Global focus on sustainability in international trade is rapidly accelerating, supported by the introduction of international regulations that require companies worldwide to disclose their environmental, social and governance information.
From time to time, we get questions from our members about these types of regulatory developments (particularly in the European Union). The Advocacy team is continually monitoring these sorts of developments, but often they will take a number of years to make their way through various legal processes. Regulations may also change or even be abandoned as they make their way through this process. For this reason, we usually update members where there is a reasonable level of certainty about the changes.
This article sets out some of the key regulations that New Zealand Winegrowers (NZW) members looking to maintain or grow their presence in the EU may need to be aware of. Importantly, all of these have long lead-in times.
The EU has introduced a range of regulations aimed at enhancing corporate accountability and transparency about environmental (e.g. climate change, greenhouse gas emissions, water quality) and social impacts (e.g. workers’ rights and elimination of forced labour). Some of these regulations are far reaching and may place reporting obligations on NZW members operating in the EU market. However, there is still much to be finalised, and we will keep members updated.
Corporate Sustainability Due Diligence Directive
The EU’s Corporate Sustainability Due Diligence Directive (also known as the CSDDD) was adopted in July 2024 and EU member states must include requirements in their national laws by July 2026. For those businesses that are captured, the new reporting requirements will be phased in over time, so there is plenty of time to prepare. The Directive establishes a due diligence framework. It requires qualifying companies operating in the EU market to assess, report and manage the actual or potential adverse effects of their activities on the environment and human rights.
Obligations under the Directive extend to subsidiaries and throughout the supply chain. This means that, even if your business is not a qualifying company, you may still be required to provide information about your environmental and social impacts, to support your European suppliers to comply. The extent to which NZW members will be impacted by the Directive will become clearer as member states start to implement it into domestic law. In the meantime, NZW members that export to the EU should engage with their importers and assess whether any of the new requirements will apply to them.
Application
EU and non-EU businesses will become qualifying companies under the scope of the Directive in a staged manner:
- 26 July 2027 – EU companies with over 5,000 employees and €1.5 billion in global net turnover, or non-EU companies with €1.5 billion net turnover within the EU;
- 26 July 2028 – EU companies with over 3,000 employees and €900 million in global net turnover, or non-EU companies with €900 million net turnover within the EU;
- 26 July 2029 – EU companies with over 1,000 employees and €450 million in global net turnover, or non-EU companies with €450 million net turnover within the EU.
Requirements
The Directive obliges companies to adopt a risk-based approach to environmental and social due diligence. This can be done in a variety of ways including integrating due diligence into policies and risk management systems, identifying and assessing actual or potential adverse impacts of business activities and prioritising them according to severity and likelihood. Any negative impacts identified must be addressed by preventing them or minimising them as much as possible.
Other Developments
Packaging
The environmental impact of packaging has also been the subject of increased scrutiny in the EU and more broadly. In 2024, the European Union formally adopted a regulation on packaging and packaging waste. The new regulation aims to reduce the generation of packaging waste by setting binding re-use targets, restricting certain types of single-use packaging and requiring operators to minimise the amount of packaging used.
Currently, wine is exempt from the re-use requirements. In addition, wine is not required to be included in deposit return schemes, although individual member states may opt to include wine if they choose. While wine benefits from some flexibility under the new regulations, members should take note, as mandatory packaging requirements could be extended to wine in the future.
The EU's Corporate Sustainability Reporting Directive
The CSRD is a comprehensive sustainability regulatory framework that requires detailed reporting on business risks and opportunities arising from social and environmental issues, and the impacts of their activities on people and the environment. Reporting must be undertaken in accordance with a detailed set of disclosure standards.
We do not expect many NZW members will be affected. The CSRD primarily targets EU-based companies, but from 2028 it will apply to non-EU parent entities with either an EU established subsidiary, or an EU branch, as well as €150 million in net turnover. Large businesses with significant activity in the EU will need to consider whether reporting requirements apply to them.
Any questions?
If you have any questions about the regulations outlined, or global trade issues more generally, please contact the NZW Advocacy Team (advocacy@ nzwine.com). The Advocacy Team actively monitors trade developments in all our major markets and will continue to update members.
Disclaimer: This article is provided as general information and guidance and does not constitute legal advice. While all due care and attention has been exercised in preparing this article, neither New Zealand Winegrowers Inc nor its employees/agents accept any liability of any kind for any loss and/or damage that may arise from reliance on the information presented.
Anna Cameron is Senior Legal Counsel in the NZW Advocacy Team
