New EU Ecodesign for Sustainable Products Regulation
The proposal for a new Ecodesign for Sustainable Products Regulation (“Regulation”) is one of the key EU-wide regulatory mechanisms that is being introduced to help drive reduction in product-related emissions and progress to net-zero.
The Regulation will:
- repeal the current Ecodesign Directive;
- impact on all products placed on the market in the EU, except for:
- food or feed (as defined in articles 2 and 3(4) of Regulation (EC) No 178/2002 respectively),
- medicinal products (i.e. drugs) for human or veterinary use; as well as
- living plants, animals and microorganisms
- products of human origin; and
- products of plants and animals relating directly to their future reproduction;
- create a harmonised regulatory and enforcement framework for a much wider range of products; and
- introduce a new requirement for a digital passport.
The intention behind the Regulation is to help consumers and businesses make informed choices when purchasing products, facilitate repairs and recycling and improve transparency about products' life cycle impacts on the environment. The product passport should also help public authorities to better perform checks and controls.
Sanctions for non-compliance with the ecodesign requirements will be set out in delegated acts and are expected to result in products not being placed on the market. If these provisions are properly enforced, this could trigger huge financial implications for everyone in the products value chain, including online marketplaces.
This article sets out the key rules within the new proposed Regulation, as well as their implications and explains how PwC can support your business as you consider what changes need to be made in light of the new requirements.
The Ecodesign for Sustainable Products Regulation sets out a framework of requirements to make products more durable, reliable, reusable, upgradable, repairable, easier to maintain, refurbish and recycle, and energy and resource efficient. It aims to extends the existing Ecodesign framework in two ways:
- firstly, to cover the broadest possible range of products; and
- secondly, to broaden the scope of the requirements with which products are to comply.
As mentioned above, the obligations will affect all aspects of the products value chain, including online marketplaces.
As a comparative example of the benefits of this sort of legislation, in 2021 the ecodesign measures under the current Ecodesign Directive 2009/125/EC covered 31 product groups, are estimated to have saved EUR 120 billion in energy expenditure for EU consumers and led to a 10% lower annual energy consumption by the products in scope.
How will Ecodesign for Sustainable Products Regulation be implemented?
The Ecodesign for Sustainable Products Regulation is being implemented in accordance with the Circular Economy Action Plan (CEAP) and is set to repeal the current Ecodesign Directive.
In practice, the aim of the Regulation is to provide a level of legal certainty and a baseline of standards for all products on the market. As it’s a European regulation, it will apply directly in all EU Member States (and not require implementation). We understand that a series of product specific delegated acts will be adopted with specific requirements.
Key impacts of Ecodesign for Sustainable Products regulation?
- Digital Passport
- Minimising the destruction of unsold consumer products
Digital Passport
A digital passport will be required for all in-scope products, sharing product related information in relation to its sustainability, which would be accessible for everyone, including those within its supply chain, customers, authorities, public interest authorities and the Commission. It will be accessed via a data carrier and linked to a unique product identifier. The passport will help facilitate the transparency, traceability and enforcement of the requirements, ultimately encouraging compliance with these regulations. The digital passport will complement the information sharing tools such as their labelling. This will require manufacturers to have all the data in place and have the passports ready in good time.
Also, it’s possible that bans might be introduced on the destruction of unsold consumer products, especially for products that carry significant environmental impact. This will be set out in delegated acts, along with relevant exemptions. As a result, companies will need to help establish which products carry significant environmental impact by looking at their product lifecycle.
How will Ecodesign for Sustainable Products Regulation be enforced?
Non-compliance with the ecodesign requirements, as set out in delegated acts, including a lack of a digital passport, will mean that products may not be placed on the market. Compliance will be monitored at a national level through adequate checks, which each Member State will set out in an ‘action plan’. The proposal allows for the Commission to adopt delegated acts, setting out the minimum number of checks to be performed by the relevant authorities.
Furthermore, the authorities will be able to investigate economic operators, and can provide actions to correct the non-compliance. If these actions are not completed in the time period provided, enforcement authorities will have the authority to restrict the circulation of the product or have it withdrawn/recalled from the market entirely. Member States will be able to decide who has enforcement powers and specific penalties.
Other Connected Legislative Changes
Following this focus on development of legislation relating to consumer products, the Commission has stated that it will start legislating for high-impact industries with gaps in sustainability rules, such as textiles, furniture, mattresses, tyres, detergents, paints, and lubricants, as well as iron, steel, and aluminium.
Next steps
As it stands, we have seen both the EU Parliament and the EU Council have now adopted their positions on a new Regulation for Ecodesign for Sustainable Products, which was first proposed by the Commission in March 2022.
The next step in the legislature process is for the Commission, Council and Parliament to reach a consensus and they begun discussions in August 2023, through the trialogue process. Once the final text has been agreed between the institutions, it will come into force.
While the Regulation does not need to be implemented by Member States, the detail needs to be worked out in product-specific delegated acts which may take a while to come into force. The EU expects to prepare and adopt up to 18 new delegated acts between 2024 and 2027, which will be directly applicable to Member States.
Global companies producing products impacted by the Ecodesign for Sustainable Products Regulation will need to consider the recyclability, repairability and durability of each product and the relevant materials during product design or redesign. This could require review of intellectual property rights and transparency of information sharing across the entire value chain. We can also see clear overlap with the directive on ‘common rules promoting the repair of goods’ (2023/0085).
How PwC can help
We can help business comply and plan for the future by:
- Tracking and influencing the development of the Regulation - by assisting with consultation responses on legislative developments;
- Horizon scanning - tracking regulatory change as the regulation and delegated acts are implemented, to explain the impact on EU and non-EU companies;
- Strategic planning - understanding your responsibilities and the impacts for your business;
- Gap analysis - understanding your current KPIs and where you will need to consider developing targets to be compliant with this regulation; and
- Data collection - understanding the importance of data collection and key data points, to support decision making.
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