How will the Ecodesign for Sustainable Products Regulation affect your business?

The Ecodesign for Sustainable Products Regulation will establish rules on the production of goods that are sold in the EU market. These rules will cover the entire life cycle of a product, from its design to its recycling. Companies which build tech devices and online platforms which sell those devices to consumers will have new obligations.

What is the Eco-design Initiative?

Eco-design (or ecological design) is the design of products or services that considers the environmental impact throughout a product’s life cycle. This initiative is part of a series of European Commission proposals intending to make sustainable goods the norm in the EU. The purpose of this regulation is to create long lasting goods, that can be repaired if broken, in order to move away from short-lasting, disposable products which fill landfills worldwide. As the design of a good determines 80% of its environmental impact, the proposal seeks to orient consumers towards more sustainable choices. The proposal builds on the EU Directive on Ecodesign requirements for energy-related products, published in 2009. The Commission wishes to enlarge the scope of this directive beyond energy related products. Under the new regulation, almost all physical goods available in the EU market, with the exception of food, feed and medicines, will have to be more sustainable, circular and energy efficient from their design phase until their end-of-life and repurposing. 

Tech goods have been under the spotlight since the start of discussions on sustainable design, as they have been identified, together with textile goods, as waste intense. Consumers have been challenging the tech sector to address and improve issues such as products' pre-determined obsolescence - purposefully designing a product so that it becomes obsolete after a certain amount of time or after mandatory updates of the operating system - and difficulties in repair and recycling.

The EU Commission has proposed the Eco-design for Sustainable Products regulation (ESPR) in March 2022 and its rapporteur Alessandra Moretti MEP (Italy, S&D) has recently presented her draft report in front of the Committee on Environment, Public Health and Food Safety (ENVI), which will be the responsible Committee in the European Parliament. The opinion giving committees are the Internal Market and Consumer Protection Committee (IMCO), and the Industry, Research and Energy Committee (ITRE).

What is the Commission proposing?

This proposal follows a three-fold approach. The first part of the regulation focuses on imposing two types of eco-design requirements on goods intended for the EU market, regardless of where they were produced. The first is performance requirements to ensure the goods comply with rules such as durability, reusability, repairability and generation of waste. Secondly, information requirements will oblige manufacturers to share information on their product via the packaging, label or in a product passport, including details such as how to repair it, whether there is any pre-determined obsolescence and the energy efficiency of the item. The Commission hopes that this will encourage consumers to make informed choices at the moment of purchase.

The second part of the regulation mandates the creation of a digital product passport. Every good launched on the EU market will be provided with a scannable passport carrying its data and that will link it to its manufacturer. This provision is designed to facilitate traceability and encourage compliance. The bill focuses on the concept of repairability, as this initiative aims to boost the number of devices which are repaired. The digital passport will include a score that determines how easy it is to find spare parts to repair the object.

The third part of the regulation would introduce significant transparency on the destruction of unsold goods. The new draft report presented by Ms. Moretti builds on that, proposing to outlaw the destruction of unsold goods that fall in the product category of textiles and footwear, and electrical and electronic appliances. If approved, this obligation would not only apply to manufacturers, in fact this responsibility will be shared across the entire value chain, including e-commerce platforms.

What are the expected challenges?

There are a couple of potential challenges this regulation could pose to companies. First, the regulation will set a new standard for sustainable goods, causing a trickle-down effect on non-EU markets. Any organisation placing goods for sale on the EU market will be required to comply with the requirements of the regulation, even if they are not based in the EU. This could cause supply chain issues for European businesses and manufacturers if they rely on products produced outside the EU that do not comply with these requirements.

Secondly, the transition period to start complying with the new rules will be two years. This could leave little time to change a product’s design to comply with the new requirements whilst remaining competitive with non-EU businesses.

What are the positions of the political groups?

Among the responses that the ESPR draft report has received, the European Conservatives and Reformists (ECR) were sceptical about the ban on destroying unsold tech products, stressing the importance of letting companies manage their own waste in the way they see fit. They also want the Commission to increase the transition period that will be given to manufacturers to start complying with the eco-design requirements. Meanwhile, the Greens and the S&D, see this directive as complementary to the Corporate Sustainability Due Diligence Directive that is also going through the legislative procedure, given that both pieces of legislation focus on the sustainability of the product and on the behaviour of the producer. The Proposed Directive would impose a corporate due diligence duty on large EU and third-country companies, and smaller companies in certain sectors, to identify and take steps to remedy actual and prevent or mitigate potential adverse impacts on human rights and the environment in the companies’ own operations, their subsidiaries and value chains. . This view is shared also by the liberal-democratic party Renew, that also express their agreement with the ECR on the extension of the grace period, keeping in mind the interests of SMEs and the challenges that smaller players could have such as the costs involved with changing a product’s design to make it sustainable .

What are the next steps?

As it stands, the proposed regulation and the draft report still do not define specific measures for different product types. This will be achieved through 30 delegated acts, expected before 2028.

Once the regulation enters into force, the grace period given for manufacturers will last two years. The ENVI Committee will discuss amendments to the regulation in February and March 2023. Ms. Moretti MEP, the Rapporteur to this file, has also announced that the ENVI Committee will present an official list of products and chemicals that it has identified as a priority under this regulation before the beginning of these discussions. This regulation is expected to be voted in at the Parliament’s Plenary meeting in June 2023.

What can businesses do to engage on this issue?

Manufacturers and e-commerce platforms should monitor the discussions around this initiative to ensure they are aware of their future compliance requirements. The ongoing discussions around amendments also give businesses an opportunity to engage with MEPs to lobby for favourable changes to the regulations. If you are a manufacturer or e-commerce platform that will be affected by this initiative, or if you would like to find out more, please contact emma.vivian@inlinepolicy.com or visit us at www.inlinepolicy.com.