The EU has been working to produce a regulation containing sustainability requirements for product design since 2022. The future regulation aims to replace the 2009 Ecodesign Directive and widen its scope of applicability in order to establish environmental sustainability requirements for almost all types of products placed on the EU market. An important step was recently taken in the legislative work when the Council of Ministers adopted a general approach on its position regarding the EU Commission’s proposal. The European Parliament is expected to adopt a position in the summer. The regulation will most likely be adopted by the Council and the Parliament in 2024. Although we cannot know what the exact final wording will be, there are a large number of operators affected who can start preparing now. In this article, Lindahl’s experts provide an update on the status of the legislative work as well as some specific tips on how companies can prepare.
The future Ecodesign for Sustainable Products Regulation (2022/0095/COD) aims to reduce products’ negative impact on the environment through minimum product design requirements (ecodesign requirements). That will mean that producers and also other operators in the commercial chain must ensure that a product complies with the ecodesign requirements before it can be placed on the EU market. The Regulation will replace the 2009 Ecodesign Directive, which only applied to certain energy-related products. The new Regulation will apply to more product categories and will be applicable over the entire lifecycle of the product. It will also include additional ecodesign requirements. Requirements will be imposed for digital product passports to enable verification that products entering the EU market comply with the requirements.
Because it is framework legislation, the Regulation will be supplemented by delegated acts for each product category. We consider that, in the near future, after the adoption of the regulation, the focus will be on the following product categories in addition to energy-related products:
- Textiles (primarily clothing and footwear)
- Detergents, paints, lubricants and chemicals
Lindahl has monitored the legislative work and has previously published two articles on the Regulation which are available to read here and here. Several measures have been adopted within the framework of the legislative work since the second article was written. We summarise the most recent comments on the proposal and the Council’s general position below.
COMMENTS ON THE COMMISSION’S PROPOSAL
Comments on the Commission’s proposal have been received from various quarters, including opinions from the Committee on Industry, Research and Energy (“ITRE”) and the Committee on the Internal Market and Consumer Protection (“IMCO”). Both committees sought the views of operators and organisations affected by or associated with the rules on ecodesign.
Furthermore, discussions regarding the contents of the proposal have been held in the Council which, on 22 May 2023, resulted in the adoption by the Council of a general approach which provides an indication of the Council’s position in advance of the future process.
ITRE begins its statement by noting that the Ecodesign Directive has helped to achieve environmental and energy efficiency goals for energy-related products through the introduction of ecodesign requirements that are both measurable and verifiable and that are based on clear, transparent methods. Considering the positive impact of the Directive, ITRE is generally in favour of the proposed Regulation and considers it to be an instrument that could help reduce the use of natural resources in the manufacture of products, increase the lifespan of products and increase the ability to repair products.
ITRE considers it necessary for ecodesign requirements established pursuant to the proposed regulation to be measurable and formulated effectively. In order to achieve this, the committee considers that the formulation of the requirements needs to be supported by greater experience. In addition, it is proposed that overall criteria for product sustainability be introduced in order to reduce the negative impact on the environment and social sustainability. Taking the implementation time into consideration, the committee considers that the Regulation needs to be formulated so as to reduce the risk of distortions in the market. According to ITRE, this should be done by giving the operators sufficient time to convert and adapt to the new requirements since they also need to permeate the operators’ supply chains. One further aspect that ITRE considers relevant is the suggestion that responsibility for producing and providing information on the products in order to facilitate consumers’ choice of products should be distributed throughout the supply chain.
Overall, IMCO is in favour of the proposal and considers it to be a suitable instrument for helping to achieve the climate and environmental goals adopted by the EU. However, the committee considers that the market, as it stands at present, tends to favour economic operators that produce products that weaken environmental and social rights. In order to achieve fair competition, the committee considers that the rules should instead reward those who produce products that are in line with environmental and social rights and that ecodesign requirements should at the same time exclude the worst performing products from the market. Our assessment is that this has already been taken into consideration, partly because ecodesign requirements prevent products that do not meet ecodesign requirements from entering the market and partly because the Commission, in its proposal, and the Council, in its general approach, included a possibility for Member States to create incentives for products included in the two highest performance classes with regard to ecodesign requirements. IMCO also puts forward a proposal whereby, in line with the principle of subsidiarity, the Member States will be permitted to adopt stricter ecodesign requirements than those set out in the regulation.
IMCO also attaches importance in its opinion to the ability to repair products and considers that this should be a matter of particular importance when formulating the ecodesign requirements. IMCO therefore proposes that a prohibition be introduced on product designs that prevent repair. A proposal is also put forward whereby the legal guarantees expressed in consumer law regulations, such as the right to complain and the placement of the burden of proof in the event of a complaint, should be adapted in order to reflect the lifespan of the products under the proposed regulation. That means that the legal guarantees must apply for the same period of time as the lifespan of the product stipulated by the ecodesign requirements.
GENERAL APPROACH OF THE COUNCIL OF MINISTERS
The latest and perhaps the most important measure adopted within the framework of the legislative work since our article in November is the fact that on 22 May 2023, the Council set out its position by means of a general approach. The general approach is not the Council’s final position, but is intended to give Parliament an indication of the Council’s position on the proposal and aims to speed up legislative work and facilitate future negotiations with Parliament. Once Parliament has delivered its opinion, the Council can choose to adopt Parliament’s position or propose amendments by adopting its final position with regard to the proposal.
The amendments to the proposal made by the Council relate, among other things, to clarification of certain criteria and aspects that should be assessed before ecodesign requirements are formulated and to the suggestion that experts and parties affected by the Regulation should be involved in formulating the requirements. Furthermore, in the amended proposal, the Council excludes vehicles that are already covered by existing EU legislation from the scope of applicability of the Regulation. The Council also considers that the transitional period must be at least 18 months from the moment when a delegated act enters into force to enable operators to adapt to the requirements. It is also proposed that Member States should be allowed sufficient time – at least two years after the entry into force of the Regulation – to be able to adapt and for the adoption of national measures such as the imposition of penalties. The Council also proposes applying the prohibition on destroying unsold products to the textile sector for unsold textiles and clothing when the Regulation is adopted. The prohibition is introduced due to the environmental problems resulting from the destruction of textiles, primarily due to the increase in internet sales. A four-year exemption from the prohibition is proposed for medium-sized companies and a general exemption is proposed for small and micro-companies.
The prohibition on destroying unsold products has been controversial, particularly with regard to textiles. The textile industry has a major negative impact on the environment, which has led many Member States to regard the prohibition as an important part of the transition to a circular economy. When negotiations were being carried on in the Council before the position was adopted, Sweden, in its capacity as President of the Council, removed the prohibition from the text of the treaty. As a result, several Member States joined forces and threatened to block the proposal if the prohibition was not included. The prohibition was therefore reintroduced, which demonstrates the Member States’ interest in converting to a sustainable internal product market.
What happens next?
The next step is for Parliament to adopt its position. The indicative plenary sitting date for Parliament is 10 July 2023. After the sitting, Parliament is expected to adopt its position and negotiations on the proposal between the Council and the Parliament can then begin. It will therefore take a while longer before we know with any degree of certainty whether the draft Ecodesign Regulation will be adopted and, if so, how it will finally be formulated. The draft Ecodesign Regulation is not expected to be adopted until 2024, but it is already high time for operators affected to start preparing for future ecodesign requirements.
How should companies prepare?
Most operators will be affected by the Ecodesign Regulation and it is time to start preparing for the new requirements. During the legislative work, there has been no sign that the various EU legal bodies have been given a hearing in order to limit the impact of the proposal on the operators who will be affected. If Parliament chooses to introduce a certain amount of relief, this is likely to be marginal. The transition for the operators affected is therefore expected to be significant. For operators whose business depends on the product groups identified so far, there are therefore great advantages in starting to prepare for the upcoming ecodesign requirements now.
The new ecodesign requirements include requirements on product performance, energy efficiency and the ability to repair, upgrade and recycle products. In view of the requirements, there is an advantage to be gained in adapting and improving those aspects of the products as early as possible.
Product passports containing information about the product will also be introduced. The work of compiling information about the products from subcontractors can therefore begin now. A prohibition on destroying unsold consumer products is also expected to be introduced. For companies using processes in which unsold consumer products are destroyed, it is time to start researching and implementing new work processes. This applies in the textile industry in particular where, taking everything into account, such a prohibition is likely to enter into force shortly after the proposal is adopted.
Companies that begin the transition on time and that are ready when the Ecodesign Regulation is adopted will enjoy significant advantages in the market compared with other operators and will therefore have an opportunity to increase their market share. We therefore recommend that companies start adopting preparatory measures primarily by mapping out the properties of products and their potential for improvement in terms of the most essential ecodesign requirements as described above. At a later stage in the legislative process, as adoption approaches, there will be reason to make investments and improve the products to ensure that an operator is in the best possible starting position in advance of the entry into force of the proposal.
Did the article raise any questions? You are welcome to contact any of us or your normal contact person at Lindahl.