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Harnessing FSMA 204 compliance for sustainable initiatives

Authors

  • Cate Mork

    EY Americas Sustainable Supply Chain Leader

  • Rae-Anne Alves

    EY Americas ESG and Sustainability Supply Chain Leader

  • Marie Johnson

    Partner, Sustainability Governance, Risk and Compliance Consulting, Ernst & Young LLP

  • Lisa Hartkopf

    EY US-Central Advanced Manufacturing Consulting Markets Leader

04 minute read 20 Jun 2024
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By integrating FSMA 204 with ESG principles, businesses can provide a competitive edge and enhanced business results for each initiative.

Three questions to ask: 
  1. How can integrating FSMA 204 compliance with sustainable supply chain practices enhance efficiency, visibility and traceability within a business?
  2. What are the key strategic steps that businesses need to take to understand, integrate and enforce effective compliance? 
  3. How do technology and data management systems boost compliance efforts and promote sustainable supply chain operations?

In an era marked by growing consciousness around business practices, companies increasingly find themselves juggling legislative compliance and sustainable operations. Within this context, there is a growing consensus about the critical need for sustainable supply chain practices, not just from an ethical standpoint but also as a strategy for achieving efficiency, supply chain visibility, regulatory compliance and heightened traceability. Visibility, an inevitable result of comprehensive traceability, fulfills both the need for regulatory compliance and sustainable supply chain practices, thus acting as a crucial element for businesses. The synchrony between the Food Safety Modernization Act 204 (FSMA 204) and the principles of environmental, social and governance (ESG) provides a unique avenue for businesses to meet both imperatives in unison.

This article explores the confluence of FSMA 204 Food Traceability Rule compliance and ESG goals to enhance sustainable supply chain efforts, and it shines light on strategic steps that businesses can take to maneuver through this complex maze of compliance and business imperative.

How EY can help

The intersection of FSMA 204 Traceability Rule and sustainable supply chain

 

The landscape of supply chain management has shifted dramatically since the pandemic, with sustainability being perceived as a significant driver of innovation and performance. Many progressive businesses are working on developing sustainable supply chains, which in turn enhances supply chain visibility and traceability, and not just because it’s the “right thing to do.” They are uncovering real, tangible business benefits along the way.

 

Similarly, FSMA 204, introduced to eradicate lapses in food safety, revolves around preventative control, stringent inspection standards and an apt response mechanism. FSMA Section 204, which speaks to “traceability,“ is not purely about compliance with regulations — it has inherent sustainability benefits. FSMA 204 requires businesses dealing with high-risk foods to maintain detailed records for each impacted food item — where it originated, the processes it underwent, its journey through the supply chain and its eventual destination. This promotes increased supply chain visibility throughout the supply chain, enabling enhanced traceability needed to assure regulatory compliance and the achievement of sustainability goals.

 

This compliance-focused regulation promotes the gathering of the data needed to inform sustainability decisions. Practices like systemic product tracking, comprehensive supplier verification and proactive hazards control can reduce environmental impact and underscore ethical practices across the supply chain. By advocating stringent documentation and comprehensive transparency, the FSMA aligns itself with the core elements of sustainability — reduction of waste, judicious use of resources and an effective crisis response mechanism. All these aspects collectively work toward establishing more resilient, efficient and, therefore, sustainable supply chains.

Strategic steps for businesses:

1. Understanding the act: The first essential step toward leveraging FSMA 204 for sustainable supply chain initiatives begins with a thorough understanding of what the act entails – the requirements, the scope and the implications. Therefore, knowledge about supply chain processes, critical tracking events (CTEs), key data elements (KDEs) and the businesses that come under the purview of FSMA 204 becomes paramount. Familiarization with the act can enable a business to better identify its current gaps and devise an appropriate compliance strategy.

2. Enabling the right technology and data management: To manage the extensive record-keeping and ability to adhere to the time constraints required by FSMA 204, technology integration becomes essential. This includes the adoption of master data management (MDM) to help ensure a single, unified view of all critical business data. By helping to ensure data consistency and accuracy, MDM can boost operational efficiency and aid compliance efforts. Moreover, technology and effective data governance stimulates more seamless, efficient and budget-friendly sustainable supply chain operations by reducing duplication, promoting data transparency and improving traceability. Technologies such as GS1 Digital Link, Internet of Things (IoT) and blockchain are revolutionizing supply chain traceability, providing real-time visibility and sustainability by reducing wastage and increasing efficiency.

3. Establishing robust auditing, reporting mechanisms and governance: An integral aspect of FSMA 204 compliance and furthering sustainability efforts is the establishment of sound auditing and reporting mechanisms, alongside strong governance to oversee these processes. These mechanisms help assure stakeholders and regulatory authorities that the company is adhering to all necessary regulations. Moreover, they help identify the areas requiring improvement, thus enabling better resource utilization and sustainability. FSMA 204 dictates that records must be reviewed, updated and audited regularly to help ensure compliance and maintain the supply chain’s integrity. Therefore, generating comprehensive reports that adequately cover all the CTEs and KDEs under a strong governance structure is essential for demonstrating compliance and sustainability initiatives. Effective governance practices can further ensure responsible, more informed decision-making when it comes to resource allocation and environmental stewardship.

Mihir Patel, Maddie Makowski, Dr. Mei-Ling Shotts and TJ Cummiskey also contributed to this article.

Summary 

Compliance with FSMA 204 is a legal necessity, but astute companies can exploit it for more than just satisfying regulatory requirements. By integrating FSMA 204 compliance with sustainable supply chain efforts, robust data management systems and effective governance procedures, businesses can foster greater efficiency, resilience and sustainability. Companies that understand the requirements of FSMA 204 and leverage suitable technologies, establish strong data governance and set up robust auditing and reporting mechanisms under efficient governance are better positioned to turn regulatory compliance into strategic advantages that offer sustainability benefits and enhance overall business performance.

About this article

Authors

  • Cate Mork
    EY Americas Sustainable Supply Chain Leader
  • Rae-Anne Alves
    EY Americas ESG and Sustainability Supply Chain Leader
  • Marie Johnson
    Partner, Sustainability Governance, Risk and Compliance Consulting, Ernst & Young LLP
  • Lisa Hartkopf
    EY US-Central Advanced Manufacturing Consulting Markets Leader
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