Murray Paul Glen, Regulatory Affairs Manager, The Scotch Whisky Association


“It is the responsibility of private industry to adapt to these consumer expectations and exercise their right to challenge regulations responsibly”



Trade is changing. Governments and private companies are pursuing policies which seek to encourage sustainability; carbon pricing, regulating production or supply chain against various environmental metrics, and improving workers’ rights all aim to create sustainable business. Meanwhile policies like the introduction of Carbon Border Adjustment Mechanisms (CBAMs) in the UK and EU endeavour to level the playing field between companies at home, who are subject to domestic environmental tariffs, and those overseas, which are not.

However, one question that is becoming more salient is if it is justifiable to challenge environmentally motivated policies, when these create market access barriers.

The dilemma is clear; a company or industry which publicly promotes its sustainability credentials cannot allow itself to be marked as anti-environmentalist. The 2024 Edelman Trust Barometer found that more people (63%) trust “business” than NGOs (59%), Government (51%), and the media (50%). This shows that business has a vital role of responsibility to play in agenda setting, because whether businesses choose to oppose or support specific environmental measures, has real-world implications. If business opposes one sustainability measure, the resultant media and political climate could legitimise actors with even less tolerance for sustainability policy, undermining progress towards sustainable development.

At first glance the introduction of a Deposit Return Scheme (DRS), for example, should have positive environmental impacts; Germany’s DRS achieved a 94% recycling rate for PET products in 2019, at a cost increase of 10% on beverage companies. It is clear implementing such systems often imposes logistical and financial challenges on businesses already present in the market. Ironically, some DRS schemes in other countries led to increased wastage and carbon intensity. With a high success rate, the policy can be seen as justifiable but how success is measured across different metrics is not always clear in policies.

Three choices are then presented to business: to absorb the additional costs and continue doing business with tighter margins, to invest in markets without such barriers, or to seek revisions to regulations by sharing legitimate industry concerns. Crucially, each of these options opens the possibility of productive dialogue on progressive alignment of environmental standards in place of, as part of, or following a regulatory change.

The role of the international trade law as an outlet for legitimate grievances remains important. The WTO’s Most-Favoured Nation (MFN) and National Treatment principles under the GATT, prohibit regulatory discrimination between countries and between “like” products. Additionally, the WTO’s Committee on Market Access allows members to present comments and raise specific trade concerns about notified environmental regulations which could alter trade practices. There is also bi/multilateral engagement between states away often encouraged and informed by industry. Trade and Sustainable Development (TSD) chapters are incorporated in several EU and global trade agreements, reflecting commitments to labour and environmental standards, including the US–Mexico–Canada Agreement (USMCA) with environmental standards in the automotive sector. Such provisions aim to harmonize sustainability standards, which could reduce market access barriers.

Consequently, there are always avenues to challenge regulations on competition grounds rather than misdiagnosing strains placed on business from changing consumer expectations, namely that companies are more environmentally responsible, as unfair. It is the responsibility of private industry to adapt to these consumer expectations and exercise their right to challenge regulations responsibly.

Most market access barriers arise through a misunderstanding of commercial processes, rather than an anti-business agenda while objections to environmentally requirements arise from concerns of counterproductive impacts. This is also where there are positive opportunities to reduce market access barriers, such as binding and standardised methods of emissions and reporting which would reduce burdens on industry and ensure accurate, consistent measurements of climate goals for governments.

With this in mind, can it be justifiable to oppose environmental policies abroad when they create a market access barrier?

Three factors must be taken into consideration. Firstly, the positive and negative environmental impact of measures must be considered. This can only be done by specialist public affairs and regulatory staff, and it is up to businesses to ensure they have internal or external resource to analyse and provide scientific rebuttal to public measures which often have the benefit of government support. Both sides will inevitably have their own sets of evidence, so it is important to engage in a well-informed policy debate to ensure that regulations are not mere barriers to trade but rather methods through which companies and states can hold one another to account using common reporting methodologies and process standards.

Secondly, popular support for the measures. UK Polling by Ipsos in 2024 found that 77% of respondents were worried about climate change to some degree but are more divided in their support of measures which would tackle climate change but would impact their day-to-day convenience or cost such as phasing out gas boilers or increasing taxes on meat. This means that where opinion is divided, businesses should foster consumer preferences for sustainable goods but not seek to stoke concerns about lack of choice or increased cost which could undermine sustainability goals.

Thirdly, the impact on business and overall supply chain resilience. There will be regulatory measures which industry will simply have to live with, where the line is drawn depends on the ingenuity of companies and their ability to meet the challenges of a market where sustainability is both of interest for consumers and based on evidence it will have beneficial outcomes for the environmental goals stated.

Companies must make a principled as well as a strategic assessment of the extent to which they want to challenge market access barriers arising from a sustainable objective. While there can be poorly designed sustainability policies which hinder competitiveness and should be challenged by companies, there is legitimate cause to see climate regulation as an opportunity for alignment, helping remove complexity. It is up to companies to invest time and expertise to tell the difference, and ensure they are not left having a one-way debate with a market which has already outgrown their attitudes to sustainability.