What happens if sustainability requirements are not respected?

Companies that fail to meet sustainability-related requirements may face several types of consequences. These consequences can arise through enforcement mechanisms in EU and national law, as well as through contractual remedies following a breach of contract (discussed further in Module II). Loss of reputation and loss of markets can also be consequences of failing to meet sustainability requirements.

The consequences include:

• Administrative supervision and sanctions: Some legislation is supervised and enforced by national authorities. Companies within the scope of such legislation may face administrative sanctions, including potentially significant fines.
• Market access restrictions: Many EU regulations use market access rules to enforce sustainability requirements. Products that do not meet the applicable requirements may not be placed on the EU market or may be withdrawn from it. This approach is used, for example, in the EU Battery Regulation, the Conflict Minerals Regulation, and the Forced Labour Regulation. Similar mechanisms are used in product legislation such as the Ecodesign for Sustainable Products Regulation (ESPR) and the Construction Products Regulation (CPR).
• Contractual and business consequences: In practice, sustainability requirements are often implemented through contracts and business relationships across supply chains. Non-compliance may therefore lead to contractual liability, termination of contracts or business relationships, loss of business opportunities, financing difficulties, and reputational damage.
• Liability for harm under national law: Where sustainability failures cause harm – for example environmental damage or human rights violations – companies may face liability under applicable national law. The availability and scope of such claims depend on the applicable legal framework.