The main challenges and opportunities for the Spice Industry regarding sustainability are:

• A long and complex supply chain with more than 200 kinds of spices and herbs globally sourced by European spice companies. It is not only that the amount is high, but the different spices do also have different characteristics due to diverse geographical and climate conditions in the growing areas. This will add complexity when addressing sustainability challenges as well as opportunities to the supply chain. Many of the herbs and spices imported into Europe are produced in less economically developed countries by smallholder farmers who for a large part of their livelihoods depend on the income from their crops. As a result of global market forces smallholder farmers have increasingly moved to other more valuable sources of income, such as highly intensive crops. In addition, many young farmers are leaving agriculture and migrate to urban areas for works in non-agricultural sectors. This affects the scarcity of spices and herbs and can also negatively affect the environment- highly intensive monoculture farm systems cause serious land degradation, pollution and erosion issues- and communities that suffer from health problems due to the use of chemicals in such systems.

• EU upcoming sustainability legislations, where EU Corporate Sustainability Due Diligence Directive (CSDDD) requires in-scope companies to conduct due diligence on, and take responsibility for, human rights abuses and environmental harm throughout their global value chains. On 1 June 2023, the European Parliament agreed on its position on CSDDD. This legislation will be one that will impact all ESA members, though within different timeframe due to company size and where in the supply chain the company is. Corporate Sustainability Reporting Directive and Forced Labor Ban regulation have also to be considered in the future.

• There are a lot on the EU policy agenda regarding sustainability except for CSDDD. Within The European Green Deal with Farm to Fork Strategy, Circular Economy Action Plan and EU Biodiversity Strategy there are forthcoming EU initiatives regarding proposal for a legislative framework for sustainable food systems, sustainable use of pesticides, revision of EU legislation on Food contact Materials, proposal for a sustainable food labelling framework, packaging and packaging waste regulation, directive on green claims.

• Consumers are looking for more sustainable foods. Protect the security of supply chain is important and consumers want to know the origin of the food they buy and will eat, and many consumers want to know the livelihoods of the people who grow the spices. Hence transparency and traceability are crucial.

The most important and relevant stakeholders for ESA regarding sustainability are, EU regulators, EU agencies & scientists, NGOs, members, consumers, retailers, B 2 B customers, farmers, collectors, and producers. ESA as a Trade association is composed of different types of members, National Associations, Direct Full Membership and Direct Associated Membership which is important to keep in mind when to decide what we can and will focus on regarding sustainability. Until now very much of individual companies work within sustainability has been voluntary commitments, but with all the upcoming EU legislation that will change.

According to the risks and opportunities in the herbs and spice supply chain, upcoming legislations and our stakeholder analysis, the focus areas for ESA sustainability work are:

• Human rights and specifically child labor

• Farmers livelihoods

• Climate

• Biodiversity

• Agrochemicals including pesticides

• Water

From the UNs 17 Sustainable Development Goals ESA has decided that the following are where we can achieve the most impact and these are the ones ESA will mainly support:

• Sustainable sourcing where compliance to ESA CoC is needed will promote sustainable production and create impact at farm level.

• To identify and address risks, due diligence is needed. When performing due diligence there will be identified risks within:

• Water and waste management.
  Child and forced labor awareness and absence in living income.
  Climate change.
  Biodiversity and agrochemical use.

• Finally, partnership is important to create impact. This will be reached through MoU with SSI and collaboration at origin.

What to achieve?
As the umbrella association for the European spice industry we want the industry to work towards a more sustainable business and we want to help our members to drive impact in the entire supply chain. This will be done through awareness, education, tools and cooperations.

Since the ESA GA October 2022, we have the ESA CoC for responsible sourcing. This is a very important document for a more sustainable business, and it is mandatory for ESA members to ensure compliance with it. This will build credibility with clients through fair and transparent culture. Embed responsible business conduct into policies & management systems is also the first step in due diligence process according to UN Guiding Principles and the OECD Guidelines.

ESA goals 2023-2027

• Establish an ESA Sustainability Committee.

• Advice the membership how to comply with ESA CoC for responsible sourcing.

• Support the membership with Due Diligence work regarding human rights and environmental.

• Support one sector project at origin.

• Strengthen ESA communication regarding sustainability.

ESA WEBSITE – SUSTAINABILITY SECTION

1. EU REGULATORY LANDSCAPE

The Environmental, Social, and Governance (ESG) regulatory framework in Europe is complex and constantly evolving. Taken as a whole, it provides a strategic roadmap for promoting the efficient use of resources, advancing the circular economy, and addressing key challenges such as climate change, pollution, human rights, and broader social and governance concerns.

Below is a list of key ESG-related legislation and regulations currently impacting companies operating in Europe.

1. The European Climate Law

Official Title: Regulation (EU) 2021/1119 establishing the framework for achieving climate neutrality

What it is:

The European Climate Law serves as the legal backbone of the EU’s climate ambition, setting in stone the overarching goal of achieving climate neutrality by 2050 and an intermediate target of at least 55% net GHG emission reductions by 2030, compared to 1990 levels. As a binding regulation, it compels both EU institutions and Member States to take coordinated action across all levels — from emissions cuts to clean technology investments and environmental protection. Rooted in the political vision of the European Green Deal, the law mandates that all EU policies — including those on agriculture, land use, energy, and trade — actively contribute to climate neutrality. It also establishes a clear emissions reduction trajectory, subject to review every five years, and introduces a robust system of scientific oversight, progress monitoring, and policy consistency checks, ensuring that the transition is fair, irreversible, and predictable for investors, businesses, and society at large.

Entry into force:

• Adopted: 30 June 2021.

• Effective as of: 29 July 2021.

Implementation:

The Law introduces:

• A European Scientific Advisory Board on Climate Change, established in 2021, to provide independent advice and assess consistency of EU policies.

• Annual progress monitoring via the European Environment Agency and the Commission.

• A mechanism for taking corrective action if progress is insufficient.

• Integration with the European Semester to align climate goals with national economic policy.

Implication for the herb and spice sector:

Although the European Climate Law does not impose direct obligations on specific agrifood products, it drives the entire climate policy ecosystem, which influences:

• Sustainability criteria for agricultural products and their carbon footprint.

• Incentives for regenerative and climate-smart agriculture, especially through the CAP Strategic Plans and Horizon Europe funding.

• EU Taxonomy alignment, where low-carbon agriculture and nature-based solutions (e.g. biodiversity-enhancing practices) are favored.

• Trade and supply chain measures, where imported products may face increasing scrutiny on their climate impacts (e.g. via Carbon Border Adjustment Mechanism (CBAM) in the future).

Producers, importers, and processors of herbs and spices will be increasingly encouraged — and potentially required — to:

• Quantify and reduce emissions across their supply chain (including scope 3 emissions).

• Invest in sustainable sourcing (e.g. agroforestry, low-input farming, organic).

• Disclose climate-related risks and targets in line with CSRD and CSDDD obligations.

2. Corporate Sustainability Reporting Directive (CSRD)

Official Title: Directive (EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022 amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and Directive 2013/34/EU, as regards corporate sustainability reporting

What it is:
The CSRD requires large and listed EU companies to report on environmental, social, and governance (ESG) performance using the European Sustainability Reporting Standards (ESRS).

Entry into force:

• Adopted: December 2022.

• Effective as of: 5 January 2023.

**Reporting obligations apply progressively, depending on company type.

Timeline:

• 2024 reports (due in 2025): Listed large public-interest entities (already under Non-Financial Reporting Directive - NFRD).

• 2025 reports (due in 2026): Large companies (>250 employees, >€40M turnover, >€20M balance sheet).

• 2026 reports (due in 2027): Listed SMEs (with opt-out until 2028).

• 2028 onwards: Non-EU companies with significant EU operations (≥€150M turnover in the EU).

Recent Developments:

In February 2025, the European Commission proposed the "Omnibus I" package, aiming to simplify and reduce the regulatory burden of the CSRD. Key proposals include:

• Raising the reporting threshold: Limiting the CSRD to companies with more than 1,000 employees and a net turnover exceeding €450 million, compared to the current thresholds of 250 employees and €40 million turnover.

• Delaying implementation: Postponing the adoption of sector-specific ESRS and the reporting requirements for non-EU companies until at least October 2027.

These changes are part of the EU's broader effort to balance sustainability goals with industrial competitiveness.

Implication for the herb and spice sector:

• Directly affects: Large companies active in sourcing or processing herbs and spices.

• Indirectly affects: SMEs as upstream suppliers, due to data requests and cascading reporting obligations.

• Key ESRS modules: ESRS E1 (Climate), E2 (Pollution), E3 (Water), E4 (Biodiversity), S2 (Workers in the Value Chain), and G1 (Business Conduct)

• ESA's role: Engaging with members to facilitate sector-relevant disclosures (e.g., biodiversity, pesticide use, smallholder conditions).

3. Corporate Sustainability Due Diligence Directive (CSDDD / CS3D)

Official Title: Directive (EU) 2024/1760 of the European Parliament and of the Council of 13 June 2024 on corporate sustainability due diligence and amending Directive (EU) 2019/1937 and Regulation (EU) 2023/2859

What it is:
The directive obliges large companies to identify, prevent, mitigate, and remedy adverse impacts on human rights and the environment in their own operations, subsidiaries, and value chains.

Timeline:

• Adopted by the EU Council: 24 May 2024.

• Publication in Official Journal: 5 July 2024.

• Entry into force: 25 July 2024.

• Transposition deadline: 26 July 2027.

• Application (stepwise):

  • 2028: Companies with ≥5,000 employees and ≥€1.5bn net worldwide turnover;

  • 2029: Companies with ≥3,000 employees and ≥€900M turnover;

  • 2030: Companies with ≥1,000 employees and ≥€450M turnover.

Implication for the herb and spice sector:

• Covers core sustainability issues in herb/spice value chains: child labour, deforestation, pesticide misuse, land rights, biodiversity, and workers’ rights.

• Emphasises leverage, stakeholder engagement, and risk-based prioritisation — crucial for companies sourcing from high-risk origins.

4. EU Forced Labour Regulation

Official Title: Regulation (EU) 2024/1860 of the European Parliament and of the Council of 13 June 2024 on prohibiting products made with forced labour on the Union market

What it is:
A new regulation to prohibit the placing and making available of products made with forced labour on the EU market — including imports and exports.

Timeline:

• Political agreement reached: March 2024.

• Final adoption expected: Q3/Q4 2025.

• Entry into force: 13 December 2024.

• Regulation fully applicable: 14 December 2027.

• Key milestones:

  • 15 September 2025: Application deadline for the Expert Group on Forced Labour;

  • 14 December 2025: Designation of competent authorities;

  • 14 June 2026: Publication of database and guidelines;

  • 14 December 2027: Regulation enters into application.

Enforcement:

• National authorities will investigate and order product withdrawals if violations are confirmed.

• A risk-based approach will guide enforcement, with emphasis on sectors or regions flagged by external benchmarks (e.g., ILO, U.S. Department of Labor list).

Implication for the herb and spice sector:

• Companies sourcing herbs and spices from high-risk regions (e.g., parts of Asia, Africa, Latin America) may face increased scrutiny.

• Strong incentives to enhance supply chain mapping, third-party verification, and worker grievance mechanisms.

5. EU Deforestation-Free Products Regulation (EUDR)

Official Title: Regulation (EU) 2023/1115 of the European Parliament and of the Council of 23 May 2023 on the making available on the Union market of products associated with deforestation and forest degradation

What it is:
This Regulation aims to prevent EU-driven deforestation by requiring due diligence for specific commodities (e.g. cocoa, coffee, palm oil, soy, rubber, timber, beef) linked to deforestation risk.

Status and timeline:

• Adopted: June 2023.

• Entry into force: 30 December 2025 for large operators; 30 June 2026 for SMEs.

• Implementation phase: Companies must prove that products linked to deforestation or degradation after 31 December 2020 are not entering the EU market.

Implication for the herb and spice sector:

• Herbs and spices are not yet covered, but certain spices — like vanilla (Madagascar), cinnamon (Sri Lanka), and pepper (Vietnam) — are cultivated near forested areas.

• Future inclusion is possible, especially if deforestation links are proven.

6. EU Taxonomy for Sustainable Activities & SFDR

Official Title:
Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020
on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088

Regulation (EU) 2019/2088 of the European Parliament and of the Council of 27 November 2019 on sustainability‐related disclosures in the financial services sector

What it is:
These initiatives aim to redirect capital flows toward sustainable business models by:

• Defining what constitutes a "sustainable activity" (EU Taxonomy);

• Requiring investors to disclose the sustainability of their portfolios (SFDR – Sustainable Finance Disclosure Regulation).

Status and timeline:

• Taxonomy Regulation entered into force: July 2020.

• Climate criteria (climate mitigation/adaptation): effective since January 2022.

• Environmental criteria (water, circular economy, biodiversity): phased in since 2023.

• SFDR Level 1: in force since March 2021.

• SFDR Level 2 (detailed disclosures): in force since January 2023.

• SFDR review: European Commission announced a review in Q4 2025, with the proposal expected by 19 November 2025, aiming to clarify key concepts, ensure regulatory consistency, and address product categorization.

• Omnibus I: In February 2025, the European Commission proposed simplifications to reduce the reporting burden under CSRD, including adjustments affecting SMEs and non-EU companies.

Implication for the herb and spice sector:

• Spices and herbs cultivated through regenerative or organic practices may contribute to Taxonomy-aligned activities.

• Companies seeking ESG funding will need to demonstrate alignment with Taxonomy and SFDR indicators.

7. Other ESG Files to Watch

• Ecodesign for Sustainable Products Regulation (ESPR) – aims to reduce environmental impacts of all products sold in the EU.

  • Official Title: Regulation (EU) 2023/2155 of the European Parliament and of the Council of 14 September 2023 on ecodesign requirements for sustainable products and repealing Directive 2009/125/EC

  • Adopted in 2024, entering into force in 2026, with delegated acts for food packaging and labelling expected.

• Green Claims Directive – requires scientific evidence and third-party verification for voluntary environmental claims (e.g. "climate-neutral", "eco-friendly").

  • Official Title: Directive (EU) 2023/970 of the European Parliament and of the Council of 20 June 2023 on the substantiation and communication of explicit environmental claims

  • Adopted in 2024, expected to apply from 2026–2027.

• Directive on Gender Balance in Corporate Boards – requires 40% representation of the under-represented sex among non-executive directors in listed companies.

  • Official Title: Directive (EU) 2022/2381 of the European Parliament and of the Council of 14 December 2022 on improving the gender balance among directors of listed companies and related measures

  • In force since 2022, applicable by June 2026.

2. NEXT STEPS

As a sector with complex, international value chains, herbs and spices stakeholders must prepare for increasing scrutiny and due diligence demands. The European Spice Association (ESA) will continue to:

• Monitor EU legislation developments;

• Engage with institutions and allied sectors;

• Provide tailored guidance, tools, and capacity building;

• Promote harmonised approaches through our Code of Conduct and working groups.

UK Scenario

1. Establishment of the ISSB

What it is:

The International Financial Reporting Standards (IFRS) Foundation established the International Sustainability Standards Board (ISSB) in 2021 to create a global baseline of sustainability disclosure standards tailored to the information needs of investors. 

The goal mirrors the IFRS Foundation’s achievements in financial reporting, aiming to integrate sustainability disclosures with financial statements in a single, consistent reporting framework.

Objectives:
The ISSB standards seek to deliver consistent, comparable, and verifiable sustainability-related financial information.

This framework supports companies in providing robust sustainability disclosures, helps prevent greenwashing, and enables investors to make more informed capital allocation decisions.

2. Publication of IFRS S1 and IFRS S2

In 2023, the ISSB issued its first two global sustainability disclosure standards:

• IFRS S1 – General Requirements for Disclosure of Sustainability-related Financial Information.
• IFRS S2 – Climate-related Disclosures.

3. UK Green Finance Strategy and SDR Development

What it is:

• In March 2023, the UK Government released an updated Green Finance Strategy, building on the 2019 version.
• It set out five key objectives to strengthen the UK’s leadership in green finance:
• Growth and competitiveness of UK financial services;
• Investment in the green economy;
• Financial stability;
• Integration of nature and climate adaptation;
• Alignment of global financial flows with environmental goals.
• In parallel, the Financial Conduct Authority (FCA) initiated consultations on the Sustainability Disclosure Requirements (SDR), addressing disclosure rules for asset managers, investment labelling, marketing standards, and anti-greenwashing measures. The Government reaffirmed its collaboration with the FCA and its commitment to a comprehensive SDR framework and a review of non-financial reporting.

4. Technical Advisory Recommendations and Draft UK Standards 

What it is:

In December 2024, the UK Sustainability Disclosure Technical Advisory Committee recommended endorsement (with minor amendments) of IFRS S1 and IFRS S2 for use in the UK.

Following this, in June 2025, the UK Government published the draft UK Sustainability Reporting Standards (UK SRS) and opened a public consultation. The UK SRS will implement the ISSB’s IFRS S1 and S2 into UK law with limited modifications.

Key Features:

• Phased implementation: Companies will initially report on climate-related issues only for the first two years; broader sustainability reporting will begin in the third year.
• Use of SASB standards: Reference to SASB industry-specific standards is permitted but not mandatory.
• Scope 3 emissions relief: Entities are not required to disclose Scope 3 emissions in the first reporting year; this obligation begins in the second year.

Next Steps:

• The Government will decide on final endorsement of the UK SRS following consultation.
• The final standards, UK SRS S1 and UK SRS S2, are expected to be published in autumn 2025, initially available for voluntary use.