In December 2019, the European Commission ("EC") proclaimed the ambitious goal of making Europe the world's first carbon-neutral continent by 2050, while both maintaining economic growth as well as preserving Europe's environment and biodiversity. The Commission recently unveiled a broad range of legislative measures in areas such as financial market regulation, energy supply, energy efficiency, transport, climate policy, trade, industry, agriculture and forestry under the umbrella term "European Green Deal".
Presented in March 2022, the Ecodesign for Sustainable Products Regulation ("ESPR") is part of the Green Deal and the cornerstone of the Commission's approach to strengthening the circular economy, reducing resource consumption and making sustainable products the norm in the internal market.
The EC's proposal
The ESPR is intended to replace the Ecodesign Directive (2009/125/EG) and establish a legal framework for improving the sustainability of products by laying down ecodesign requirements that specific product groups must meet. Unlike the currently applicable Ecodesign Directive, the new regulation will apply not only to energy-related products, but to almost any physical product placed on the market or put into service, including components and intermediate products, thus considerably expanding the scope of application.
The ecodesign requirements laid down in the ESPR are to be further specified by delegated acts of the Commission and can therefore be individually substantiated depending on the specificities and challenges of each product group. The requirements relate to aspects such as product durability and reliability, reusability, upgradeability, repairability, maintenance and refurbishment, substances of concern in the product, energy and resource efficiency, recycled content in products, expected generation of waste materials, or the products' carbon and environmental footprint.
This dynamic approach of the ESPR will allow the European legislator to address the particularities of the various product categories. For example, energy efficiency and repairability will most likely be of material importance when designing electronic products, while the textile industry should emphasise recyclability.
New information requirements and product passports
The results of a survey carried out on behalf of the EC and published in 2020 led to the conclusion that 94 % of EU citizens surveyed consider the protection of the environment to be "very important" or "fairly important", while 77 % perceive climate change as a very serious problem in the EU. However, consumers can only fully participate in the shift to a more sustainable and circular economy if they have convenient access to transparent information on aspects such as sustainability, repairability, availability of spare parts or the environmental footprint of a product.
Further harmonisation in the area of information obligations should hopefully eliminate the information deficit in some cases. The EC presented a new tool called the Digital Product Passport ("DPP") that consists of a product-specific data set, enabling the electronic registration, processing and transfer of product-related information between companies in the supply chain, authorities and consumers throughout the product's lifecycle. Standardised information relating to origin, supply chain, energy balance or repairability accessible through a single point of contact would enable consumers to make informed and sustainable choices.
Additionally, the introduction of harmonised information requirements for almost all physical products would in turn inevitably lead to improvements on the part of producers and suppliers. Criteria such as sustainability, repairability or the availability of spare parts could subsequently become important factors on the market and boost demand for "green products". A similar development has occurred in recent years with stricter data protection laws – above all the GDPR – which have led to a high level of data protection becoming a competitive advantage. Companies that have some catching up to do in this respect would have to disclose more information and would be subsequently spurred to close the gap with more progressive competitors.
However, when specifying the requirements and the scope of the information obligations, the Commission should ensure an appropriate balance between the consumers' interest in information and the manufacturers' interest in keeping their trade secrets and intellectual property protected.
Measures against the destruction of unsold consumer goods
Under Art 20 of the ESPR proposal, companies that destroy unsold consumer goods will in future be obliged to publicly disclose information about this process; for instance, on the number and type of products or the reasons for their destruction. This would make it easier for consumers to identify companies that act in an environmentally harmful way and to adjust their consumption behaviour accordingly. Companies, on the other hand, would have one more reason to reduce the destruction of unsold consumer goods to an absolute minimum. In certain cases, the Commission would be able to prohibit the destruction of products altogether. However, the proposal does not yet provide for a general ban on the destruction of unsold products. Given that some Member States like Germany or France have already taken stricter steps in this direction, at least in certain sectors, EU-wide rules will likely be tightened up as well in the course of the legislative process.
Next steps and how manufacturers can prepare for the ESPR
The ESPR is a proposal for a framework regulation, which means it could take some time to shape the obligations for the individual product groups even after the primary agreement on the legal framework. However, while concretisations under the Ecodesign Directive have in some cases been a long time coming, the Commission apparently aims to speed up the process and plans to launch a public consultation on the categories of products for the first ESPR working plan by the end of 2022.
As specific information on the obligations is still pending, no concrete advice can be given yet. Nevertheless, manufacturers should keep an eye on further developments relating to the ESPR and the corresponding delegated acts to be able to react in time once the requirements for their product groups have been defined. If parts of the product portfolio are among the products in the Commission's first working plan, it is advisable to consult external experts to ensure compliance with the ESPR and avoid the risk of a penalty.