EU sustainability rules

If your company operates in the EU, it’s important to be aware that the EU has set a vast amount of corporate sustainability related legislation. Much of this legislation sets requirements for products sold in the EU market, for a company’s own operations as well as its value chain. For example, sustainability due diligence is being incorporated into EU legislation, such as the Corporate Sustainability Due Diligence Directive (CSDDD) (EU) 2024/1760, the Battery Regulation (EU) 2023/1542, the Conflict Minerals Regulation (EU) 2017/821, and the Forced Labor Regulation (EU) 2024/3015.

In the Compass, we focus on some of the most relevant EU legislation that has implications for supply chain contracts (at the time of creating this Compass in 2026). The following table describes the main content and scope of the CSDDD, the Battery Regulation, the Conflict Minerals Regulation, the Ecodesign for Sustainable Products Regulation, the Construction Products Regulation, and the Forced Labour Regulation. Some of this legislation applies directly only to companies within their formal scope. However, their practical effects extend much further through supply chains and business relationships.

Regulation	Scope
Corporate Sustainability Due Diligence Directive (CSDDD) Requires large EU companies and companies with significant turnover generated in the EU to identify, prevent, and mitigate adverse human rights and environmental impacts in their operations and global value chains	Large EU companies (5.000+ employees and €1.5 billion+ turnover) and equivalent non-EU companies
Battery Regulation Concerns sustainability, safety, labelling, marking, and information of batteries that are placed on the market and put into service within the EU; requires a digital battery passport for specific batteries	Economic operators placing batteries on the EU market (some of the obligations concern only companies with €40 million+ turnover)
Conflict Minerals Regulation Requires EU importers and global smelters and refiners of tin, tungsten, tantalum, and gold to meet international responsible sourcing standards set by the OECD	EU importers and global smelters and refiners of tin, tungsten, tantalum, and gold that exceed thresholds set in the regulation
Ecodesign for Sustainable Products Regulation (ESPR) Sets rules for improving product durability, reusability, upgradability, and reparability; introduces a Digital Product Passport (DPP) for products, components, and materials; sets rules for the deconstruction of unsold consumer products	Economic operators placing products on the EU market
Construction Products Regulation (CPR) Sets specific technical performance standards to ensure durability, safety, and overall reliability of construction products; requires a construction-specific Digital Product Passport aligned with ESPR principles but tailored to product performance, safety, and life cycle characteristics in the built environment	Economic operators placing construction products on the EU market
The Forced Labour Regulation Prohibits products made with forced labour as defined by the International Labor Organization from being sold on the EU market. The ban applies to all products, whether imported or produced within the EU for domestic consumption or export	Economic operators placing products on the EU market

In addition to the examples above, there is other EU regulation related to corporate sustainability, such as:

Regulation (EC) No 1907/2006 concerning the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH)

According to REACH, companies that manufacture or import chemicals in the EU must identify and manage risks posed by chemicals for human health and environment, and register safety data. REACH includes a restriction process for certain substances of very high concern if they pose an unacceptable risk to health or the environment. Examples of such substances include microplastics. Such substances may be limited or even banned, if necessary.

Regulation (EC) No 1907/2006

Directive on Repair of Goods (EU) 2024/1799

Manufacturers of certain products (e.g., household washing machines, washer-dryers, tumble dryers, vacuum cleaners, fridges, electronic displays, and smartphones) will have to repair those products within a reasonable time and for a reasonable price. They will be prohibited from using contractual clauses, hardware, or software techniques that impede the repair of goods unless justified by legitimate and objective factors. They will also be obliged to provide access to spare parts at reasonable prices.

Directive on Repair of Goods (EU) 2024/1799

Empowering Consumers for the Green Transition Directive (EU) 2024/825

Sets rules for information that must be given to consumers about product durability, reparability, and legal guarantee rights, and the prohibition of using claims, such as ‘green’ or ‘environmentally friendly’, and the use of unreliable voluntary sustainability logos.

Empowering Consumers for the Green Transition Directive (EU) 2024/825

Regulation establishing a carbon border adjustment mechanism (EU) 2023/956 (CBAM)

Sets price on carbon emitted during the production for carbon-intensive goods that are entering the EU.

Regulation establishing a carbon border adjustment mechanism (EU) 2023/956

EU Deforestation Regulation (EU) 2023/1115

Sets requirements for the traceability and transparency of wood, rubber, cattle, coffee, cocoa, palm oil, and soya, as well as the products made from these materials to reduce global deforestation, forest degradation, and biodiversity loss. The regulation applies to imports into the EU, exports from the EU, domestic and intra-EU trade, domestic production, as well as domestic and intra-EU further processing. The measures required depend, for example, on the company’s size and its role in the supply chain.

EU Deforestation Regulation (EU) 2023/1115

EU Taxonomy Regulation (EU) 2020/852

The EU taxonomy regulation creates a common classification system for sustainable economic activities of companies. It sets out conditions that an economic activity has to meet in order to qualify as environmentally sustainable. To be considered sustainable, an activity must:

substantially contribute to at least one of the following six objectives: 1) climate change mitigation, 2) climate change adaptation, 3) sustainable use and protection of water and marine resources, 4) transition to a circular economy, 5) pollution prevention and control, 6) protection and restoration of biodiversity and ecosystems
“do no significant harm” to the other objectives and;
meet minimum social safeguards that cover four core topics (human rights, bribery/corruption, taxation, fair competition) and that are based on the OECD Guidelines and the UNGPs, among others.
In addition, large companies must report their taxonomy eligibility and alignment.

EU Taxonomy Regulation (EU) 2020/852

Legislation relating to sustainability reporting and information disclosure

Companies operating in the EU are subject to different kinds of reporting and information disclosure requirements based on their industry and size. Examples include the Corporate Sustainability Reporting Directive (CSRD) (EU) 2022/2464, which requires large companies operating in the EU to publish detailed, audited reports on their environmental, social, and governance impacts using European Sustainability Reporting Standards (ESRS) (EU) 2023/2772. Another, industry-specific example is the Sustainable Finance Disclosure Regulation (SFDR) (EU) 2019/2088, according to which the financial market participants have to categorize their investment products as based on the level of sustainability they demonstrate and disclose entity and product-level sustainability information.

Legislation to money-laundering and terrorist financing

There are numerous regulations and directives that combat money-laundering and terrorist financing, placing several obligations, such as the obligation to know your customer (KYC), to relevant gatekeepers, such as banks, accountants and attorneys.

Directive (EU) 2019/1937 on the protection of persons who report breaches of Union law (the so-called “Whistleblower Protection Directive”)

According to the Whistleblower Protection Directive, companies need to have an effective channel for the personnel to report breaches of EU rules confidentially, and the reports should be properly investigated and acted upon by companies. Also, whistleblowers should be protected from retaliation.

Directive (EU) 2019/1937 on the protection of persons who report breaches of Union law

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