CPG Director

With global trade tensions escalating, supplier diversification has been embraced as the leading antidote to mitigate short-term risks. Thus, rapid pushes for multi-sourcing, local-for-local, component substitution, stockpiling, and scenario planning have engulfed corporate boards. CPG companies are accelerating years of work in nearshoring and onshoring suppliers and production. While the financial benefits of supplier diversification seem straightforward, the risks posed to an enterprise without a robust know your supplier program will expose new threats to reputation, operations, customer interfacing, and more. How should corporate directors re-imagine due diligence during Trump 2.0 and global trade upheaval?

With national security central to Trump’s policy agenda, sanction compliance directly ties into CPG (Consumer Packaged Goods) boards of directors’ duties of care and loyalty. As stewards of the company, directors must ensure responsible and ethical operations, which include strict adherence to sanctions. Failing to comply can expose the company to significant legal and reputational risks, which will ultimately harm shareholders’ interests. Therefore, it is imperative that boards fully understand the sanction compliance requirements relevant to their company.

While CPG companies have set decarbonization goals and have made progress towards carbon-neutral products, there is still work to be done as decarbonization is integrated more comprehensively from production through product marketing. Regulators and customers are both pushing for greater transparency for both emissions disclosures, as well as other Environmental, Social, and Governance-related (ESG) metrics (recyclability, biodiversity, fair trade, human rights, etc.) This pressure has started in Europe and continues to grow in North America, Australia, Singapore, and beyond. Board members should understand key drivers around this trend and determine how their organizations should manage reputational risk and operational viability with carbon labeling.

Does the China+1 strategy now apply to U.S. allies of Mexico and Canada? With Trump’s latest announcement about immediate tariffs levied on imports from both Mexico and Canada on day one in Trump’s second administration, Consumer Packaged Goods (CPG) companies are rushing to evaluate their exposure to tariffs, increased costs for inputs, and potential implications to consumer demand.