Spark Newsletter – September 2024

As the global regulatory environment continues to evolve, the number of regulations and regulatory updates companies need to be cognizant of continues to grow. In this month’s newsletter, we take a look at:

• The difference between the German Supply Chain Due Diligence Act (LkSG) and the EU Corporate Sustainability Due Diligence Directive (CSDDD).
• Some developments for product stewards to be aware of within the EU Classification,?Labelling and?Packaging (CLP)?regulation, Poison Centre Notification (PCN) and the global regulations surrounding?per- and?polyfluoroalkyl?substances (PFAS).
• Why life cycle assessments are key to the EU’s Ecodesign for Sustainable Products Regulation (ESPR).
• The EU’s Carbon Border Adjustment Mechanism (CBAM) and its implications for supply chains.

What is the difference between the LkSG and CSDDD?

Consumers today are increasingly concerned about the ethical practices of the companies they support, and it has led to a growing focus on corporate sustainability and human rights due diligence. The German Supply Chain Due Diligence Act (LkSG) and the EU Corporate Sustainability Due Diligence Directive (CSDDD) both aim to hold companies accountable for human rights and environmental impacts within their supply networks. But what sets them apart?

While both the LkSG and the CSDDD share the goal of promoting human rights and environmental standards, the objectives, provisions and scope of the LkSG and the CSDDD differ.

• In terms of human rights, the LkSG references specific conventions on forced labor and indigenous rights. It also mandates that companies conduct regular risk assessments to pinpoint potential environmental harms throughout their supply chains.
• Like the LkSG, the CSDDD’s core objective is to compel companies to identify, prevent and mitigate potential human rights and harmful environmental impacts within their operations and supply chains. In addition to its wider scope, the EU’s CSDDD goes a bit further than the LkSG by requiring companies to conduct due diligence among their direct suppliers as well as their indirect suppliers.

Read about key requirements and differences in the LkSG and the CSDDD.

Insights into EU CLP, PFAS and PCN

In the ever-evolving landscape of regulatory compliance, staying informed about the latest updates is crucial for businesses to ensure adherence and?maintain?consumer safety. Some recent significant developments for product stewards to be aware of are within the EU Classification,?Labelling and?Packaging (CLP)?regulation, Poison Centre Notification (PCN) and the global regulations surrounding?per- and?polyfluoroalkyl?substances (PFAS).?

• Countries around the world are taking steps to restrict PFAS, with proposals for widespread phase-outs and limitations on use.
• While PCN compliance has moved more into ongoing compliance mode, changes to other parts of the CLP regulation will continue to impact PCN submissions.
• The focus on PFAS and CLP continues to dominate the regulatory landscape, posing challenges and opportunities for businesses operating within the EU.

Learn more about the EU CLP, PFAS and PCN.

Why life cycle assessments are key to the EU’s ESPR

The EU's Ecodesign for Sustainable Products Regulation (ESPR) entered into force on July 18, 2024. With the?ESPR, the European Commission has established a legislative framework for improving the environmental performance of products sold on the EU market.

The aim is to reduce the negative life cycle impacts of products, and products must meet specified ecodesign requirements for performance and information under the ESPR. Environmental data for products, ideally provided through a life cycle assessment (LCA), is at the heart of the ecodesign concept.

Read more about key requirements of the ESPR.

Understanding CBAM from a supply chain angle

The EU’s Carbon Border Adjustment Mechanism (CBAM) puts a price tag on the carbon emissions embodied in certain imported goods to equalize carbon pricing on domestic and imported goods. The transitional phase is well under way, and companies need to understand and prepare for CBAM to minimize the financial impact on their business and supply chain.

CBAM essentially discourages European companies that import certain goods and materials into the EU from moving production to countries with lax environmental standards — known as?carbon leakage?— and incentivizes them to invest in cleaner technologies and processes.?The mechanism complements and reinforces the EU’s?Emissions Trading System (ETS), a “cap-and-trade” system that covers emissions from roughly 10,000 energy sector installations, certain aircraft operators and, as of this year, maritime transport.??

Given the sectors in focus, CBAM has significant implications for supply chains. Companies that must comply with CBAM will gain transparency in their supply chain and, eventually, a reduced carbon footprint. But their first order of business is preparation.

Learn more about CBAM, its implications for supply chains and what companies need to do.

We hope you found this issue of the Spark Newsletter to be informative and insightful. Between issues, you can keep current with the latest from Sphera by following us on LinkedIn or by visiting us at sphera.com.

The information provided in this newsletter is for general information purposes only, may not be updated in real time and does not constitute legal advice.?Please consult with your legal and other advisors to discuss your particular needs and circumstances.