Understanding corporate sustainability regulations in the EU
The European Commission has created a broad array of laws under the Green Deal, the Green Deal Industrial Plan, and the Circular Action Plan. Five key areas for companies include corporate due diligence, financial reporting, social sustainability, waste management or circularity, and anti-greenwashing. Each category of regulations places specific requirements on companies operating, trading, or selling on the EU market. Non-compliance can, amongst others, lead to heavy fines and the seizure of goods or profits.
Palsa & Pulk can support you with the compliance of each of these categories of laws.
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Corporate due diligence regulations set out requirements for companies to carry out due diligence and risk assessments throughout their supply chains on their environmental sustainability, climate impacts, biodiversity loss, human rights impacts, labour rights issues, and effects on Indigenous Peoples. Examples of this category of regulations include the Corporate Sustainability Due Diligence Directive (CSDDD) and the Regulation on Deforestation-free Products (EUDR).
Financial reporting regulations have to do with companies' obligations to report annually on their due diligence, risk assessments or risk mitigation measures, and generally on their ESG progress. Some of these regulations also set out standards for how this reporting needs to be done. Examples of this type of regulation include the Corporate Sustainability Reporting Directive (CSRD), Carbon Border Adjustment Mechanism (CBAM), EU Taxonomy, and Sustainable Finance Disclosure Regulation (SFRD).
Social sustainability regulations are the laws that have to do with human rights, modern slavery, forced labour, child labour, Indigenous Peoples' rights, labour standards, and conflict minerals that must be upheld by companies (particularly those importing products or materials to, or exporting these from, the EU market). Examples of this type of regulation include the EU's Forced Labour Regulation and the EU's Conflict Mineral Regulation.
Waste and circularity regulations govern how companies have to deal with their waste and to what degree they have to incorporate principles of the circular economy onto their business models. This is a very big category of regulations, with examples including the Packaging and Packaging Waste Regulation (PPWR), the WEEE Directive, the Waste Framework Directive, and the Landfill Directive.
The Green Claims Directive governs how companies may communicate about their sustainability efforts on the market and to consumers. It also sets out rules on what green certifications and labels are acceptable in the EU.
Explore the EU's environmental and social regulations.
Our interactive overview will give you an insight into several key regulations in the EU. It was created by Wiktoria Gonet from the Master's program in sustainable development at Utrecht University, with the support of Christine Nikander from Palsa & Pulk B.V.
Do you need help complying with EU sustainability directives or regulations? Then, reach out to us for an introductory call here!