Trade Compliance for Leadership Navigating a Shifting Global Landscape 2025

International trade management now requires the gathering of sustainability information in addition to data that was already collected for regular customs formalities. A key challenge for sustainable trade compliance and risk mitigation is identifying who within a company should be responsible for these new obligations, where the necessary information resides and which departments to involve. Trade practitioners may find it helpful to distinguish between sustainability requirements that are “trade adjacent” and those that are “trade concerned”. Trade-adjacent regulations are those that do not directly regulate trade flows but may still require input from trade compliance for due diligence, data collection or reporting. Examples include the Corporate Sustainability Reporting Directive (CSRD), which mandates large companies operating in the EU to disclose a wide range of environmental, social and governance (ESG) impacts along their value chains, and the Corporate Sustainability Due Diligence Directive (CSDDD), which requires companies to identify, prevent and mitigate adverse human rights and environmental impacts throughout their global value chains. While these regulations may not address trade directly and are not enforced at the border, they often require input from trade compliance to perform due diligence or comply with reporting obligations. By contrast, trade-concerned regulations are enforced at the border and directly affect import processes, whereby non-compliance is de facto an issue for the international trade management team and may lead to supply chain disruption or additional costs at the border. Examples of trade- concerned regulations include the EU’s Carbon Border Adjustment Mechanism (CBAM), which imposes a carbon price on certain imported goods, and the EU Deforestation Regulation (EUDR), which requires companies to ensure that products placed on the EU market are not linked to deforestation or forest degradation, with compliance verified through due diligence and traceability requirements. Similarly, the US UFLPA prohibits the import of goods produced wholly or in part in China’s Xinjiang region, unless the importer can provide clear and convincing evidence that the goods were not produced with forced labour.Interview feedback highlighted that when governance responsibilities are not clearly defined, companies may experience “ping- ponging” of responsibilities between departments. Understanding whether a regulation is trade adjacent or trade concerned can be helpful from an international trade management perspective to prioritize involvement. After all, interviewees note that trade functions may be drawn in due to their regulatory expertise and access to relevant data, but this involvement must be balanced against core responsibilities. Data availability and quality is another major challenge. Supplier sustainability data such as emissions, sourcing details or labour practices can be hard to obtain. Many interviewees lack visibility beyond Tier 1 suppliers. Interviewees also noted that suppliers are increasingly overwhelmed with data requests that use different systems and tools. Multiple interviewees also said that, given the regulatory complexity, it is important to carefully evaluate which regulations are interconnected and which are not, and allocate responsibility accordingly. Risks and opportunities Non-compliance with emerging sustainability regulations presents trade risks for companies including shipment delays or rejection at the border; reputational damage, legal penalties or exclusion from vital markets; and missed business opportunities. In some cases, companies may also incur higher costs due to reactive compliance efforts or supply chain disruptions caused by non- compliant suppliers. At the same time, companies that proactively address sustainability regulations can unlock significant strategic benefits. Deeper supply chain insight enhances supply chain futureproofing. Additionally, companies that lead on sustainability compliance may benefit from improved brand reputation, stronger investor confidence and alignment with customer expectations. Companies may also find themselves more easily able to access green financing, acquire preferred supplier status or participate in sustainable procurement programmes.2.2 Supply chain sustainability International trade requirements have expanded in recent years with the introduction of sustainable trade regulations. Companies need to consider new governance and data collection approaches. Trade Compliance for Leadership: Navigating a Shifting Global Landscape 13