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

Overview of the EU Ecodesign Regulation for Sustainable Products (ESPR)

The European Union is strengthening commitments under the Environmental (E) pillar of ESG by adopting new rules under the EU Ecodesign Regulation for Sustainable Products (ESPR) 2024/1781. These rules target the handling of unsold consumer products, introducing mandatory transparency and restrictions on product destruction, aiming to curb waste and promote sustainability.

Key Objectives

• Prevent systematic destruction of unsold consumer products, viewed as an environmental and economic issue.
• Harmonize regulations across EU Member States to eliminate market distortions caused by differing national laws.
• Apply rules to all enterprises placing products on the EU market, including non-EU businesses.

Timeline and Scope

• ESPR in Force: Since 18 July 2024, with key new rules commencing based on upcoming delegated and implementing legislation.
• Audited Transparency: Obligations begin in 2026 using 2025 data.
• Destruction Ban: Enforced from 19 July 2026.
• Enterprise Obligations:
  • Initially for large enterprises.
  • Extended to medium enterprises from 19 July 2030. ## Core Requirements Under Article 24 ESPR: Transparency on Unsold Products

Enterprises must annually disclose:

1. Quantity: Volume (number and weight) of unsold products discarded, categorized by product type.
2. Reasons: Rationales behind discarding, including any approved derogations.
3. Waste Treatment: Breakdown of how discarded goods are processed—reuse, recycling, recovery, or disposal.
4. Prevention Measures: Current and planned initiatives to avoid future destruction.

Disclosure Format

• Companies can publish data on easily accessible webpages or within sustainability reports (mandated under Article 19a or 29a of the EU Accounting Directive).
• Parent companies may provide consolidated disclosures covering subsidiaries.
• A standardized disclosure format is required to ensure comparability, organized into three sections:
  • Organization details and reporting period.
  • Product and disposal data.
  • Preventive measures planned.

Verification and Assurance

• Large enterprises subject to sustainability reporting must obtain a limited assurance opinion from auditors or accredited providers to confirm data accuracy.

Draft Implementing and Delegated Acts

• The EU Commission aims to finalize:
  • An implementing act detailing disclosure rules and format (expected Q3 2025).
  • A delegated regulation defining exceptions to the destruction ban.

These frameworks set the foundation for enforcement by Member States, including penalties for non-compliance (e.g., Germany’s fines of up to EUR 50,000 per incident under previous rules).

Practical Implications for Businesses

• The regulation applies regardless of company location, so non-EU enterprises exporting to the EU must comply.
• Transparency obligations require robust internal data tracking for unsold products.
• Enterprises must strategize preventative programs to minimize waste and avoid bans on destruction.
• Failure to comply risks penalties and reputational damage.

Conclusion

The new EU Ecodesign measures under ESPR highlight the growing regulatory emphasis on sustainable products, transforming how companies report on and manage unsold consumer goods. By enforcing transparency and limiting wasteful destruction, the EU aims to foster a circular economy, conserve resources, and elevate environmental standards across markets.

References:

• EU Ecodesign Regulation for Sustainable Products (EU) 2024/1781
• EU Accounting Directive 2013/34/EU
• ESPR Draft Implementing Acts and FAQs (EU Commission)

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