Last week, the people of the United Kingdom voted to leave the European Union, ushering in a period of uncertainty and change that is likely to have broad implications for the business community. While it is important to note that the vote itself is not binding, the private sector in Europe and beyond must immediately consider the effects that separation would have on various aspects of their operations, if it is actually enacted.
Corporate sustainability is no exception. Companies in the UK will be impacted by changes to the regulatory landscape. UK businesses are currently subject to many European laws on environmental and social issues, including REACH, RoHS, WEE, and more. Over the coming months and even years, government decision makers in London will have to look through these laws and decide how to handle each piece or group of legislation.
In all likelihood, many laws will be kept the same or redrafted with content similar to the original. The UK government’s top priority is, and will remain, stability. Its desire to keep businesses thriving and investment flowing will likely result in legislative continuity. Furthermore, Westminster’s desire to remain in the European ‘Single Market’ makes major change all the more unlikely. It is improbable that they would raise legislative sustainability barriers that would result in a more difficult environment for business. In fact it is possible that some sustainability laws will be done away with to encourage business confidence. However, this is uncharted territory and the UK’s private sector will have to keep up with developments as they unfold. It will take time.
Companies that are joint ventures in the UK and other EU countries are in a uniquely complex position. Unilever, for example, is co-Headquartered in the Rotterdam and London. If the legislative landscape in the UK changes, questions of compliance will certainly arise for them and other companies in similar situations. Again, keeping a careful eye on developments is key.
Businesses outside of the UK and EU will also be impacted if they are doing business with either entity. The division means that they must be seen as two distinct trading partners with different sustainability laws. While it’s unlike that these companies will produce different products for the two markets, it is likely that compliance costs will increase.
Companies that have taken a ‘beyond compliance’ approach to sustainability over the past years are placed at an advantage in this situation. As always, staying ahead of the sustainability curve makes it easier to avoid risk and build value.