Purpose: To provide a framework for evaluating and selecting suppliers and partners in the trade of agarwood and other high-value plant products, ensuring legal compliance, sustainability, and market credibility.
A. Definition
- Due Diligence: The process of assessing the legal, operational, financial, and reputational standing of potential suppliers or partners.
- Ensures that all transactions comply with CITES, national laws, and company policies.
- Supplier Vetting: Systematic evaluation of suppliers’ practices, certifications, traceability systems, and compliance history.
B. Key Components
- Legal Compliance Checks:
- Verify CITES permits, source codes, and NDF compliance
- Confirm adherence to national regulations and administrative orders
- Traceability and CoC Verification:
- Review farm-to-market records, batch IDs, and QR code tracking
- Ensure supplier maintains accurate chain-of-custody documentation
- Sustainability and ESG Assessment:
- Evaluate environmental, social, and governance practices
- Confirm plantation certification and ethical sourcing
- Financial and Operational Review:
- Assess supplier reliability, production capacity, and delivery performance
- Check for past incidents of non-compliance or legal issues
- Ongoing Monitoring:
- Regular audits, spot checks, and updates to compliance documentation
- Continuous verification of performance and adherence to agreements
C. Benefits
- Reduces risk of illegal trade, penalties, and reputational damage
- Enhances supply chain transparency and investor confidence
- Supports sustainable sourcing and ESG compliance
- Improves overall operational reliability and quality control
D. Practical Recommendations
- Establish a supplier onboarding checklist including legal, traceability, and sustainability criteria
- Conduct site visits and document verification before finalizing agreements
- Maintain digital records of due diligence findings and approvals
- Implement periodic reassessments to ensure ongoing compliance
Learning Outputs
- Understanding of due diligence and supplier vetting processes
- Ability to evaluate suppliers for legal, operational, and ESG compliance
- Knowledge of tools and practices for monitoring and verifying supplier performance
- Skills to mitigate risk and ensure a transparent, sustainable supply chain