The European Union (EU) has introduced a suite of green policies to align international trade with its climate and sustainability goals. These regulations aim to reduce environmental impact, ensure responsible supply chains, and create a level playing field for businesses operating in the EU market. Companies engaged in cross-border trade must comply with these evolving policies to avoid penalties, maintain market access, and support global sustainability efforts.
EU Green Policies in Trade
ALS – your international customs agency
Key Requirements:
Due Diligence:
Companies must ensure products are not sourced from land deforested after the EU’s designated cutoff date
Traceability:
Importers must provide precise geographic information on product origins.
Reporting:
Regular due diligence statements must be submitted to EU authorities.
Enforcement & Risks:
Non-compliance can result in fines, product bans, and reputational damage. Businesses must strengthen their supply chain transparency and implement robust verification systems.
Key Requirements:
Quarterly Emissions Reporting:
Currently mandatory during the transitional phase (Oct 2023–Dec 2025).
Carbon Certificates:
Required from 2027 to offset embedded emissions in goods.
Carbon Cost Adjustments:
Importers may deduct any verified carbon pricing already paid in exporting countries.
Recent Updates:
- New in 2025: Importers bringing in less than 50 tonnes of CBAM goods annually are exempt from reporting and financial obligations.
- First financial obligations begin in February 2027, with annual declarations due by August 31 starting that year.
For further detail, see our dedicated CBAM glossary entry.
Corporate Due Diligence in Supply Chains
The EU is introducing mandatory corporate sustainability due diligence legislation. These rules will apply to:
- Large EU-based companies (500+ employees or significant turnover)
- Non-EU companies operating in the EU market
Obligations include:
- Risk Assessment: Identify potential environmental or human rights risks in the supply chain.
- Preventive Action: Take measures to mitigate risks and demonstrate responsible sourcing.
- Monitoring & Reporting: Evaluate the effectiveness of due diligence efforts.
- Stakeholder Engagement: Maintain open communication with affected communities and supply chain partners.
Non-compliance may result in enforcement actions, fines, and restrictions on EU market access. Indirectly, smaller companies may also be affected if they are suppliers to larger obligated firms.
Impact on Businesses
Complying with the EU’s green trade policies requires companies to:
- Enhance supply chain traceability
- Integrate due diligence and emissions reporting processes
- Stay updated on regulatory changes and deadlines
While these measures may initially increase operational complexity, they also bring long-term advantages:
- Strengthened access to the EU market
- Enhanced stakeholder trust
- A more resilient and sustainable business model
