EU Supply Chain Sustainability Regulations Are Reshaping Business—Here's What You Need To Know

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Headlines:

- Major economies implementing carbon pricing mechanisms: Carbon pricing, such as carbon taxes and cap-and-trade programs, is being implemented in various countries to incentivize businesses to reduce greenhouse gas emissions. - EU's Supply Chain Sustainability Regulations: The European Union's proposed Supply Chain Sustainability Regulations aim to address the environmental impact of companies' supply chains, covering emissions, deforestation, and human rights. - Pressure on manufacturers to adopt sustainable practices: With the increasing adoption of sustainability regulations, "manufacturers are facing pressure to reduce their environmental footprint.".. leading to investments in greener technologies and practices. - Shifting consumer preferences: Consumers are increasingly demanding sustainable products and companies that prioritize environmental responsibility. This trend is driving the demand for companies to adopt sustainable supply chain practices. - Investment opportunities in sustainable supply chains: The growing focus on sustainability is creating new investment opportunities in technologies and practices that improve supply chain sustainability. - Collaboration across the supply chain: To effectively address sustainability challenges... collaboration and coordination between companies across the supply chain are essential. - Developing countries facing challenges: Developing countries may face challenges in complying with sustainability regulations

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Sustainability isn't just a buzzword — it's now a business necessity. With Europe's new Corporate Sustainability Reporting Directive (CSRD) and Corporate Sustainability Due Diligence (CSDD) regulations in effect, businesses must do more than just measure their carbon emissions; they must prove they're actively reducing them.

These regulations impact around 50,000 businesses across the EU, but here's the catch: any business with operations in Europe must comply—no matter where they're based. As supply chain expert Oliver Hurrey, Founder ⁘ Chair of the Scope 3 Peer Group, puts it, "A lot of people assume these regulations only apply to European companies, but any business with operations in Europe will have to comply."

The challenge? There's a massive gap between the ambition to meet sustainability goals and the ability to execute them.

"I worked as a consultant and data analyst at Sustain Consulting, we helped large corporations and global players address sustainability challenges—primarily focusing on carbon emissions. Through this work, I noticed a significant gap between ambition and action," says Johannes Scholz, co-founder of ctrl+s , a company focused on smarter sustainability and data solutions, "Many companies set ambitious sustainability targets, and there's strong momentum with increasing regulatory requirements. Both regulatory pressure and corporate sustainability goals are driving the market forward. However, when it comes to supply chains, companies often lack the means to bridge the gap between their sustainability ambitions and actual implementation."

The CSRD requires companies to disclose detailed information on their environmental and social impacts, using standardized European Sustainability Reporting Standards (ESRS).

"We saw an opportunity to make a real impact on a larger scale—beyond what was possible through consultancy alone, we knew there was a broader need and the right timing to create something truly impactful," explains Scholz.