Bureau
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You now know that you can learn customer loyalty and grow revenue through targeted sustainability action. Starting with just two data points, you can begin to incrementally gain insight into your current footprint and your future ambitions. We’ve also explained how Sustainable ShelfMaster can make organizing your data maze a whole lot easier. And once you do, you can be ready for some significant legislation that’s set to change the way you do business.
It’s likely you’ve recently been confronted with an alphabet soup’s worth of new directives and laws that are coming down the pipeline. But what do CSRD, ISSB, DPP, CSDDD and PEF actually mean for your business? What do you need to know, and how urgent is the need to comply with these new regulations? In particular, since some of them are still being finalized, and others are subject to proposed revisions under the EU's newly proposed Omnibus Package. We spoke to the compliance experts at Vaayu, one of our Sustainable ShelfMaster tech partners, to get a glimpse inside these new regulations, and what they mean for you.
Perhaps the best place to start is with the Corporate Sustainability Due Dilligence Directive (CSDDD). This EU directive – and all the national equivalents in individual countries – are requirements that are already adopted and coming into effect. They require you to take a good look at your supply chain and do some risk-based due diligence. You’ll uncover actual or potential negative impacts, so you can start developing strategies to prevent or mitigate them moving forward.
Other, more specific, due diligence requirements – like the EU Deforestation Regulation (EUDR) – will also require you to have full command of your sustainability data. You’ll need to keep meticulous records and demonstrate the traceability of your supply chain. EUDR is particularly impactful, as non-compliance can mean your products are no longer welcome in the EU market. Luckily, Sustainable ShelfMaster helps you get all your data collected and organized, so you’ll not only be prepared to take on the upcoming demands of the EUDR and CSDDD, but you’ll have taken a significant step towards the information you’ll need for public disclosure of your activities.
If you’re in the business of consumer goods, then you’ve likely heard all about Digital Product Passports (DPP). As early as 2027, apparel and footwear may be among the first categories required to carry a special type of QR code that directs to a permanent digital report of the product’s provenance, supply chain data, footprint, and other data.
Much more than a ‘green’ label, DPPs are a permanent source of truth that consumers can call up throughout the product’s entire lifetime – even through recommerce or resale. And while the specific requirements for DPPs vary by sector and product, one thing is fixed and certain: DPPs are coming, and there will be a moment when you won’t be able to sell your products in the EU without one.
Many companies are looking at the DPP mandate as an opportunity instead of a requirement. Remember those climate-conscious customers who are eager to learn more about your supply chain? There may be opportunities to include information about your own product buyback or recycling program, to offer loyalty discounts or other incentives, or to directly connect with those who buy your products second-hand, all through the DPP.
But first, you must start developing a DPP according to the regulations of your industry. And here’s where data comes in (again). VML can help you identify and collect the specific data you’ll need for your DPP, and explore opportunities to improve your scores before the legislation takes effect. So that, when it does, you can hit the ground running and not lose a single day of sales.
This year, international businesses have already started the new wave of corporate-level sustainability disclosure requirements. For most companies, this is either the Corporate Sustainability Reporting Directive (CSRD), the International Sustainability Standards Board IFRS Sustainability Disclosure Standards (ISSB Standards), or maybe even both. Even accounting for the Omnibus Package, the CSRD is set to require thousands of companies – even some outside of the EU – to disclose comprehensive environmental, social and governance (ESG) data. And material climate change information is at the center of it all. Most companies will need to report a corporate carbon footprint that’s aligned with the Greenhouse Gas (GHG) Protocol Corporate Standard, along with any number of additional impact areas. VML and Vaayu can help you calculate that footprint with our targeted tools and experience in this domain.
In addition, you’ve got the ISSB Standards, which may require you to disclose a wide set of sustainability impact information. Again, standardized climate disclosures are at the very heart of the requirements. Across the globe, financial regulators are rapidly adopting ISSB Standards as legal requirements, especially for listed companies. So, the sooner you get your data in order, and get the right experts to make the right calculations, the better off you’ll be. You won’t want to get caught in non-compliance when the regulators come knocking, and that could be any day now.
No matter how much data you collect on your own, you won’t be able to calculate your actual carbon scores without help from experts like Vaayu. Once we’ve set up your comprehensive and organized single source of sustainability data truth, we can help you identify the right calculations for the right reporting, and guide you through the process of making them in each country in which you operate. In some cases, final decisions about those calculations haven’t even been made yet. But once they are, you’ll want to be ready for them, or risk non-compliance with these strict regulations. And that can mean your products won’t make it to consumers at all.
The Product Environmental Footprint (PEF) Framework is emerging as one of the ways the EU is aiming to standardize product footprinting. The EU officially recommended it in 2021, and it requires the creation of product-specific PEF ‘category rules’ (PEFCRs) so that it is applicable to different product types. These could form the basis for product comparisons, or they may be directly incorporated as requirements or options in other EU laws, like the EU’s Green Claims Directive, or even specific DPP requirements. At the moment, PEFCRs are in development, including ones for apparel and footwear.
But PEF is only one method and one type of calculation. Depending on your product, your countries of operation, your industry, and your size, you may need to provide different reporting to different legislative bodies, or create unique DPPs for specific markets. Without the guidance of compliance experts, you’ll likely be unable to perform the right calculations, at the right time, with the right data to fulfill the requirements. VML and Vaayu can help you ensure that all those elements come together in the right way and keep you compliant.
Once all that data is collected and you’re ready to start reporting, you’ll likely notice areas in need of improvement. After all, it's possible that some countries will adopt legislation that prevents you from selling your product there if your carbon scores or other calculations don’t meet minimum requirements. If that happens, you’ve got choices. Some companies may choose to make radical changes to their supply chain to get their scores up. While others may work with their suppliers to make intrinsic changes that not only improve scores, but create fundamental improvements to the way they do business. Of course, that second type of improvement is the best way to ensure long-standing and sustained climate protection.
Either way, you can use Sustainable ShelfMaster to map out a variety of scenarios. You can see what the impact of both major and minor changes to your supply chain and production can do to your scores, and make targeted, data-driven decisions based on the outcomes of those scenarios. You’ll no longer need to guess which actions will have the biggest impact – we can help you see it in black and white before you even get started. So that every step you take can be another step closer to your goals.
Ready to start the journey towards a more sustainable and compliant business? Time is running out. Contact us today to find out how Sustainable ShelfMaster can get you – and keep you – on the right track.
