The European Union is a global leader in setting ambitious targets to improve the sustainability of its member states and influencing third countries to do the same. Recently, the European Commission placed its focus on the way we manufacture, use, recycle and dispose of products by publishing the Ecodesign for Sustainable Products regulation (ESPR), which aims to improve circularity of products marketed in the EU.
This is seen as one of several important measures towards achieving the goals set out in the EU Green Deal, namely to increase sustainability and make Europe the first climate neutral continent by 2050. The proposal will introduce new ecodesign and information requirements which products will have to meet to be placed on the EU market. The latter will include, for instance, information on product performance, repair, recycling and dismantling and handling, among others. All this information will be collected in one common data carrier, called the Digital Product Passport (DPP).
The Malta Business Bureau in principle sees the proposal as a way to further streamline the value chain and improve the sustainability of products, reducing waste where possible through an information-driven approach. Information gaps are some of the main challenges which inhibit circularity truly being applied to the way we manufacture, use, repurpose and dispose of products. This regulation thus represents a key opportunity to develop new circular markets for our products.
Implementing this in the form of a regulation will also help improve the functioning of the EU single market by setting the exact same requirements across all member states. This in turn provides increased legal certainty, lower costs and a level playing field for businesses seeking to market their products in the EU.
Despite the positives, the ESPR proposal has raised several key concerns which must be considered seriously by EU and national policymakers. The first, and perhaps the most obvious, is that the new requirements will undoubtedly introduce additional financial and administrative costs for businesses in a time where they are already contending with supply-side issues and rising input prices. The proposal mentions that SMEs will be supported through financial schemes and written guidelines to ease the transition. This part will be crucial to support a section of businesses with limited resources and which will be hardest hit by the legislation.
More generally, policymakers need to be cautious of overburdening businesses with multiple pieces of legislations which overlap and introduce similar requirements. There are currently several pieces of EU legislation adopted, or still being discussed, which introduce similar environmental or information requirements. Clear examples are the Packaging and Packaging Waste Directive, the Reach Directive on chemicals and the Empowering Consumers for the Green Transition Directive. All these separate initiatives must be efficiently streamlined to avoid double-regulation and ever mounting administrative costs for businesses.
Aside from the related costs, requiring businesses to disclose certain information on their products will introduce competitiveness concerns over access to confidential data and trade secrets. The proposal does not adequately delineate which type of information will be available to what actor along the value chain, leaving the possibility that actors will have access to information which they do not need.
Finally, the successful implementation of the ESPR will require a huge, coordinated effort between various actors across the supply chain. The most precarious of these relationships will be between EU businesses and non-EU suppliers, with the former relying on the latter to supply accurate and timely information on the materials being used. It may often prove difficult to gather all information from the non-EU suppliers. Legal safeguards consequently should be introduced to ensure EU businesses do not ultimately pay the punitive price for their non-EU suppliers’ shortcomings.
While the ESPR will be a complex and challenging policy to implement, it certainly is a welcome initiative if formulated with the appropriate caution. In this regard, the setting up of a consultative Ecodesign Forum involving affected industry players, to help formulate ecodesign requirements is a positive development which will ensure the business voice is heard and accounted for.
On its part, the MBB is following the ESPR negotiations at EU level within the European Parliament and Council of the EU. We encourage businesses with an active interest in this area to get in touch with our policy team for more information or with any feedback or concerns.
Gabriel Cassar is a senior policy executive for Sustainable Development at the Malta Business Bureau. The MBB is the EU advisory organisation of the Malta Chamber and the Malta Hotels and Restaurants Association and a partner of the Enterprise Europe Network