Can EU environmental regulations change global shipping?
Sometimes, legislative changes in one region can influence a whole global industry. Here is one example and some thoughts on how recent legislation on sustainability can have a similar impact.
Tributyltin (TBT) was a commonly used antifouling paint in international shipping because nothing would grow on it, allowing ships to maintain top performance by gliding through water effortlessly.
With growing concerns over pollution in the 1980s, it became clear that the substance was extremely toxic to local environments. It even changed the sex of some species.
The realisation of the widespread environmental effects caused by TBT resulted in the Europe-wide ban of it’s use in 1987 on boats under 25 meters. EU, Japan and other countries continued to lobby for a ban on larger vessels as well, but they could not get a sufficient majority in the International Maritime Organisation. Not until the EU decided they would enforce the prohibition no matter what happened at IMO, and ban TBT on large vessels with the clause "no ships with TBT on the hull will be allowed into European harbour".
This immediately led to a change in enough member states so that in 1998, the IMO decided to introduce a worldwide ban on the use of TBT in antifouling paints for most ships from January 2003. Consequently, shipowners or operators could not use TBT antifouling paint on any vessels that sailed internationally, as they would not be permitted to enter any European ports. When everyone adhered to the same regulations, they would have to seek alternatives to antifouling substances.
What are the learnings from the story?
EU can move singlehandedly and still change the world. This is what some EU supporters call the Brussels Effect. The mechanism is now being used in new legislation.
Sometimes it can be difficult to distinguish between protectionism and sustainability requirements. However, if your business is subject to strict laws and regulations related to health, safety, environment, reporting, and pollution taxes, it can be devastating to be undercut by companies from countries with less stringent regulations. This can result in significantly lower production costs for these companies and can put your business in a difficult position.
The Carbon Border Adjustment Mechanism (CBAM) is an initiative by the European Union to ensure a justifiable cost for the amount of carbon emitted during the production of carbon-intensive goods that enter the EU. The main objective is to encourage non-EU countries to adopt cleaner industrial production methods and to create a level playing field for carbon-intensive industries within European borders to compete on price.
The Corporate Sustainability Due Diligence Directive (CSDDD) will require companies to conduct human rights and environmental due diligence in their global value chains. This directive will be the legal basis for imposing fines if any rights are violated.
The directive will require companies to:
The directive is an essential measure for ensuring fair competition conditions both within and beyond the EU's borders. Its emphasis on safeguarding human and social rights outside the EU has made it highly regarded worldwide. To sell goods and services, every company must thoroughly understand their supply chain and document their efforts to address any compliance issues.
This supply chain follow-up is Factlines’ speciality and what we have been doing for a decade. Not to make it impossible to compete in the EU for global or developing world economies but to make it easier to document that your company should get contracts.
Read more about Factlines Sustainable Supplier Network here.
Read more on clean shipping and anti-fouling:
https://www.imo.org/en/OurWork/Environment/Pages/Anti-fouling.aspx
https://www.sciencedirect.com/science/article/abs/pii/S0048969721054541
https://www.imo.org/en/KnowledgeCentre/ConferencesMeetings/Pages/Legal_Conferences-default.aspx
