Can Oiconomy Pricing help companies to comply to the new EU regulations on transparent value chains?

Recently various new EU regulations on transparency in global value chains have been prepared and accepted.

These include the EU regulation on Deforestation Free Products (EURDP, EU 2023/1115), the Digital Product Passport (DPP, EU Document 52022PC0142) as part of the EU Ecodesign for Sustainable Product Regulation, theForced Labor Ordinance FLO, EU Document 52022PC0453), the Corporate Sustainability Reporting Directive (CSRD, EU 2022/2464), which also implements the European Sustainability Reporting Standards (ESRS), the EU Non-Financial Reporting Directive (NFRD, EU 2014/95), more recently replaced by the Corporate Sustainability Due Diligence Directive (CSDDD, EU Document 52022PC0071).

This recent tightening of regulations demands more active data collection, interpretation, and mitigation activities by companies:

First: a large group of companies will need to show their impacts and planned mitigation in their value chains, using the life cycle approach.

Second: it uses the due diligence process, including identifying all your impacts, identifying mitigation options and implementing those improvements.

Third, jointly these new legal requirements refer to the full scope of sustainability aspects, covering Planet, People and Prosperity aspects.

Beatriz Hidalgo Daim has reviewed how well the Oiconomy Pricing approach fits to these new requirements. The report (available HERE) shows that the Oiconomy Pricing approach is very well prepared for enabling companies to comply to these new regulations:

• All these regulations require an inclusive value chain approach in assessing impacts of product and the producing companies.
• Oiconomy Pricing uses data about the actual performance of all value chain partners, while, when this is missing, using available data sources which are comparable to the data sources referred of in these regulations.
• Oiconomy Pricing uses for other aspects an assessment approach based on good governance, well-fitting to the due diligence process described in the new EU regulations.
• The orientation of Oiconomy Pricing on prevention costs suits very well for the double materiality requirements formulated in these regulations.
• The core philosophy behind Oiconomy Pricing is that it starts collaboration between value chain partners on getting to know their impacts, knowing the costs of prevention, and thus enabling them to start developing and implement improvement. This is in essence what the new legislation intends to provoke: the final mitigation steps of the due diligence process.

We conclude that further uptake of the Oiconomy Pricing approach is essential for successful implementation of the new EU regulations. Oiconomy Pricing is so far the only tool covering the full scope of topics addressed in these regulations. The report also included suggestions for further alignment of Oiconomy Pricing method to these regulatory developments.