The European Sustainability Revolution: 7 Key Regulations Every Major Corporation Needs to Know

In recent years, the European Union has introduced a series of transformative regulations aimed at enhancing corporate accountability and sustainability. These regulations are reshaping how businesses report and manage their environmental and social impacts. Here’s a comprehensive overview of seven crucial European regulations that every major corporation needs to understand.

1. Corporate Sustainability Reporting Directive (CSRD)

The Corporate Sustainability Reporting Directive (CSRD) represents a major overhaul of corporate reporting requirements. Officially adopted in December 2022, this regulation mandates that large EU companies and listed SMEs disclose detailed information about their sustainability practices. The directive aims to align sustainability reporting with financial reporting standards, responding to the growing demand from investors for reliable, comparable data on environmental and social impacts.

Key Points:

• Scope: Affects approximately 50.000 companies in the EU, including large public interest entities and listed SMEs.
• Reporting Requirements: Companies must report on their environmental and social impacts, including goals related to greenhouse gas emissions and climate change mitigation.
• Implementation Timeline: The first reports under CSRD will be required in 2025 for the 2024 financial year, with further phases extending to smaller companies over subsequent years.

2. Ecodesign Regulation

The Ecodesign Regulation, which has seen significant updates, focuses on the environmental performance of products throughout their lifecycle. Adopted by the Council and European Parliament in May 2024, this regulation mandates that products meet specific sustainability criteria, from energy efficiency to materials used, aiming to reduce waste and encourage recycling. It introduces the Digital Product Passport (DPP), an information system to electronically record, process and share information related to the sustainability of products. It finally entered into force on 18 July 2024.

Key Points:

• Objectives: Prevention, reuse, and reduction of waste; promotion of a circular economy.
• Implementation: Manufacturers must design products with longer lifespans and higher recyclability, adhering to updated standards.

3. Corporate Sustainability Due Diligence Directive (CSDDD)

The CSDDD, agreed upon in March 2024 and formally adopted by the European Council in May 2024, requires large companies to implement measures to prevent, detect, and mitigate adverse impacts on human rights and the environment within their operations and supply chains. This directive introduces comprehensive due diligence obligations for managing risks across business activities.

Key Points:

• Scope: Applies to companies with over 1.000 employees and €450 million in turnover.
• Requirements: Companies must establish processes for monitoring and addressing potential negative impacts from their own operations and their value chains.
• Phased Implementation: Compliance timelines vary based on company size, with requirements to be met progressively over three to five years.

4. Green Claims Directive

The Green Claims Directive addresses the issue of greenwashing by setting standards for environmental claims made by companies. This regulation, which has not yet been approved, aims to prevent misleading, vague, or unsubstantiated claims about the environmental benefits of products and services.

Key Points:

• Objectives: Protect consumers from deceptive eco-labels and claims.
• Requirements: Companies must ensure that any environmental claims are substantiated with credible evidence and align with established standards.

5. Critical Raw Materials Regulation

The Critical Raw Materials Regulation, which entered into force on 23 May 2024, focuses on securing the supply of essential raw materials that are crucial for the EU's economy and green transition. It outlines measures to reduce dependency on non-EU sources and improve the sustainability of raw material supply chains.

Key Points:

• Objectives: Ensure a stable supply of critical raw materials and enhance recycling and sustainability practices.

6. Packaging and Packaging Waste Regulation

The new Packaging and Packaging Waste Regulation, approved by the European Parliament in April 2024, aims to improve the environmental performance of packaging through prevention, reuse, and increased recycling rates. It also introduces harmonised labelling and increased recycled content requirements. 

Key Points:

• Objectives: Reduce packaging waste, promote recycling, and harmonise packaging regulations across the EU.
• Implementation: Companies will need to comply with Extended Producer Responsibility requirements and updated labelling standards. 

7. Waste Shipments Regulation

The Waste Shipments Regulation entered into force in May 2024 and governs the movement of waste within and outside the EU. It aims to ensure that waste is managed in an environmentally sound manner and to prevent illegal waste shipments.

Key Points:

• Objectives: Enhance control over waste exports and imports, ensuring environmentally safe disposal.

These regulations collectively represent a significant shift towards greater corporate responsibility and sustainability. Major corporations operating in Europe must not only comply with these directives but also adapt their practices to meet the rigorous standards set forth by the EU. As the landscape of corporate sustainability continues to evolve, staying informed and proactive will be crucial for navigating these transformative changes.

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Ready to Ride the Wave of this Regulatory Tsunami?

Feeling a bit lost with all this information? TEIMAS is hosting a free workshop series titled "Surfing the Tsunami of Sustainability Compliance" to inform professionals from major companies about the upcoming changes in sustainability regulations and how to navigate them effectively.

Register now here for this series of workshops to keep your organisation at the forefront of a changing corporate responsibility landscape.