The ‘E’ of ESG: New EU Ecodesign Rules Target Unsold Consumer Products

Overview

The EU Commission is set to implement detailed regulations under the EU Ecodesign Regulation for Sustainable Products (EU) 2024/1781 (ESPR), focusing on transparency and preventing the destruction of unsold consumer goods. These rules, still in draft form with finalization expected by Q3 2025, will impact all enterprises marketing products within the EU, including those based outside the EU.

Key Regulatory Highlights

1. Scope and Applicability

• Applies to products placed on the EU market.
• Initially targets large enterprises (starting 2026 based on 2025 data).
• Medium-sized enterprises must comply from 19 July 2030.
• Relevant for any business offering consumer goods in the EU, regardless of location.

2. Destruction Ban on Unsold Products

• Effective 19 July 2026.
• Aims to curb the systematic destruction of unsold consumer products, a growing environmental issue exacerbated by online sales.
• Seeks to harmonize rules across Member States to avoid market distortions stemming from inconsistent national legislations.
• Supports recycling, reuse, and other recovery methods as preferable waste treatments.

3. Transparency and Disclosure Obligations (Article 24 ESPR)

Enterprises must annually disclose:

• Quantity & weight of unsold products discarded, categorized by type.
• Reasons for disposal, including any approved exceptions.
• Waste treatment methods used—whether products are reused, recycled, or otherwise recovered/disposed.
• Preventive measures planned or taken to reduce product destruction.

Disclosure must be made public either on:

• The company’s website (easily accessible page) or,
• Within their sustainability reports as required by EU Accounting Directive 2013/34/EU (Articles 19a or 29a).

Consolidated reporting by parent companies is allowed.

4. Disclosure Format and Verification

• The draft implementing regulation mandates a standardized format ensuring comparability, divided into three key sections: company info, product and waste data, and preventive strategies.
• Reporting classifies products by categories using the Combined Nomenclature code.
• Large enterprises must secure limited assurance from auditors or accredited providers verifying reported data accuracy.

5. Penalties and Enforcement

• Enforcement will rely on national penalties.
• For example, Germany’s previous Ecodesign Directive allowed fines up to EUR 50,000 per incident, potentially higher based on illicit profits.

Practical Implications for Businesses

• Large enterprises should prepare immediately for transparency disclosures starting with 2025 data.
• Businesses must develop robust tracking and reporting systems for unsold inventory management.
• They need to proactively design prevention strategies to reduce wasteful destruction.
• Compliance will require coordination across supply chains, especially for non-EU entities selling into the EU.
• The impending harmonized rules will level the playing field and enhance sustainability accountability.

Conclusion

The upcoming EU Ecodesign rules reinforce the environmental pillar of ESG by targeting unsold consumer product destruction—a significant waste and sustainability challenge. Through strengthened transparency, auditing, and a binding destruction ban, these measures promote circular economy principles and responsible resource use in the European market, urging businesses worldwide to align with evolving sustainability governance.

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