This article speaks to the impact of the new EU rules on sustainability and carbon disclosures for Asian suppliers, but the message is the same, no matter where the supplier is located, and consistent with what we have been reporting.
The Corporate Sustainability Reporting Directive (CSRD), due to be rolled out in 10 months, will require companies to disclose how sustainability issues, such as climate change, impact their business and how their operations in turn affect people and the planet.
Some 50,000 companies – all large companies and listed small and medium-sized firms – will have to make such disclosures, up from 11,700 large companies and public entities with more than 500 employees mandated under existing legislation. Auditing of the disclosures will be mandatory.
These companies will in turn require their global suppliers to disclose their sustainability data, such as greenhouse-gas emissions, so that they can calculate their own environmental footprints and social risk exposure.
- There is no escape’ from impending European Union rules requiring sustainability reporting
- Countries including Germany, the UK, Australia and Norway already have rules in place focusing on specific environmental and social aspects, and coming EU regulations will bring these all together
- Ultimately, if some suppliers fail to show that they are fulfilling those expectations, at some point, companies sourcing from them will tell them that they are a risk to their reputation and therefore not eligible for the business relationships
If you are a supplier to a larger company, regardless of where that larger company is located, the benefits of becoming certified sustainable, then certified carbon neutral, then building an ESG program, are clear.
Further, for suppliers that get ahead of this, there is opportunity to take market share from those that delay. This PPP will help define what to look for in a program.