Brazil’s beleaguered coffee growers, still reeling from 2024’s poor harvest, are confronting a fresh challenge – to comply with new sustainability rules created 9,000km away in Brussels to protect the Amazon rainforest.
Their concern centres around the new EU Regulation on Deforestation-free Products (EUDR) that states producers must be able to prove that their products do not originate from recently deforested land or have not contributed to forest degradation.
While many large producers are already able to comply, the smaller companies in their supply chains often do not have the necessary reporting systems in place. In future, failure to disclose sustainability related financial information which has been independently assured may exclude companies from international export markets.
“Historically, many companies in the EU have waited for legislation to be imposed before significantly ramping up their efforts to provide sustainability information,” says Mark Stewart, the Moore network’s global leader on sustainability and a partner at member firm Johnston Carmichael. “In putting it off as long as possible a form of panic can set in when they realise deadlines are fast approaching.
“However, there is a less stressful way of going about this by preparing to meet the requirements of the regulations without having to completely reinvent the business.”
Stewart warns mid-sized companies against falling into the “Transparency Trap” which can eat into precious time and financial reserves. Some regulations may cover more than 1,000 individual data points but not every company has to provide all of this information.
“Our advice is: break it down into bite-size chunks, and to be prepared ahead of the curve,” he says. “We know what regulators want in most jurisdictions, so it’s about getting the business in shape to collect the data to meet those demands.
“Focusing on what is material, based on business type and industry sector, is the best way to reduce the information you are required to gather and analyse.”
The first step is for businesses to review their existing financial reporting capabilities to understand where they may not comply with new sustainability disclosure rules. This allows SMEs to proactively prepare for any required disclosures and align practices with the regulations.
By establishing a robust reporting framework now, SMEs can avoid scrambling to gather the necessary data when legislation comes into force.
SMEs should begin communicating with key stakeholders – customers, suppliers and investors – about their sustainability efforts and policies. This engagement allows companies to identify areas where they can collaborate with suppliers or adjust business models to meet sustainability goals.
The EU is leading the way on sustainability and ESG with its Corporate Sustainability Reporting Directive (CSRD), requiring companies to report on the impact of their activities on the environment and society.
Meanwhile, European Sustainability Reporting Standards (ESRS) already oblige larger companies to report both on their impacts on people and the environment and on how social and environmental issues create financial risks and opportunities for the company. The rules will extend to small companies over the next two years.
The UK is also at the forefront of regulation in this area and its Sustainability Reporting Standards (UK SRS) will come into effect in January 2026, with the first reports due in 2027. “UK based SMEs have time to get prepared for impending legislation but they should start planning for it now.” Says Mark Stewart.
In this Global Snapshot, Moore’s experts examine developments in other markets.
How Brussels rules impact Brazilian coffee farmers
The wider impact of decisions made in Brussels can be seen in the coffee-growing regions of Brazil. For the farmers and exporters who buy their beans the EU’s Regulation on Deforestation-free Products (EUDR) will have a profound impact on their ability to sell into their biggest market.
Brazil is the largest producer and exporter of coffee but 72% of Brazil’s coffee producers are smallholder farmers, cultivating on 20 hectares or less. Of these, 47% are family-owned businesses that export to the EU – and many lack the sophisticated systems required to demonstrate compliance with the EUDR.
Major coffee producers are taking the initiative and creating tools that can prove their locally harvested beans did not come from deforested areas. However, one major concern remains: most coffees are a blend that use beans from other countries and guaranteeing the traceability of supplies from Ethiopia, for example, is difficult.
The stakes are high. As well as coffee, the directive applies to soy, beef, palm oil, coffee, cocoa, rubber, wood and derivatives, including leather and furniture. Commodities affected by the EUDR earn Brazil around $15 billion in exports – one-third of its total overseas revenues.
For smaller growers the problem is more mundane: how to create systems that prove to the big producers they sell to that they are compliant with all financial reporting regulations. Moore Belo Horizonte is at the forefront of efforts to help mid-sized agri-businesses develop templates that allow them to meet their obligations quickly and easily.
“EUDR affects many companies, such as those in the coffee and beef sectors, because if they do not take action, they will be forbidden to export to Europe. Nowevery time we talk to a company, the first thing we ask them is who are their big clients and main suppliers. From that we can work out the very first steps they must take to be compliant.”
As rapidly growing Indian companies become bigger players on the world stage, there is an increased demand for information on sustainability from investors, regulators and other stakeholders.
The Securities Exchange Board of India rolled out a Business Responsibility and Sustainability Reporting (BRSR) framework, which requires the top 1,000 companies by market capitalisation to disclose their sustainability and ESG initiatives.
There are a set of around 40 key performance indicators classified under nine attributes, referred to as BRSR Core, covering everything from their energy footprints to enhancing employee wellbeing and fairness in dealing with suppliers and customers.
From 2025-26 the BRSR Core framework also requires the top 250 companies to track sustainability KPIs of partners in their value chains.
And when it comes to assurance, India has taken a more pragmatic approach than the EU, preferring to focus on rigorous assurance of a small number of key metrics – around 40 – rather than limited assurance of the whole range of possible metrics.
Getting to this point has been a challenge, especially for mid-sized companies. Though they often had the data required, it was not captured in the way that acceptable to the regulator.
Moore Singhi has been helping many of those data-challenged businesses to embed systems that allow the free flow of all relevant information up the supply chain to their main customers and on to the regulators.
One of the main befits of a positive approach to the sustainability and ESG agenda revealed in Moore Global research was the impact on customer retention and brand image.
The Moore Singhi team have noticed a growing trend among Indian companies exposed to the European market to do more on transparency than the regulations mandate in order to demonstrate commitment to being good corporate citizens.
“It started as a complianceissue but people do now see the value of good governance and realising thatby implementing ESG, they are able to identify the risks that the company is exposed to. Investing in robust data systems and engaging value chain partners allows Indian businesses to drive a meaningful sustainability agenda and gain a competitive edge in the global market.”
Ravi Sankar Nori
Chief Operating Officer – ESG Advisory Moore Singhi
K-pop offers ESG insight in Korea
Like their Indian counterparts, South Korea’s businesses with big footprints in western markets are also faced with the challenge of dealing with tighter sustainability and ESG regulation abroad than they have experienced at home.
In 2021, the Financial Services Commission in Seoul said it would gradually broaden the scope of mandatory ESG disclosure, commencing with companies with assets of more than 2 trillion won ($1.3 billion) by 2025 and eventually encompassing all stock market-listed companies by 2030.
However, this met resistance from business quarters and the requirement for ESG disclosure mandates was pushed back to after 2026 and the date may slip to 2029. However, large international brands like Hyundai and Samsung are already monitoring their own performance.
If the ‘G’ in ESG (Governance) is a work in progress, perhaps an even bigger challenge for Korea is the ‘S’ – Social.
More highly educated women are entering the workforce and are not prepared to accept the old norms of male domination in corporate hierarchies. They also face a 31.2% gender wage gap – the widest among OECD countries.
Research by the University of Sheffield found that companies that hire more permanent female staff and reduced their reliance on temporary contractual workers performed better financially over the long term.
An unlikely answer to this thorny ‘Social’ question in the ESG debate may be found in the glitzy world of K-pop. With its catchy tunes and synchronised dance routines it is now a global phenomenon of that is now worth more than $40 billion to the economy. One boy band alone, BTS, is reported to contribute 0.3% of Korean GDP
K-pop has become a global phenomenon – but there have also been tragedies of performers dying young followed by revelations of intolerable pressures and lop-sided contracts.
This has led a country that has been slow to embrace ESG to understand the need for minimum standards and ensuring the well-being of employees – which, essentially, is what most K-pop performers are in terms of employment status.
Hyesung Accounting Corporation, a correspondent firm in the Moore network, has organised investment conferences in Seoul in recent years and has seen Korean companies taking ESG more seriously as they realise that international investment now comes with sustainability strings attached.
“Almost all of the investors we speak to consider sustainability and ESG factors when they are selecting investments, so there is definitely more awareness of the issues. Newer companies realise that if they don't have minimum processes in place, they could miss out.”
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