Global supply chains and the sustainability opportunity: why new EU rules matter to APAC channel companies

Global supply chains and the sustainability opportunity: why new EU rules matter to APAC channel companies

Global supply chains and the sustainability opportunity: why new EU rules matter to APAC channel companies

The climate crisis is already being felt across the globe, including APAC. There were an estimated 81 weather, climate and water-related disasters in Asia in 2022, according to the World Meteorological Association (WMA). These events cost thousands their lives, directly affected tens of millions more and caused $36bn in damages. It's a challenge that EU legislators are tackling with some of the most progressive green regulations anywhere in the world.

This has major implications for APAC channel businesses operating in or exporting to the European market. Increasingly, they will need detailed ESG data to fulfil their regulatory obligations.

What's coming from the EU?

Technology innovation has long been driven by commercial rather than environmental, social and governance (ESG) requirements. And given their prodigious power consumption, digital technologies have been viewed with suspicion by many sustainability advocates. But EU regulators are looking to change that by harnessing the digital revolution for the bloc's green transformation.

EU Digital Product Passport (DPP): Part of the larger European Green Deal and set to land in 2026, the DPP will initially apply to apparel, batteries, and consumer electronics. It will require any business selling into the EU to provide a "product passport" for all finished product and their individual parts. These will need to prove that all components meet strict sustainability criteria.

Germany Supply Chain Act: Already in force, this law requires all German companies with 1000+ employees to ensure all tech components are sourced from suppliers that adhere to human rights and environmental standards.

French Repairability Index: Introduced in 2021 for five product categories (smartphones, laptops, televisions, lawn mowers, and front-loading washing machines), this regulation requires vendors to provide products with repairability in mind.

EU Due Diligence Directive:Requires all companies within the EU with more than 500 employees and a worldwide net turnover of over million to identify, prevent, and mitigate human rights and environmental risks in their supply chains. This means ensuring the entire supply chain, from raw materials to end products, adheres to strict standards.

What it means for APAC's IT channel

This collective push on ESG within Europe has major implications for any APAC channel business with customers in the EU. For one, it will require them to ensure relevant materials and components meet the strict criteria set down by the various EU and member state regulations/laws. They will need to ensure that any products not only meet these technical demands but also align with ESG values.

The bottom line is this: to prove compliance and continue operating within Europe, APAC channel players will need to report the relevant ESG information to the relevant authorities. All of this will require more data than many IT stakeholders perhaps collect at present. But the benefits will speak for themselves. Not only will it protect existing revenue streams from European sales, it could also help Asian players to stay ahead of copycat regulations which may soon emerge in the APAC region.

CONTEXT can help. We are currently building a product ESG database which will help clients align with the DPP.

To find out more follow CONTEXT APAC for insights and updates within the region.

Recent posts

Introducing Routes to Market: A new analytics report from CONTEXT

South African IT distributors remain resilient