Sustainability and Environmental Law in International Trade: Expected Regulations Following COP28

As the fight against climate change intensifies, governments, international organizations, and the private sector are taking action to achieve sustainability goals through new regulations. In this context, the United Nations Climate Change Conference (COP28) in November 2023 featured pivotal decisions that could reshape environmental law in international trade. In this article, we explore the anticipated regulatory changes in trade and environmental law following COP28 and highlight key sustainability-focused shifts on the horizon.

COP28 and Global Sustainability Goals

One of the most pressing topics at COP28 was the commitment of countries to significantly reduce their carbon footprint and adopt stricter measures to meet emission targets. The conference underscored the importance of reducing global carbon emissions by 2030—a goal that will likely require significant adjustments from major exporting countries and international businesses. This commitment emphasizes the necessity for countries and companies to transition to environmentally friendly production methods and create clear roadmaps for achieving carbon neutrality.

Border Carbon Adjustments and New Trade Barriers

The European Union’s “Carbon Border Adjustment Mechanism” (CBAM), which requires importers to lower the carbon footprint of their products, has emerged as a significant development in sustainable trade. Following COP28, more countries are expected to introduce similar mechanisms, gradually phasing out carbon-intensive production methods in international trade and encouraging more sustainable production practices.

CBAM and comparable policies will make it increasingly challenging to import carbon-heavy products, particularly in sectors like steel, aluminum, and cement. This regulatory shift will prompt businesses to adopt sustainable production methods to remain competitive in international markets.

Green Financing and Investment Incentives

COP28’s impact extends beyond environmental regulations, promoting green financing initiatives that support sustainable projects in developing countries as a vital tool in combating climate change. Organizations such as the World Bank and IMF have committed to channeling more funds into projects that support the transition to low-carbon energy sources. Additionally, international financial incentives for these projects are expected to grow, supported by new trade and investment laws that aim to facilitate sustainable economic development.

These changes indicate an increase in incentives for low-carbon products and more favorable financing terms for environmentally friendly projects. Specifically, investments in renewable energy and sustainable agricultural practices will likely play a central role in establishing a more sustainable international trade foundation.

Environmental Impact Assessments and the Future of Trade

Assessing the environmental impact of international trade has gained increased importance following COP28. Many countries now prioritize enhancing Environmental Impact Assessment (EIA) processes. Standardizing EIA reports globally and stricter monitoring of the environmental impact of trade activities can contribute significantly to fostering a sustainable trade structure. Such regulations aim to protect natural resources and encourage environmentally conscious trade practices.

Anticipated Regulations for Companies: New Responsibilities in Sustainability

Post-COP28, countries are expected to introduce stricter legal requirements for environmentally responsible business practices. Companies will likely face increased obligations related to reducing their carbon footprint, meeting environmental standards, and ensuring transparent reporting of their practices.

The European Union’s "Green Deal" targets serve as an example of how responsibilities for trade companies may evolve globally. New requirements, such as using sustainable packaging and monitoring carbon emissions, will prompt companies to adopt sustainability measures across their entire supply chain—not just in their own production processes.

Conclusion

COP28 represents a pivotal moment for reshaping global trade to prioritize environmental responsibility. Decisions made at this conference offer both opportunities and challenges for countries and businesses embracing sustainability goals. Carbon border adjustments, green finance incentives, enhanced EIA standards, and increased corporate environmental accountability are expected to contribute significantly to promoting sustainable international trade.

The anticipated post-COP28 regulations will drive eco-friendly and responsible trade practices while advancing green trade initiatives. Green finance support and investment incentives for sustainable projects, particularly in developing nations, could also help establish a more equitable and environmentally conscious structure in international trade.