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.
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
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.
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.
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.
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.
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