Last week, I ran a Sustainability workshop for members of the North East Automobile Alliance (NEAA). As the delegates were new to me, I started with my usual opening gambit of standing by a blank flipchart and asking “Why are we here?” meaning “why should those manufacturing companies take Sustainability seriously?” This exercise has numerous objectives:

• It’s a proper icebreaker, getting delegates into thinking mode from the very start;
• The delegates sell the full business case for Sustainability to themselves, including elements they may not have at the front of their mind;
• It gives me insight into what drivers are pushing this sector right now.

The first answer I got was “legislation” and I must admit, as someone who has been preaching ‘Beyond Compliance!’ for several decades, I was a tad disappointed. But when we dug into that in more detail, it was the EU’s Carbon Border Adjustment Mechanism (CBAM), the EU’s Deforestation Regulation (EUDR) and the Corporate Sustainability Reporting Directive (CSRD) that were bothering the delegates – all of these are new and all of them are have a global impact (so much for Brexit freeing us from Brussels bureaucrats as we were promised during the 2016 referendum). One delegate threw in a curve-ball: his UK-based company needs to comply with packaging regulations laid down by India.

Once upon a time legislation was place-specific. If you wanted to open a factory in country X, then that country would tell you the limits on what you could discharge into the surrounding air or water. But 20 years ago, the EU’s Restrictions on Hazardous Substances (RoHS) and Waste Electronic and Electrical Equipment (WEEE) Directives made a step change towards making legislation product-based and, given our global supply chains, they applied internationally. I recall asking a US academic at the turn of the millennium why she was presenting a conference paper on the WEEE Directive and she said “because we want to continue being able to sell US products in the EU.”

While the EU has been at the forefront of such legislation, the US law on conflict minerals is another that has global impact (and one that came up in the workshop). It struck me that if ‘producer’ countries like India are starting to put environmental restrictions on imports then legislation is starting to get very complex indeed, and that’s why “Legislation” had bubbled up to the top of my flipchart list again.

My fear is that the raft of new data-intensive requirements all arriving in quick succession could distract industry from the purpose of the legislation: to drive environmental improvements. There must be a business opportunity for a supply chain platform to collect, collate and distribute data to streamline the process for each Directive to reduce the reporting burden.

As the workshop continued, we started to touch on the ‘Beyond Compliance’ mindset again. If you can get ahead of the legislation, using it as a spur to drive innovation, then you will find compliance with this wave of legislation (and hopefully the next) much easier. And those who take an incremental ‘compliance will do’ attitude will find themselves at a massive disadvantage. So it is important to look to the long term and prepare appropriately.