Uncertainty about the practical application of the EU’s sustainability regulations may lead companies to wait for further clarification. This is problematic because companies then fail to allocate resources where required to meet their obligations.
These findings emerge from the study ‘The Cumulative Effects of EU Sustainability Legislation (CEULA)’, which was published on Tuesday 28 January 2025. The study assessed how the EU’s sustainability regulatory instruments cumulatively impact on Finnish companies. The EU’s sustainability regulation contributes to addressing problems such as the climate crisis, dwindling biodiversity and pollution. Human and labour rights are also protected throughout the value chains of companies within the EU. The study recommends that companies be more proactive in their approach to EU sustainability legislation. Commissioned by the Ministry for Foreign Affairs, the study was carried out by a research consortium comprising the following members: Dorothée Cambou, Martin Fougère, Heidi Herlin, Neema Komba, Amin Maghsoudi, Mikko Rajavuori, Elina Sagne-Ollikainen, Juho Saloranta and Nikodemus Solitander.
For the study, companies from the agriculture, forestry, mining, textile and food industries were interviewed especially on their value chains. Because value chains are global, regulation also has impacts on trade policy. The companies were asked about the effects that the following five regulatory instruments have on them: the Regulation on Deforestation-free Products, the Carbon Border Adjustment Mechanism, the Directive on Corporate Sustainability Due Diligence, the Regulation on Prohibiting Products Made with Forced Labour and the Ecodesign for Sustainable Products Regulation.
“The study clearly shows that Finnish companies that are cumulatively impacted are not so much concerned about over-regulation, competitiveness or GDP, but rather about the uncertainty created by the EU itself over the fate of regulation,” says Nikodemus Solitander, who directed the study, in a press release by Hanken School of EconomicsLinkki toiselle sivustolle.
The interviews in different sectors also revealed that some companies are more prepared than others to meet regulatory requirements. The study emphasises the need for companies and authorities alike to cooperate, communicate clearly and continuously develop their operations. The researchers recommend that Finnish authorities develop guidance on the laws to facilitate their interpretation.
Source: valtioneuvosto.fi