Sustainability Regulations Highlight How Proper Due Diligence is the Backbone of EU Compliance

Supply chains are rapidly evolving, with data, sustainability, and compliance challenges changing how we interact with every stakeholder involved. And sustainability-related legislation is no longer a future concern; it is actively here and developing – reshaping how goods are sourced, sold, and declared today.

The CBAM and EUDR pushed supplier data into the spotlight, but these are not isolated measures. A growing number of regulations are emerging with the same expectation: you must be able to demonstrate robust due diligence across your supply chain using accurate, accessible, and verifiable data.

Authorities are increasingly moving towards evidence-based enforcement of supplier information, creating a real operational challenge for those who are not yet digitally secure.

In this article, we unpack some of the upcoming regulations and how a solid compliance foundation helps you to navigate them more easily.

Contents:

• Different sustainability regulations, same compliance foundation
• Due diligence is now a business-wide responsibility
• Common pitfalls and their consequences
• Building a robust supply chain
• How Customs Support Group helps you adapt and thrive

Different Sustainability Regulations, Same Compliance Foundation

Supply chain sustainability is in focus for a widening group of products, industries, and locations, which appear to be independent of one another. However, in practice, they work with the same compliance function:

• CBAM compliance requires reporting on embedded emissions, with verified data.
• EUDR compliance needs proof that products and their raw materials are deforestation-free.
• The Packaging and Waste Regulation (PPWR) introduces material-level traceability, looking at both the sustainability performance at origin and the recyclability of a product – with minimum thresholds.
• The EU Battery Regulation is similar to CBAM, in that importers must calculate and declare the carbon footprint of the battery’s lifecycle.
• The Critical Raw Minerals Act targets supply chain dependency, where you must know the source of the raw minerals used inside your products and/or components. i.e. the gallium in your solar panels or the tungsten in your superalloys.
• The Ecodesign for Sustainable Products Regulation (ESPR) expands the scope of sustainability beyond high-impact industries and products, aiming for products to meet targets on durability, reliability, repairability, energy efficiency, recyclability, and more.

Whilst the objectives and particulars vary, the compliance expectation is consistent. You must know your products, understand their true origin, and be able to quickly provide accurate data for the whole lifecycle.

Due Diligence is Now a Business-Wide Responsibility

Along with these shifts in sustainability monitoring, the authorities are no longer being timid about investigating and challenging data held on suppliers – with heavy consequences for those who get it wrong, as a company processing aluminium foil in Vietnam recently discovered.

And, all of this must be considered when choosing a new supplier, which can sometimes be a last-minute endeavour when a deal or freight arrangement falls through.

What this means for importers is that you cannot rely on compliance and legal teams to review the fine print. Procurement and purchasing clerks must know what to look for, and must be able to ask suppliers for it instead of relying on them to supply the information.

Likewise, exporters must be able to quickly provide all of the information that their prospects and clients need so that sales can be streamlined. This must not only be at face value, but also verifiable data. For example, proof that the origin statement on your export paperwork holds up to scrutiny.

Both flows rely on robust data systems, where the request and storage of key information is built into standard operating procedures so that it is present, accurate, and verifiable. This is why CPOs and CFOs should prioritise classification, and why goods classification is one of the most important datasets in international trade.

Common Pitfalls and Their Consequences

When you are navigating compliance in sustainability and due diligence, you will encounter similar pitfalls to those in customs tariff classification:

• Relying only on the supplier’s information
• Not having all the information
• Not looking past the description
• Overlooking exceptions
• Not giving it enough attention

Without a healthy procurement and compliance structure, you can be exposed to:

• Supply chain disruption and the associated charges. i.e. storage and detention.
• Customs penalties and fines
• Underpaid duties
• Legal consequences
• Reputational damage

Building a Robust Supply Chain

Like the underlying compliance themes in sustainability regulations, it is your systems, procedures, and data infrastructure that will allow you to adapt and grow with each new challenge.

To streamline and safeguard your business, you should:

• Build your classification database
• Create due diligence SOPs for procurement and purchasing operators
• Streamline the collection, maintenance, and accessibility of key data
• Be prepared to defend and justify your operation to authorities
• Get outside expertise if required

How Customs Support Group Helps You Adapt and Thrive

Working with businesses of all kinds throughout Europe and beyond, CSG helps you minimise the effects of red tape so that you can conduct business efficiently. You can rely on us for:

• Practical Advice: Find and remedy your exposure so that you can minimise risk.
• Comprehensive Support: A full suite of customs services throughout Europe.
• Digital Expertise: Cost-efficient compliance with industry-leading CustomsTech.
• Permit Applications: Get financial and operational benefits with special procedures.
• Risk Management: Operate with peace of mind by reducing your exposure.

Together, we can both safeguard your business against compliance regulations and prepare you so that you can adapt to future legislation with ease.

Take the first step with a customs health check, where we examine your classification, licences, processes, and more. Contact us to get started.