerns about climate change, social inequality, and the need for greater accountability in how companies operate. ESG compliance is no longer optional; it has become a necessary requirement for businesses to stay competitive and meet regulatory demands.

New regulations driving responsible business

Recent regulations, particularly within the European Union, such as the LkSG (German Supply Chain Act), CSDDD (EU Supply Chain Law, and EUDR (EU Deforestation Regulation), are compelling businesses to act more responsibly. These laws mandate companies to ensure that their supply chains are free from exploitative labor practices and environmental harm, particularly in regions like the Global South, which often bear the heaviest burdens.

In a conversation with osapiens, Dieter Overath, former CEO of Fairtrade Germany, shared his views on the necessity of these regulations and how companies like osapiens can contribute to ethical supply chains. Overath has dedicated decades to advocating for fair trade, human rights, and sustainable practices in the Global South. Now as Senior Advisor for UNIDO (UN Industrial Development Organisation) and an osapiens ambassador, Overath continues to play a crucial role in driving change.

Understanding the Global South and the “First Mile”

The Global South refers to economically developing regions rich in natural resources but facing significant challenges in terms of poverty, inequality, and labor exploitation. These regions, which include parts of Africa, Latin America, and Asia, are where the production of many consumable goods begins, or as Overath calls it, the first mile of the supply chain.

In our conversation, Overath clarified:

“The Global South typically refers to regions that are less economically developed yet rich in resources that the rest of the world depends on. These are the places where the journey of our consumables begins—what I refer to as the first mile of the supply chain.”

The “first mile” of the supply chain is where raw materials are sourced—be it coffee, cotton, or minerals. Often, these areas experience the worst conditions, including unsafe labor environments, low wages, and the environmental impacts of deforestation and land degradation. Improving these conditions is at the heart of global ESG efforts.

Why ESG regulations like LkSG, CSDDD, and EUDR matter

The rise in ESG-related regulations is a response to the increasing demand for transparency and accountability in global supply chains, particularly in the Global South. Overath noted that while voluntary commitments from corporations are valuable, they often fall short of delivering meaningful improvements. Binding regulations are therefore critical for enforcing ethical business practices.

One such regulation is Germany’s LkSG (Lieferkettensorgfaltspflichtengesetz), or German Supply Chain Act, which mandates that companies monitor and ensure human rights and environmental standards are met throughout their entire supply chain. Overath explained:

“This vision aligns with Germany’s Supply Chain Act, aiming to elevate living and working conditions in the Global South.”

In addition to the LkSG, two other key regulations are shaping the future of supply chains:

CSDDD (Corporate Sustainability Due Diligence Directive): A directive from the European Union that requires companies to conduct due diligence on their supply chains to prevent human rights abuses and environmental harm, particularly in developing countries.
EUDR (EU Deforestation Regulation): This regulation targets products linked to deforestation, requiring companies to ensure that commodities like wood, palm oil, coffee, cocoa, rubber, soy, and cattle in their supply chains are deforestation-free. This law is critical for protecting the environments in the Global South, where deforestation has had devastating effects.

Overath emphasized:

“Despite good intentions, voluntary commitments haven’t sufficiently improved conditions in the Global South. Binding laws are necessary to ensure products aren’t made at the expense of people and the planet.”

These regulations compel companies to take responsibility for their supply chains, ensuring that human rights are protected, and environmental standards are met.

Fairtrade’s role in supply chain transformation

During his tenure as CEO of Fairtrade Germany, Dieter Overath was a pioneer in pushing for ethical sourcing practices, especially in the Global South. Under his leadership, Fairtrade ensured that producers can earn a living wage and work in safe conditions, and it advocated for sustainable farming practices.

He shared a memorable anecdote from his early days at Fairtrade, demonstrating the power of grassroots activism:

“One of our first big campaigns involved mobilizing communities to demand Fairtrade coffee in supermarkets. Groups like the Catholic Women’s Community of Germany (Katholische Frauengemeinschaft Deutschlands (kfd)) would organize supermarket walks, repeatedly requesting Fairtrade products. Their persistence paid off, demonstrating to retailers that there was a significant demand for ethically sourced goods.”

This story illustrates how consumer demand can influence corporate behavior, proving that real change can begin at the grassroots level. In the meantime, civil society’s commitment to fair trade has taken on new formats such as Fairtrade Towns, Fairtrade Schools and Fairtrade Universities.

Joining osapiens: continuing the mission

After his impactful career at Fairtrade, Overath’s passion for advocacy didn’t diminish. Recognizing the rising importance of ESG compliance and the role of technology in providing transparency, he joined osapiens as an ambassador. osapiens is a tech-driven company focused on helping businesses manage their ESG responsibilities, offering solutions to improve supply chain transparency and compliance with new regulations like LkSG, CSDDD, and EUDR.

“After retiring from Fairtrade, my passion for this cause didn’t wane. I wanted to continue influencing corporate and societal behaviors, especially in light of new regulations like the German Supply Chain Act. osapiens’ mission resonated with me, and I saw an opportunity to contribute further to this evolving dialogue”, Overath explained.

Introducing the osapiens HUB: the ESG platform to make an impact

osapiens develops innovative Software-as-a-Service solutions that help companies across industries to implement ESG requirements quickly, automatically, and securely. At its core is the osapiens HUB, an AI-based cloud platform that creates compliance and transparency along the value chain. This platform allows businesses to meet their ESG challenges, and streamlines compliance with regulations like LkSG, CSDDD, and EUDR, offering full transparency from the first mile to the final product.

Overath highlighted:

“Transparency isn’t the end goal; it’s the beginning of a deeper evaluation of how and where to invest to truly make a difference.”

The osapiens HUB is designed to help companies not only meet regulatory requirements but also foster long-term improvements in ethical sourcing, environmental protection, and efficient operational practices. This tool supports businesses facing the challenges of today’s global market, where ESG compliance is mandatory.

Charting a path toward a more equitable and sustainable global supply chain

The Global North and Global South are deeply interconnected through global supply chains, yet the disparities between them remain vast. Through regulations like the LkSG, CSDDD, and EUDR, and the support of innovative tools, there is hope for a more equitable global trade system.

Dieter Overath’s legacy, from his leadership at Fairtrade to his current role at osapiens, underscores the importance of transparency, binding legislation, and technological innovation in transforming supply chains. Innovational tools are essential in helping businesses meet these regulatory challenges while creating tangible improvements in the lives of workers in the Global South.

As Overath succinctly puts it:

”The journey towards a sustainable future begins with transparency and ends with tangible improvements in the lives of those at the start of the supply chain – Ideally with the participation of stakeholders in the Global South.”

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