Overview
The European Union is intensifying its commitment to enforcing responsible business practices and enhancing sustainability within supply chains through a series of new regulations. Key among these are the Corporate Sustainability Due Diligence Directive (CS3D) and the upcoming European Deforestation Regulation (EUDR). Together, these regulations establish a robust framework aimed at improving transparency, protecting human rights, and upholding environmental standards in EU business operations.
Corporate Sustainability Due Diligence Directive (CS3D)
Published on the 5th of July 2024, the CS3D represents the end of a rigorous legislative journey. This directive gives businesses the clarity needed to determine if they fall within its scope and, if so, to identify the necessary steps for compliance. The CS3D requires companies to actively manage and report on the human rights and environmental impacts of their activities and supply chains, thus raising the bar for corporate responsibility.
European Deforestation Regulation (EUDR)
Slated to take effect at the end of 2024, the EUDR specifically addresses deforestation. It mandates that products entering the EU market must be "deforestation-free," meaning no net loss of trees should occur during their production. This involves planting at least one new tree for every tree cut down. The EUDR stipulates:
Relevant goods must come from areas where no deforestation has occurred since 31st of December 2020.
Wood products must be sourced from forests that have not been degraded after 31st of December 2020.
Affected Goods
The EUDR currently applies to the following commodities:
Palm oil
Cattle
Soy
Coffee
Cocoa
Beef
Rubber
Wood
Derived products (such as beef, furniture, or chocolate)
The European Commission plans to review and potentially expand this list over the next two years.
Additional Measures
In addition to the CS3D and EUDR, the EU has introduced other regulations affecting supply chains:
Batteries Regulation: This new regulation replaces the 2006 Directive and includes due diligence and traceability requirements for batteries sold in the EU market.
Forced Labour Products Regulation (FLP Regulation): Aimed at eliminating forced labour from supply chains, the FLP Regulation is in the final stages of legislative approval.
Source: Princvision, Travers Smith, The European Commission
Impact on Businesses
These regulations collectively require companies operating in the EU to enhance transparency and actively manage the human rights and environmental aspects of their business operations and supply chains. This wave of legislation significantly raises the standards for corporate accountability and sustainability.
Is your UK-based business dealing with the impact of the new EU rules? Need support in understanding how this new wave of legislation will affect your business?
Businesses must stay updated on these regulations and their implications. As the world moves towards sustainability, businesses need to adapt to changing rules, like the new EU regulation. Simply email us at international@gmchamber.co.uk or arrange a complimentary session with one of our Trade & Customs Advisers here.
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