We define green trade law as the entirety of legal requirements in the areas of ESG (environment, social, governance), which are also summarized under the term sustainability, in the context of international trade.
Sustainable business means minimizing negative impacts on the environment and prospects of future generations – not only in physical terms, but also in social and economic terms. New regulations to initiate and to enforce more sustainable international trade entail comprehensive obligations for companies. These concern both, the due diligence obligations along the supply chain as well as the organization and processes for their implementation.
In this context, close links and numerous interfaces exist with foreign trade law: green trade law standards, which are enacted under the aspect of sustainability, potentially affect all areas of international trade, from raw materials to intermediate products and the end of a product’s life cycle to business partners and suppliers along the entire value chain.
Green trade law and foreign trade law place partly identical and partly similar demands on a company’s organization and processes under the common umbrella of trade compliance. On the one hand, this allows synergies to be exploited, but on the other hand, significant differences must be recognized and specifically taken into account.
We support in identifying legal requirements of green trade law through risk analysis, assist in implementing them in organizations and processes as part of a risk management system, and, if necessary, represent in proceedings with the authorities. In doing so, we always keep an eye on the links and interfaces with foreign trade law and on current political developments.
Our Main Topics in Green Trade Law
Under the German Act on Corporate Due Diligence Obligations in Supply Chains (LkSG), German companies must ensure the protection of human rights in their international supply chains. To this end, the risks of human rights violations along the supply chain must be identified and assessed, appropriate preventive and remedial measures must be taken, and reports must be prepared. Since January 1, 2024, the LkSG has applied directly to companies based in Germany with at least 1,000 employees. However, smaller companies are also indirectly affected by the LkSG because their legally obligated customers impose corresponding contractual obligations on them.
In addition, the EU adopted the European Corporate Sustainability Due Diligence Directive (CSDDD) in June 2024. This is to be transposed into national law by the member states by July 26, 2026 and – with gradual application depending on the size and turnover of the companies from summer 2027 – provides for various tightenings compared to the LkSG.
The EU Deforestation Regulation (EUDR), which has been in force since June 29, 2023, and now shall be applied in stages from December 30, 2025 (for large and medium-sized companies) and June 30, 2026 (for micro and small companies), is intended to protect human rights as well as the environment. It allows certain raw materials and products manufactured using them (wood, rubber, cattle, coffee, cocoa, palm oil and soy products) only to be placed on the market in the EU, to be made available on the market in the EU and to be exported from the EU if specified due diligence obligations are met in the supply chain. In particular, the supplier must make a declaration of due diligence regarding “freedom from deforestation” and compliance with the relevant legal provisions of the country of production.
Since January 1, 2021, EU-importing companies of all sizes have been required to comply with certain due diligence requirements in their supply chain under the EU Conflict Minerals Regulation in order to ensure that tin, tantalum, tungsten and gold from conflict-affected and high-risk areas are traded responsibly. These due diligence requirements include risk assessment, implementation of a supply chain management system, independent third-party audits and transparent reporting.
On May 23, 2024, the Critical Raw Materials Act (CRMA), another EU regulation related to critical raw materials, came into force. It is designed to ensure the autonomous, secure and sustainable supply of critical raw materials to the EU economy. It will affect a significantly larger number of raw materials, currently 34, which are listed as strategic or critical, including rare earths, lithium and silicon, but also tantalum and tungsten.
On December 12, 2024 the EU published a regulation that prohibits the import, placing on the market and export of products manufactured using forced labor. With a transition period of three years, applicable to all economic operators, products manufactured using forced labor will after December 14, 2027 no longer be allowed to be imported into the EU and placed or made available on the EU market. Likewise, their export from the EU market will be prohibited.
Internationally operating companies with supply obligations in the USA must also comply with the Uyghur Forced Labor Prevention Act (UFLPA). This prohibits the import of goods into the United States that were wholly or partially manufactured in the Xinjiang Uyghur Autonomous Region (XUAR) or in a listed company. The ban also applies to downstream products manufactured from these goods worldwide or containing these goods.
