A company that asks which ESG rules apply often thinks first of the sector in which it operates or of the size of the business. The product itself — what exactly is made, processed or sold — is a separate factor that is independent of that and can weigh just as heavily. Two companies in the same sector, of comparable size, can fall under a different set of rules because one company makes a product that falls under specific product legislation and the other does not.
Within ESG obligations, the product plays a role in several ways. Some regulation ties obligations directly to the type of product: think of raw materials, chemical substances, packaging or products with a longer lifespan that fall under circular economy rules. Other regulation does not look at the product itself, but at what happens in the chain around it — where raw materials come from, how a product is produced, or what happens to it at the end of its lifespan. A product can therefore bring obligations that are unrelated to the sector classification of the company that makes or sells it.
What exactly applies depends on how the product is categorised within the relevant regulation, on the market in which it is placed and on the phase in the chain in which the company finds itself. A producer, an importer and a distributor of the same product can each have different obligations. That makes the product a factor that does not stand on its own, but must always be viewed in combination with the company's role in the chain.
As soon as a company changes the composition of its product portfolio — adding a new product, adjusting an existing product, or discontinuing a product line — that can shift the set of applicable obligations. This works in two directions. A product change can cause obligations that previously applied to lapse, but can also give rise to new obligations that did not previously exist.
Think of an adjustment in material use that brings a product under different reporting obligations, or an expansion into a product category for which separate due diligence requirements apply. Even a seemingly small change, such as an adjustment in the origin of a raw material, can trigger an obligation that did not apply to the earlier product. Conversely, discontinuing a product line can cause an obligation that previously applied to lapse.
These shifts are often not the first thing noticed, because attention during a product change usually goes to operational or commercial consequences, not to the compliance side. That is precisely where the risk arises: a company can be in control at the moment of measurement, and no longer be so a few months later without anything having changed in the sector, the size or the legal form — only the product.
The product is one of several factors that together determine which obligations apply, and it is useful not to confuse these factors with one another. For instance, the sector in which a company operates also partly determines which rules apply, independently of the product. In addition, the size of the business plays a role, and the legal form can cause obligations to turn out differently than for a comparable company with a different legal structure. For companies operating internationally, there is also the fact that the countries in which the company operates are themselves also decisive, because the same European rule is implemented differently per country. These factors do not work one after another, but simultaneously, and a change in one of them can influence the outcome of the others.
Which obligations exactly apply to a specific product depends on the exact categorisation within the applicable regulation, on the company's role in the chain and on the market in which the product is placed. Thresholds, definitions and deadlines change regularly and differ per regulatory framework, so for the current text the source itself — the relevant regulation or directive, and its national implementation — is the starting point. This page describes the factor and the direction of change, not the exact boundary.
Knowing that the product is one of the factors that determines the applicable obligations is a first step. The follow-up question is what happens when that product changes: which obligation lapses, which one is added, and who in the organisation is then responsible for it. That is exactly where the changes resulting from a product change are made visible, and where the connection with a change in the countries in which a company operates is also addressed. The Compliance Check is designed not only to flag these obligations, but to link an owner, a piece of evidence and a control to each obligation, so that a board can demonstrate that it is in control — even when the product changes.
Once it is clear which obligations apply and what evidence is needed for them, the question naturally arises of how much capacity that requires and which part of it is repeatable enough to automate. FTE TO AI's work scan calculates, per task, which part of the work can be taken over by AI, and thereby connects with the moment when a company not only knows which rules apply, but also wants to know what demonstrating compliance with them will structurally cost.
The Compliance Check is under construction. Anyone who sees a role for this within their own organisation can sign up for the waiting list.
Vraag maar welke verplichting op u van toepassing is, en waaraan u dat kunt aantonen.
Answers come from this site’s knowledge base. Not tailored advice, and not a scan of your company.