Skip links

Sustainability rules and effects on firms

The European Union (EU) is making sustainability and circularity “the norm” across the 27 member-States. The goal is to ensure all physical goods on the EU market are eco-friendly, including their circularity.

Moreover, the EU requires all goods to be energy efficient throughout their lifecycle, from design to daily use, repurposing and end-of-life.

Sustainable development is a core principle of the EU’s treaty and a priority objective for the union’s internal and external policies. The rules provide directives on fostering sustainable and responsible corporate behavior throughout EU and global value chain.

The EU rules on sustainability offer a milestone in an attempt to regulate business impacts on human rights and the environment. The regulations require companies to undertake due diligence on sustainability matters within their own organisation and the supply chain.

Companies must also take steps to prevent the adverse impacts on human rights and the environment as they produce and consume. At the same time, firms need to establish a complaints procedure and reporting mechanism for non-compliance.

The rules are set to complement and support the EU’s Green deal. The EU’s new growth strategy is the green deal to transition the EU economy to a sustainable model. The objective of the EU’s green deal is to make it the first climate-neutral continent by the year 2050.

This will result in a cleaner, more affordable energy, innovative transport system, new green jobs and overall better quality of life for its citizens.

The EU green deal aims to end the “take, make, break and throw away” model that is harmful to our planet, our health, and our economy. This allows consumers to save energy, repair instead of replacing broken products, and make smart environmental choices when shopping for new ones.

This will help restore our relationship with nature and reduce our vulnerability to disruptions in global supply chains.

The EU green deal and the sustainability rules include actions to strengthen the decarbonisation efforts, ranging from products sustainability to the supply of raw materials.

This ensures that products placed on the EU markets have a long shelf life, are recyclable, made of nonhazardous substances, and consider social rights and the environment during production.

In a competitive, resilient and innovative manufacturing industry, producers have to take responsibility for their products along the value chain, including when they become waste.

The EU rules will pressure the Kenyan businesses to inculcate a culture of embracing greening mechanisms such as setting recycling targets, reducing their carbon footprints and human right safeguarding if they are to sell products to the EU markets.

To strengthen sustainable industry competitiveness and resilience, Kenyan firms will need to actively participate in co-creation through their commitments to circularity and circular business models and actions.

Pollution is the most significant environmental cause of multiple mental and physical diseases and cases of premature deaths. It’s also an essential driver of biodiversity loss.

As a result of these negative effects, businesses will need to go an extra step to ensure environmental protection against hazardous chemicals as a result of their production systems.

The measures to be embarked by Kenyan companies need to be helpful in addressing pollution from large industrial installations and ensure they’re compliant with related EU green deal objectives and requirements.

This will be achieved by committing to a zero-pollution action plan for air, water and soil pollution prevention, and putting in place a mechanism to prevent, remedy, monitor and report on pollution.

Under the new rules on sustainability, the national regulators will be empowered to investigate companies suspected of non-compliance, issue orders requiring a company in breach to take remedial action and impose fines.

Member states will also be required to establish civil liability regimes where they don’t exist, whereby companies could be liable for damages if their failure to comply harms individuals.

This provides a precise enforcement mechanism to ensure that business rules are adhered to. This provides a clear enforcement mechanism to ensure the business adheres to the rules.

With rules comes the demand for sustainable technology as companies and individuals embark on following the stricter sustainability regulations. This will lead to research and technology development focusing on developing such technologies, ultimately increasing the prominence of sustainable technologies.

Kenyan companies supplying to the EU will definitely need to become more engaged in their sustainability journey if they are to continue doing business with the EU domiciled companies.

The trend will continue. In the future, I foresee sustainability becoming a regulated matter that calls for proactive action by businesses to embrace it before it is too late.