Understanding the New Ecodesign for Sustainable Products Regulation

On 18 July 2024, the Ecodesign for Sustainable Products Regulation (ESPR) entered into force. The ESPR forms part of a package of measures central to achieving the objectives of the European Commission’s 2020 Circular Economy Action Plan, which is a part of the broader European Green Deal. A core objective of the 2020 Circular Economy Action Plan is ensuring that products placed on the EU market are designed with sustainability considerations in mind.

The ESPR replaces the existing Ecodesign Directive, expanding its scope to cover any physical goods, including components and intermediate products, placed on the market or put into service (i.e., it also applies to goods placed by non-EU market operators), with limited exceptions including food or medicinal products. While the current Ecodesign Directive focuses on energy and greenhouse gas-intensive products (comprising around 30 product groups), the ESPR introduces new general requirements for circularity, durability, repairability, and recyclability.

Objectives and Timeline

The ESPR aims to improve the circularity, energy performance, and other environmental sustainability aspects of products placed on the EU market.

The ESPR is a framework legislation that enables the adoption of product-specific measures over time. These measures will be introduced progressively through different delegated acts, the adoption of which will follow a prioritisation exercise. High-impact items like textiles and iron and steel products are already under study. Other priority products in the first working plan include aluminium, tyres, paint, chemicals, and energy-related products. No homogeneous sustainability requirements covering the different products is foreseen and, therefore, different products shall be subject to different sustainability requirements to be defined at the delegated acts. A summary of key dates is below:

• July 2024: ESPR entered into force.
• Q3 2024: Establishment of the Ecodesign Forum, with its first meeting taking place in Q4 2024. The Ecodesign Forum will be the main arena for consulting stakeholders on the development of rules under the ESPR.
• Q2 2025: Adoption of the first ESPR Working Plan. Following the Commission’s Working Plan, the first Delegated Act will be developed.
• 2026: Adoption of the first ESPR measures regarding textiles, as well as iron and steel.
• 2027/2028: The first product requirements, including Digital Product Passports (DPP), begin to apply.

Implementation of DPP

A significant feature of the ESPR is the requirement for products to have a Digital Product Passport (DPP). These digital tools collect and share information about a product and its supply chain, ensuring that information is retained at the customer level. This new feature will enhance transparency and traceability.

The DPP will include information on sustainability, environmental impact, circularity, substances of concern, value retention, and recycling. The specific details will be determined by the Commission in consultation with relevant stakeholders.

Who Will Be Impacted?

As indicated above, ESPR covers a wide range of physical goods sold in the EU, regardless of their origin. Therefore, all businesses placing products on the EU market must comply with the ESPR.

Companies must ensure that:

1. products meet the ecodesign requirements set out in the regulation;
2. products have a DPP; and
3. systems are in place to quantify unsold stock and provide evidence of what happens to unsold products. Companies (depending on size) will be required to disclose information online regarding the number and weight of discarded products.

Penalties for ESPR non-compliances are to be laid down by the different Member States. However, the ESPR mandates Member States to include, at least, fines and temporary exclusions from public procurement as penalties for the breaches of its provisions.

The Commission has noted that the EU will provide support to partner countries and thoroughly assess the potential impacts on third countries.

Challenges and Next Steps

Companies may face several challenges in implementing the ESPR, including data management and reporting, developing products to meet sustainability requirements, and potential organisational changes needed to engage stakeholders.

Companies should start by performing a regulatory and readiness assessment to develop a roadmap and action plan for ESPR compliance.

Latham & Watkins will continue to monitor the ESPR and related developments regarding the European Green Deal.