The European Commission (EC) began a public consultation on September 14, 2020, on the Inception Impact Assessment (Assessment) for a directive on the “Sustainable Products Initiative” (Initiative). According to the EC, this Initiative, which will revise the Ecodesign Directive and propose additional legislative measures as appropriate, intends to make products placed on the European Union (EU) market more sustainable. The EC states that consumers, the environment, and the climate will benefit from products that are more durable, reusable, repairable, recyclable, and energy-efficient. The Initiative will also address the presence of harmful chemicals in products such as electronics and information and computer technology (ICT) equipment; textiles; furniture; and steel, cement, and chemicals. Comments on the Assessment are due November 2, 2020. According to the Assessment, the EC intends to launch a public consultation in the fourth quarter of 2020 to gather input from citizens and stakeholders. The EC will carry out further consultations to obtain input from and discuss policy options with a wide range of stakeholders, for example, through workshops, conferences, webinars, or other means.

Background

As reported in our April 20, 2020, Global Regulatory Update, on March 11, 2020, the EC issued a press release announcing the adoption of a new Circular Economy Action Plan, “one of the main building blocks of the European Green Deal, Europe’s new agenda for sustainable growth.” The EC provides that “[w]ith measures along the entire life cycle of products, the new Action Plan aims to make our economy fit for a green future, strengthen our competitiveness while protecting the environment, and give new rights to consumers.”

The EC indicates that, building on the work done since 2015, the new Action Plan focuses on the “design and production” for a circular economy, with the aim to ensure that resources used are “kept in the EU economy for as long as possible.” The Circular Economy Action Plan presents measures to:

• Make sustainable products the norm in the EU;

• Empower consumers;

• Focus on the sectors that use the most resources and where the potential for circularity is high (e.g., electronics, batteries and vehicles, packaging, plastics); and

• Ensure less waste.

Assessment

The Assessment states that the Initiative intends to set out the EU policy framework necessary to achieve the objective of the Circular Economy Action Plan 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.” To do so, the EC 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 EU’s commitments in international trade agreements, including in the World Trade Organization (WTO) context.

According to the Assessment, the Initiative will be developed in close coordination with other initiatives announced in the Circular Economy Action Plan, in particular the initiative on empowering consumers for the green transition and the initiative on the substantiation of environmental claims using product and organizational environmental footprint methods. The EC states that 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 Initiative intends to correct the following market and regulatory failures:

• Product-related externalities are not fully internalized: 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. Many products break too quickly, many cannot be easily and safely reused, repaired, or recycled, and many are made for single use only. Furthermore, according to the Assessment, 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 sustainability aspects of products, either on a mandatory or voluntary basis. The Assessment notes that 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, according to the Assessment, “there is no comprehensive set of requirements to ensure that all products placed on the EU market become increasingly sustainable.”

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

The EC will perform an impact assessment to assess which combinations of measures will best achieve its objectives. According to the Assessment, all combinations will include widening of the scope of the Ecodesign Directive to cover a wide range of products, beyond energy-related products. This will enable the appropriate minimum sustainability and/or information requirements for specific groups of products to be set at the EU level, giving priority to addressing product groups identified in the context of the value chains featuring in the Circular Economy Action Plan, such as electronics and ICT equipment and textiles, as well as furniture and high-impact intermediate products such as steel, cement, and chemicals. The Assessment states that in addition, the EC will consider the following measures:

• Establishing overarching product sustainability principles;

• Establishing EU rules to make producers responsible for providing more circular products and intervening before products can become waste;

• Establishing EU rules for setting requirements on mandatory sustainability labeling 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;

• Adding requirements to address social aspects throughout the product life cycle as part of sustainability principles and requirements, where appropriate and feasible;

• Taking measures on production processes, for example, to facilitate recycled content or remanufacturing and to track the use of hazardous substances in such processes; and

• Taking measures to ban the destruction of unsold durable goods.

According to the Assessment, the EC will pay particular attention to the operational feasibility of the measures, minimizing related administrative burdens and facilitating implementation and enforcement. The EC will assess the measures against a “business as usual” baseline option (in which no policy changes are introduced) to identify the best combination of measures to achieve the objectives set out in the Circular Economy Action Plan. In doing so, the EC will give particular attention to coherence with existing relevant EU policy instruments and other ongoing new initiatives.

Commentary

This is a program to watch. Whatever emerges will almost certainly function as a new de facto global standard and influence emerging programs and governance expectations globally. Product stewards of all sorts should monitor this space carefully.