Foreign companies exporting to the EU—such as Turkish businesses—are facing increasingly stringent ESG (Environmental, Social, and Governance) compliance requirements, particularly due to the following regulations and directives.
CSRD – Corporate Sustainability Reporting Directive (2024–2028)
While this directly applies only to EU-based companies, it indirectly affects all suppliers (including those exporting to the EU).
- **Why?** Because EU companies must collect ESG data across their entire **value chain**.
- For example, if a Turkish company supplies apparel to a French retailer, the French company must **report on the supplier’s environmental and social impact**.
**Consequence:** EU partners may request ESG data, conduct audits, or only work with certified suppliers.
EU Due Diligence Directive (CSDDD / HRDD)
This regulation mandates human rights and environmental due diligence for EU companies—covering their entire global supply chain.
- **Applies to Turkish exporters** supplying EU companies.
- Mandatory assessments include: working conditions, child labor, safety, human rights, emissions, and waste management.
**Note:** The CSDDD introduces legal enforcement where CSR was previously voluntary.
CBAM – Carbon Border Adjustment Mechanism
Starting fully in 2026, the Carbon Border Adjustment Mechanism will apply to these sectors:
- Steel, aluminum, cement, fertilizers, electricity, hydrogen
- **Foreign exporters** (e.g., Turkish steel producers) must **provide CO₂ emissions data** and **purchase quotas** for EU sales.
**This effectively mandates carbon pricing**—posing a competitive disadvantage without carbon footprint tracking.
Key CBAM-affected energy-intensive products (from 2026)
Initially, CBAM covers these six product categories:
- **Iron & steel**
- **Cement**
- **Fertilizers**
- **Aluminum**
- **Hydrogen**
- **Electrical energy**
These products were prioritized due to their high energy consumption and CO₂ emissions.
Detailed product list & tariff codes
The full CBAM product list and tariff codes are in Regulation (EU) 2023/956, available on the official EU site:
CBAM – Taxation and Customs Union
Other energy-intensive industries
Per EU research, these sectors are also energy-intensive:
- **Chemicals**
- **Ceramics**
- **Glass**
- **Paper & pulp**
Future CBAM expansions may include these industries.
Recommendation
Check your product’s tariff code against CBAM annexes and monitor EU updates for new inclusions.
Example:
Fiberglass insulation is energy-intensive due to high melting temperatures (~1400°C) and may indirectly fall under CBAM via raw materials (e.g., aluminum, steel).
Steps for exporters:
- Conduct a **full carbon footprint assessment** (Scope 1-3).
- Track **energy sources** (e.g., gas, electricity) and usage.
- Document **input materials** (binders, packaging).
EUTR & EU Deforestation Regulation (EUDR)
- Applies to **agricultural/forestry products** (coffee, cocoa, soy, timber, palm oil, beef, etc.).
- Exporters must **prove** products **do not contribute to deforestation**.
- **Traceability** and **geolocation data** are mandatory.
What compliance might EU partners request?
- ESG reports/questionnaires
- Certifications: ISO 14001 (environment), SA8000 (labor), GHG Protocol
- Life Cycle Assessment (LCA) or carbon footprint data
- Social audits (e.g., SMETA, Sedex)
- Environmental, labor, and human rights declarations
How should a Turkish exporter prepare?
| Area | Requirement |
|---|---|
| Emissions | CBAM reporting, CO₂e metrics |
| Labor rights | HRDD compliance, ethical employment |
| Product | LCA, carbon footprint data |
| Environment | EUDR compliance, traceability |
| Data disclosure | ESG questionnaires, supplier audits |
