Exporters brace for tighter ESG regulations from EU
Four new regulations from the European Union (EU) will put “increased pressure” on local exporting enterprises to embrace environment, social and governance (ESG) measures, the largest umbrella group of exporters said.
Philippine Exporters Confederation Inc. (Philexport) identified the four new regulations from the regional bloc: Corporate Sustainability Reporting Directive (CSRD), Corporate Sustainability Due Diligence Directive (CSDDD), EU Battery Regulation, EU Deforestation Regulation (EUDR), and Carbon Border Adjustment Mechanism (CBAM).
Philexport cited a joint study from the Employers Confederation of the Philippines and the Danish Industry entitled “ESG Study: The Effects of EU Sustainability Regulations in the Philippines.”
“The CSRD mandates companies with activities within the EU to disclose their ESG impact across the whole value chain. This law is seen to put pressure on Filipino companies to deliver data and report on how they manage and govern potential ESG risks and impacts,” the business group wrote in its newsletter released last week.
On the other hand, CSDDD requires large companies operating in the EU to proactively identify, prevent and report on adverse human rights and environmental impacts across their operations and value chains.
As for the third regulation, the EU Battery Regulation, Philexport said exporting products that contain batteries to the EU would need to disclose the origin of raw materials used in battery production.
Additionally, it said that the EUDR would need to prove verification that input goods such as rubber, palm oil, soy, coffee, cocoa, wood and cattle had not been sourced from deforested or degraded land.
Under CBAM, the group said that exporters of carbon-intensive goods may incur extra costs if their production processes have high carbon emissions.
Citing the report, Philexport said local industries must stay updated and compliant with new EU legislative changes and requirements.
Philippine Statistics Authority data released earlier this month show that the Philippines had exported $6.38 billion worth of goods to the EU from January to September.
