Design Delight Studio

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

Overview

The European Union is set to implement stringent new regulations under the EU Ecodesign Regulation for Sustainable Products (ESPR), focusing on sustainability and transparency regarding unsold consumer products. These rules aim to curb the widespread environmental issue of product destruction—a significant loss of resources—especially driven by the rise of online retail.

Key Regulations and Deadlines

• Scope: Applies to all products placed on the EU market, including those by non-EU entities.
• Start Dates:
  • Audited disclosure obligations begin in 2026, covering data from 2025.
  • Ban on destruction of unsold consumer products becomes effective from 19 July 2026.
  • Medium-sized enterprises will join disclosure requirements from 19 July 2030.

Objectives of ESPR

• Prevent systematic destruction of unsold consumer goods to reduce waste and recover economic value.
• Harmonize rules across all EU Member States to eliminate market distortions caused by varying national legislation on disposal practices.

Transparency Requirements (Article 24 ESPR)

Enterprises must annually report:

• Quantity: Number and weight of unsold products discarded, by product type/category.
• Reasons: Justifications for disposal and any applicable exemptions.
• Waste Treatment: Details on reuse, recycling, recovery, or disposal methods.
• Prevention: Measures taken or planned to prevent destruction of unsold goods.

Reporting Format

• Information is to be disclosed on an accessible company webpage or included in sustainability reports aligned with the EU Accounting Directive (Articles 19a or 29a).
• Parent companies may report consolidated data on behalf of subsidiaries.

Draft Implementing Act Details

• A uniform standardized disclosure format is planned to ensure data comparability.
• Reporting will be differentiated by product categories, per Combined Nomenclature classifications.
• Enterprises must obtain limited assurance from auditors confirming the accuracy of their disclosures, enhancing data credibility.

Legal & Penalty Framework

• Member States will enforce penalties for non-compliance; for example, Germany imposes fines up to €50,000 or higher depending on the severity and profit impact.
• Two key pieces of legislation will finalize details by Q3 2025:
  • An implementing act on disclosure requirements.
  • A delegated regulation outlining exceptions to the destruction ban.

Implications for Businesses

• Immediate attention is needed from large enterprises to prepare for compliance by 2026.
• Transparency and destruction bans will influence product lifecycle management, inventory policies, and sustainability strategies.
• The harmonized EU framework streamlines regulatory expectations for both EU-based and international companies operating in the European market.

Conclusion

With the ESPR’s focus on sustainable product handling, the EU is set to enforce a robust legal structure to reduce waste and promote transparency. Enterprises selling consumer goods in the EU must ready themselves for new auditable disclosures and an end to the destruction of unsold products. This marks a significant step in the EU’s environmental agenda, aligning with broader ESG (Environmental, Social, Governance) objectives to foster circular economy principles and resource conservation.

For companies involved in consumer goods, understanding and preparing for these upcoming regulatory changes is critical to maintaining compliance and reinforcing sustainable business practices.

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