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

The European Union is advancing its commitment to sustainability and the environment through new regulations targeting unsold consumer products under the EU Ecodesign Regulation for Sustainable Products (ESPR 2024/1781). These rules are key elements of the environmental (“E”) dimension of ESG (Environmental, Social, Governance) criteria, focusing on reducing waste and promoting transparency.

Overview of ESPR and Its Objectives

• Effective Date & Scope: ESPR has been in force since 18 July 2024 and applies to all products placed on the EU market, regardless of whether the company is based inside or outside the EU.
• Key Goals: To combat the widespread destruction of unsold consumer products, which the EU identifies as a growing environmental and resource waste problem exacerbated by the surge in online sales.
• Market Harmonization: ESPR aims to eliminate market distortions caused by inconsistent national laws on product destruction by setting unified rules and incentives for all economic operators in the EU.

Main Regulatory Instruments Expected by Q3 2025

1. Implementing Act on Disclosure Requirements (Article 24 ESPR)
2. Delegated Regulation on Exceptions to Destruction Ban (Article 25 ESPR)

These instruments will clarify transparency obligations, standardized reporting formats, and justifiable exceptions to the destruction ban. EU member states must enforce national penalties for non-compliance, with fines potentially reaching up to €50,000 per incident as seen in Germany’s prior laws.

Transparency and Disclosure Obligations (Article 24 ESPR)

Who Is Affected?

• Large enterprises must begin disclosures from 2026 (reporting 2025 data).
• Medium-sized enterprises will join from 19 July 2030.
• Non-EU companies offering products in the EU must also comply.

Required Disclosures Include:

• Quantity: Number and weight of unsold products discarded, categorized by product type.
• Reasons: Causes for product disposal and applicable legal exceptions.
• Waste Treatment: Proportions undergoing reuse, recycling, recovery, or disposal.
• Prevention: Current and planned measures to avoid future destruction of unsold products.

Reporting Format and Verification

• Companies can disclose information on a dedicated section of their website or within sustainability reports complying with the EU Accounting Directive.
• Consolidated disclosures by parent companies are permitted.
• A standardized reporting format is mandated to improve comparability, outlined in the draft implementing act.
• Large companies subject to sustainability reporting must procure limited assurance opinions from auditors or authorized assurance providers attesting to report accuracy.

Implications for Businesses

• The destruction ban will be enforced starting 19 July 2026, compelling companies to seek alternatives to product disposal.
• Companies should prepare to meet stringent transparency requirements, including setting up systems for data collection, reporting, and verification.
• The unified EU approach ensures fair competition and environmental accountability across sectors.

Conclusion

The EU’s new ESPR rules represent a significant regulatory milestone toward sustainable product lifecycles by discouraging wasteful destruction of unsold goods. Early preparation and compliance will be essential for enterprises to meet upcoming disclosure mandates and avoid penalties. This initiative underscores the EU’s leadership in embedding environmental responsibility into corporate practices and advancing circular economy principles.

For businesses and sustainability stakeholders, these updates emphasize the importance of integrating transparency and proactive product lifecycle management into ESG strategies, driving environmental benefits while ensuring regulatory compliance.

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