Sustainability requests are more than ever coming in alongside RFQs (Requests for Quotations) as companies embed sustainability as a core principle, often even weighted higher than traditional company values. I’ve seen firsthand how the ESG ‘ask’ at tender is often overly concentrated on the ‘E’ – the environment.

It’s understandable when you look at the teeth failure to focus on the ‘E’ can bring to bear in terms of sanctions. Since the introduction of the European Union’s Corporate Sustainability Reporting Directive in 2023, companies must file annual sustainability reports alongside their financial statements and submit them in accordance with European Sustainability Reporting Standards (ESRS).

The ‘E’ therefore is no longer a ‘nice to have’ but a ‘must have’, with non-compliance resulting in administrative sanctions and three possible penalties including a public denunciation, an order to change conduct or a financial punishment with the maximum fines up to 10 million Euros or five per cent of their annual revenue.

Governance in ESG: A critical ‘G’ component

Sanctions aside, I strongly believe the ‘G’ in ESG is perhaps more critical and arguably the ‘go-to’ gold standard which drives compliance with the other two requirements. In short, my stance is that governance is fundamental to the success and sustainability of any organisation.

Customs is a specialist area requiring forensic attention to detail and governance involves adhering to international trade regulations, ensuring compliance and mitigating risks associated with import and export activities.

Robust governance practices in customs operations not only protect the company from legal and financial repercussions but also enhance its reputation and operational efficiency.

Indeed, I’d go as far as to say that I don’t plant a tree for every step I take, but what I would do is governance all day, every day.

This ‘G’ in ESG is the often-overlooked biggest benefit of making customs processes work for manufacturing businesses by proactively moving away from practices which do not serve you or the world you work, live and thrive in.

When customs compliance goes wrong, the consequences can be severe. It doesn’t just work against you; it can be truly damaging to the wider environment, impacting the 26 ESG criteria used to evaluate companies’ sustainability practices.

Core skills: leave customs to the experts

For most businesses, complex customs practices are not day-to-day core skills. They are not specialists, and the often-steep learning curves they face are almost exclusively driven by legislative or regulatory requirement. This may have resulted from far-reaching geopolitical developments such as the introduction of tariffs and counter-tariffs.

Teams unaware of changes in the macro environment or sudden governance issues can face significant disruptions. For example, unsanctioned trade can occur if there isn’t a firm policy on where to trade and an understanding of global sanctions. This can lead to hefty fines, legal battles and damage to the company’s reputation. Ensuring compliance with international trade regulations is crucial for maintaining strong governance and avoiding these pitfalls.

My colleague Nicola Haynes, who has more than 40 years in the industry, believes one of the most effective ways to ensure strong governance in customs operations is through the use of Customs-as-a-Service (CaaS) providers: outsourcing customs handling to the experts. They operate in a highly-skilled environment which understands and represents the company’s needs and values.

At Customs Support Group, we offer business process outsourcing with dedicated white-label solutions supported by a team of experts across Europe. By leveraging the expertise of full-time, technologically-supported and regularly upskilled customs professionals, companies can ensure compliance with complex trade regulations and minimise risks.

Governance and compliance: the key to success

Strong governance in customs operations is therefore essential for the long-term success of manufacturing businesses.

By working with CaaS providers, companies can ensure compliance, mitigate risks and enhance operational efficiency. This approach alleviates the burden on in-house teams, allowing them to focus on core business activities without the stress of managing complex customs processes.

The importance of digitalisation

Customs compliance is traditionally a paperwork-heavy process, with forests of documentation to complete, a factor that also impacts on the E in ESG at a micro-company level.

In-house operations can often struggle to resource, protect, maintain and proactively improve large-scale digitalisation projects, which in turn can impact risk management if not managed carefully.

Bringing in the G force – the power of governance in the future – I am certain that investment in digitalisation is crucial for maintaining high governance standards in customs operations.

Digital tools will enable real-time tracking, data analysis and seamless communication, all vital for efficient customs management which importantly dovetails into the transparency and reporting goals within governance structures.

As manufacturing industries continue to evolve, AI is becoming an increasingly integral part of our supply chains. This shift brings greater scrutiny to governance and the protection of those affected by AI’s decisions within this major global infrastructure.

Additionally, the global trade landscape is constantly changing due to shifting political environments worldwide. In this dynamic context, the importance of robust customs support to safeguard and proactively manage your governance will only grow.

Need assistance with your own customs challenges? Reach out to Customs Support Group today to ensure your business is fully compliant and optimized for success.