In the run-up to the elections in June 2024, the EU institutions managed to close another circular economy file: last night, they reached a provisional political agreement on the so-called Ecodesign Regulation. The new regulation will replace the existing Ecodesign Directive from 2009, which was limited to energy-using appliances, with directly applicable performance and information requirements for all kind of products placed on the EU market. It aims to make products more durable and reliable, easier to reuse, upgrade, repair and recycle, and use less resources. For that purpose, companies will be subject to far-reaching and challenging obligations such as the introduction of an EU digital product passport and new obligations for the handling of unsold products.
The new provisions
The final wording of the compromise text is not yet available, but according to the Council’s press release and the Parliament’s press release, the EU institutions reached the following agreement as regards the Commission’s proposal (read more on the proposal in our client alert):
- Scope: Unlike the Ecodesign Directive, the Ecodesign Regulation is not limited to certain products. Rather, it applies to almost all product categories (e.g., dishwashers, televisions, windows, car chargers, etc.). From the limited information available, it seems that only a few product groups are out of scope. For instance, at the Council’s initiative, motor vehicles are explicitly excluded if already regulated in other pieces of legislation. Products that have an impact on defense or national security are also out of scope.
- Specific product requirements: The Commission will set requirements for specific product groups through delegated acts (e.g., regarding ecodesign and performance). At the Parliament’s request, the Commission must prioritise several product groups (including iron, steel, aluminium, textiles, furniture, tyres, detergents, paints, lubricants and chemicals) in its first working plan to be adopted no later than nine months after the entry into force of the new regulation. A transition period of 18 months after the adoption of the delegated act will apply which will allow the industry and national administrations to adapt to the new ecodesign requirements. However, in justified cases, the Commission can set a shorter transition period.
- Public procurement contracts: The Commission shall also adopt implementing acts with mandatory requirements for public procurement contracts to incentivise the supply and demand for environmentally sustainable products.
- Digital Product Passport: To facilitate the movement of sustainable products in the Single Market, a new Digital Product Passport shall provide customers with information about the products’ environmental sustainability. According to the compromise, the Commission will manage a public web portal allowing consumers to search and compare information included in product passports.
- Destruction of unsold goods: All economic operators that destroy unsold goods have to disclose the quantities of products they dispose of as well as the reasons for the disposal on an annual basis. The destruction of unsold apparel, clothing accessories and footwear will be generally prohibited two years after the entry into force of the new regulation (six years for medium-sized enterprises), with only small and micro companies being exempted of this ban. The Commission is authorised to introduce bans for the destruction of other unsold products by delegated acts. This aspect will pose major challenges, particularly for companies that rely on generating sales through volume.
- Sanctions: The regulation sets up harmonized criteria for penalties in the event of an infringement of the new provisions, but leaves the decision which penalties should be imposed to the authorities of the Member States.
The provisional agreement still needs to be endorsed and formally adopted by both the Parliament and the Council before being published in the Official Journal and entering into force 20 days later. Even if the details of many obligations are left to delegated acts and transition periods will apply, affected companies should already familiarise themselves with the new provisions to ensure compliance and avoid sanctions. This applies in particular, but not exclusively, to companies that belong to the prioritized sectors. We will keep you updated on the details of the final law as it becomes publicly available. Stay tuned!
For further information, please contact:
Dr. Rupert Bellinghausen, Partner, Linklaters