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Urgent EU Legislation Update: The Sustainable Products Initiative

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Urgent EU Legislation Update: The Sustainable Products Initiative

Before June 9, 2021, the EU is seeking feedback from businesses that trade in Europe on the Sustainable Products Initiative.

This initiative is part of the European Green Deal and will revise the Ecodesign Directive, proposing additional legislative measures with the aim of making products placed on the EU market more sustainable, durable, reusable, repairable, recyclable, and energy-efficient. The initiative will also address the presence of harmful chemicals in products such as electronics and ICT equipment, textiles, furniture, plus steel, cement and chemicals.

Positive Luxury has collected all the important information below and encourages luxury businesses that trade in Europe to prepare for this legislative change and take advantage of this opportunity to co-create ambitious climate solutions with legislators.

You can contribute to the consultation by responding here

Context

The European Green Deal is a growth strategy to transform the EU into a fairer and more prosperous society, with a modern, competitive, climate-neutral and circular economy. As stated in the Commission’s strategic recovery package, in response to the dramatic and unprecedented effects of the COVID-19 crisis, a collective and cohesive recovery that accelerates the twin green and digital transitions will only strengthen Europe’s competitiveness, resilience and position as a global player.

A key part of this recovery is the March 2020 Circular Economy Action Plan (CEAP), which provides a future-oriented agenda for achieving a cleaner and more competitive Europe in co-creation with economic actors, citizens and civil society organisations. It announces a sustainable product policy legislative initiative to make products fit for a climate-neutral, resource-efficient and circular economy, reduce waste and ensure that the performance of frontrunners in sustainability progressively becomes the norm. The initiative will aim to set out the EU policy framework necessary to achieve this objective.

For this, the scope of the Ecodesign Directive needs to be widened beyond energy-related products (as it was previously) and made applicable to the broadest possible range of products. Through this revision and, where necessary, complementary legislative proposals, the Commission will establish sustainability principles and other mechanisms to regulate sustainability-related aspects in a wide range of product-related instruments, while continuing to respect the EUs commitments in international trade agreements, including in the context of the World Trade Organization.

This initiative will be developed in close coordination with other initiatives announced in the CEAP, in particular the initiative on empowering consumers for the green transition and the initiative on the substantiation of environmental claims using product and organisational environmental footprint methods. Together these initiatives will seek to establish a coherent policy framework whereby sustainable goods, services and business models become the norm and consumption patterns are more sustainable.

The problem the initiative is trying to solve

Without policy intervention, by 2050 the world population is expected to be consuming resources at a rate three times higher than the earth can replenish.

Global consumption of materials such as biomass, fossil fuels, metals and minerals is expected to double by 2060, while annual waste generation is projected to increase by 70% by 2050. Production, consumption and waste linked to products are responsible for pollution and for around 40% of global greenhouse gas emissions. The Sustainable Product Policy Initiative aims at correcting the following market and regulatory failures:

  1. Product-related externalities are not fully internalised: the linear production and consumption pattern of ‘take-make-use-dispose’ does not provide producers with sufficient incentives along the supply chains to make their products more sustainable
  2. The average lifespan of many products has become shorter over the last decades
  3. Many products break too quickly, many cannot be easily and safely reused, repaired or recycled, and many are made for single use only. Furthermore, there are concerns over the environmental impact and working conditions in which materials are sourced and/or products produced

EU initiatives and legislation only partially address the sustainability aspects of products, either on a mandatory or voluntary basis.

The Ecodesign Directive successfully regulates energy efficiency and some circularity features of energy-related products covered by implementing measures. At the same time, instruments such as the EU Ecolabel or the EU green public procurement (GPP) are broader in scope but have reduced impact due to the limitations of voluntary approaches. In fact, there is no comprehensive set of requirements to ensure that all products placed on the EU market become increasingly sustainable.

The lack of reliable information on sustainability along value chains related to many products placed on the EU market de facto reduces the ability of economic operators upstream in the value chain to offer more sustainable products, and for consumers and procurers to choose products with the lowest environmental footprint. 

EU basis for intervention

As the proposal will consider requirements for the placing on the EU market of products, action needs to be taken at EU level.

This brings clear benefits in terms of economies of scale, reducing regulatory barriers and the administrative burden and improving the functioning of the internal market through the provision of homogenous information and a level playing field. At the same time, the single market provides a critical mass enabling the EU to set global standards in product sustainability and to influence product design and value chain management worldwide.

The necessity to prevent fragmentation of the internal market when Member States would take their own initiatives, means that the initiative will be based on Article 114 (internal market) of the Treaty of the Functioning of the European Union (TFEU).

Depending on the need for other legislative initiatives or amendments besides amending the Ecodesign directive, Article 192(1) TFEU (environment) may also play a role. The impact assessment will help determine which objectives can be achieved through the revision of the Ecodesign Directive and which (if any) would require further initiatives.

Objective and policy options

In line with the Green Deal objectives, EU product policy needs to contribute to keeping climate and environmental impacts linked to resource and energy use, production and use of products within planetary boundaries.

This means reducing the overall life-cycle climate and environmental footprint of the products placed on the EU market, achieving longer product lifetimes e.g. through more durable and reparable products, increasing circular material use rate, reducing waste and achieving higher recycling rates.

This initiative will aim to provide the basis for ensuring high environmental performance of all products and, to the extent possible and relevant, services on the EU market, by setting out sustainability principles and specific requirements linked to environmental and, where appropriate, social aspects. In coordination with other Green Deal and CEAP initiatives, it will propose the necessary changes to the EU legal framework to achieve the objectives set out in the Circular Economy Action plan 2020.

Amongst other things, this will require improved information flow through, inter alia, mobilising the potential of digitalisation of product information, including solutions such as digital passports and tagging. An impact assessment will be performed to assess which combinations of measures will best achieve the objectives. All combinations will include the widening of the scope of the Ecodesign directive to cover a wide range of products that goes beyond purely energy-related products.

This will enable the setting at EU level of appropriate minimum sustainability information requirements for specific groups of products, giving priority to addressing product groups identified in the context of the value chains featuring in the Action Plan, such as electronics, ICT and textiles but also furniture and high impact intermediate products such as steel, cement and chemicals. In addition, the following measures will be considered:

  • establishing overarching product sustainability principles
  • establishing EU rules to make producers responsible for providing more circular products and intervening before products can become waste (for example providing products as a service, providing repair service/or ensuring spare parts availability)
  • establishing EU rules for setting requirements on mandatory sustainability labelling and/or disclosure of information to market actors along value chains in the form of a digital product passport
  • establishing EU rules for setting mandatory minimum sustainability requirements on public procurement of products
  • requirements to address social aspects throughout the product lifecycle as part of sustainability principles and requirements, where appropriate and feasible
  • measures on production processes, for example to facilitate recycled content or remanufacturing and to track the use of hazardous substances in such processes
  • Measures to ban the destruction of unsold durable goods. Some of these measures would be of horizontal nature, while others would target specific sectors in particular.

Preliminary assessment of expected impacts

Likely economic impacts

These EU measures would facilitate a more harmonised single market with incentives for more sustainable and innovative products across the whole EU. This provides strong economic potential for both EU and non-EU operators that offer sustainable products by reducing market fragmentation due to individual Member State initiatives. The market incentives for sustainable products would increase the relative competitiveness of sustainable products vis-à-vis unsustainable products. Both EU and non-EU producers, retailers and other economic operators whose business model currently depends on unsustainable products will have to make changes or accept lower sales.

The EU accepts that Measures to reduce negative effects on climate and the environment related to materials and production may at least in the short term lead to extra costs for producers and/or retailers, which could in turn lead to purchasing price increases for consumers, but the corresponding costs borne by society related to those negative effects are reduced. Economies of scale mean the price difference in the longer term will be smaller as sustainable products become more mainstream and the extra costs are shared out over a larger number of products.

Finally, better information along value chains is expected to facilitate enforcement by public authorities of new and existing product-related legislation (e.g. REACH) and contribute to ensuring a level playing field for EU manufactured and imported products, thus increasing the competitiveness of EU industry.

Likely social impacts

This legislation will result in more jobs and added value across the EU in the recycling sector, and reuse and repair sectors. We also expect better information along value chains on the sustainability performance of products to boost demand for sustainable products, reuse, repair, remanufacturing and recycling, with associated benefits in growth and jobs.

In the longer term, it is expected that increased product lifetimes reduce overall purchasing costs and running costs (including utilities bills where appropriate) because more efficient products use less resources such as energy and water.

Likely environmental impacts

The initiative aims to significantly reduce the environmental pressures (e.g. resource extraction, energy use, greenhouse gas and other emissions, environmental pollution, water use) and the associated environmental impacts (e.g. biodiversity loss, global warming, water scarcity, human and ecosystems toxicity) associated with current production and consumption patterns.

As such, it will contribute greatly to the European Green Deal objectives. It will also contribute to the achievement of the Sustainable Development Goals (SDG), especially SDG 12 on responsible consumption and production.

Recommended actions

  • Although we do not know the exact shape this legislation will take, we can confidently state that laws that direct businesses to create more sustainable policies are coming. We recommend that any organisation assesses what their products are made from, their entire value chain, and their life cycle – paying special attention to their end of life.
  • We recommend that luxury businesses contact the commission before the feedback period closes on 9 June 2021 (midnight Brussels time) to ensure that this legislation is as bold and progressive as possible.

You can contribute to the consultation by responding here

 

Written by - Jamie Moore

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