EU: Part 1 of Circular Economy Package to make sustainable products the norm

On 30 March 2022, the European Commission published a package of proposals to make sustainable products the norm in the EU (see press release). The aim is to make most physical goods in the EU more environmentally friendly, circular and energy efficient throughout their full lifecycle. This will mean making products more durable, reliable, reusable, upgradable, repairable, easier to maintain, refurbish and recycle, as well as being more energy efficient.

The Circular Economy Package focuses on the ecodesign of sustainable products, sustainable textiles, sustainable construction products and new rules to enable consumers to make more informed choices and protect them from greenwashing. 

See below for links to all the proposals and accompanying documents in the Circular Economy Package:

This is the first part of a Circular Economy Package, which forms part of the European Green Deal and Circular Economy Action Plan. 

The creation of a circular economy is at the heart of the European Green Deal, with the focus on ensuring products are fit for a climate-neutral and resource-efficient economy. One of the key initiatives in the Circular Economy Action Plan is to develop a framework to make sustainable products, services and business models the norm and ensure products are efficient, affordable, last longer and are designed for reuse, repair and recycling - thus moving away from a “take, make, break and throw away” model and avoid unnecessary waste. There is also a focus on providing consumers with better information and tackling false or misleading green claims. 

The Commission is also keen to increase the EU’s resilience to supply shocks and price volatility (brought to the fore by the Covid-19 pandemic and the current war in the Ukraine) by increasing the bloc’s strategic autonomy on raw materials and resource independence.

Summary of the Circular Economy Package

Proposal for a Regulation on Ecodesign of Sustainable Products 

• This proposal is the core of the Circular Economy Package and reflects the fact that much of a product’s environmental impacts are determined at the design stage.
• The proposal sets out a framework with general rules for making products more durable, reliable, reusable, upgradable, repairable, easier to maintain and refurbish, and more energy and resource efficient. The details will follow later in product-specific legislation.
• The new rules will apply to most physical goods placed on the EU market (with exceptions for food, feed and medicinal products, as well as living plants, animals, micro-organisms and products of human origin).
• The Commission will consult on the categories of products to be selected under the first workplan by the end of 2022. However, the Commission has already identified textiles, furniture, mattresses, tyres, detergents, paints, lubricants and intermediate products such as iron, steel and aluminium as suitable candidates to be targeted first, due to their high environmental impact.
• The proposal will also require “digital product passports” to be rolled out for all regulated products to improve the information available about a product’s environmental sustainability, in order to help consumers make more informed purchasing choices and enable repairers and recyclers to access the relevant information.
• The proposal also provides mandatory green public procurement criteria and rules for preventing the destruction of unsold consumer goods.
• For more information on this proposal, see our client briefing.
• This proposal will be complemented by an upcoming initiative on the sustainable consumption of goods (which will lead to a proposal for an amendment of the Sale of Goods Directive) and a new initiative on the right to repair (which will involve either an amendment to the Sale of Goods Directive or will be set out in a separate legal instrument) (see our previous blog post).

New consumer rights and a ban on greenwashing 

• The Commission is proposing to update the Consumer Rights Directive and the Unfair Commercial Practices Directive (UCPD) to ensure consumers are able to make informed and environmentally-friendly choices when buying their products. It is also proposing to ban “greenwashing” and misleading environmental claims.
• Changes to the Consumer Rights Directive will require traders to provide consumers with information about the durability and repairability of products. It will be up to producers and sellers to decide on the best way to provide this information (e.g. on the packaging or in the product description on a website).
• Changes to the UCPD include adding new practices to the existing list of prohibited unfair commercial practices (the “black list”), including making generic or vague environmental claims (e.g. “environmentally friendly”, “eco” or “green”), making an environmental claim about the entire product when it really concerns only a certain aspect of the product, and displaying a voluntary sustainability label which is not based on a third-party verification scheme or established by public authorities.
• For more information on this proposal, see our blog post. 
• This proposal will be complemented by an upcoming initiative on substantiating green claims (see here), which is expected to be published in July.

Strategy for Sustainable and Circular Textiles 

• The Strategy proposes actions for the full lifecycle of textiles and addresses the way textiles are designed and consumed. The aim is that, by 2030, textiles placed on the EU market will be long-lived and recyclable, made as much as possible from recycled fibres, free of hazardous substances and produced in a way that respects social rights and the environment. 
• Measures envisaged in the Strategy include:
  • New design requirements for textiles under the proposed Ecodesign for Sustainable Products Regulation, making them longer-lasting and easier to repair and recycle, as well as mandatory minimum requirements for the inclusion of recycled fibres in textiles, and a ban on the destruction of unsold products under certain conditions.
  • Clearer information on textiles and a “digital product passport” based on mandatory information requirements on circularity and other key environmental aspects.
  • Tight controls on greenwashing and measures to ensure the accuracy of green claims.
  • Action to address the unintentional release of microplastics from synthetic textiles. The Commission is planning to publish an initiative on this in the second half of 2022.
  • New rules on extended producer responsibility for textiles, as part of the revision of the Waste Framework Directive. This is likely to impose a fee on big brands based on the environmental impact of their items.
• To address fast fashion, producers will be subject to mandatory design requirements for textiles. Greater reliance on extended producer responsibility schemes should also help extend the lifetime of clothing. In the Commission’s words: “fast fashion should be out of fashion”. 
• The Commission proposal for new rules on waste shipments will only allow the export of textile waste to non-OECD countries under certain conditions (see here). And to avoid waste streams being falsely labelled as second-hand goods when exported from the EU, the Strategy proposes the development of specific EU-level criteria to distinguish waste properly.
• The Strategy envisages that the “social” aspects of the textiles industry will be addressed through the recently-published Communication on Decent Work (with the focus on gender equality as 75% of global garment workers are women) and the Proposal for a Corporate Sustainability Due Diligence Directive (see our client briefing).
• The Commission plans to develop a transition pathway setting out a long-term plan for the textile sector, to help transform the way the EU produces, uses and disposes of textiles. The pathway will set out key actions and set targets and commitments.
• European consumption of textiles has the fourth highest impact on the environment and climate, after food, housing and mobility. It is also consumes significant amounts of water and land use, primary raw materials and emits greenhouse gases. Added to which, the consumption of clothing and footwear is expected to increase by 63% by 2030. Around 73% of the clothing and household textiles consumed in the EU are produced in and imported from countries outside the EU. In 2019, the EU was one of the largest global importers of clothing.

Revision of Construction Products Regulation 

• The Commission has published a proposal to revise the existing Construction Products Regulation to enable construction products to meet the EU’s climate and sustainability goals.
• The aim is to make construction products more durable, repairable, recyclable and easier to re-manufacture by setting sustainability criteria.
• In particular, manufacturers will have to comply with a number of new obligations, including the requirement to:
  • design and manufacture a product and their packaging in such a way that their overall environmental sustainability reaches the state of the art level;
  • give preference to recyclable materials and materials gained from recycling;
  • respect minimum recycled content obligations and other limit values regarding aspects of environmental sustainability;
  • make available, in product databases, instructions for use and repair of the products; and
  • design products in such a way that re-use, re-manufacturing and recycling are facilitated.
• To prove that products meet EU requirements, manufacturers will be required to draw up a declaration of performance and a declaration of conformity and affix the CE marking.
• Buildings are responsible for around 50% of resource extraction and consumption, and more than 30% of the EU’s total waste generated each year. They are also responsible for 40% of the EU’s energy consumption and 36% of energy-related greenhouse gas emissions.

Next steps

The legislative proposals on sustainable products, construction products and consumer protection will now be scrutinised (and likely amended) by the European Parliament and Council, acting under the ordinary legislative procedure before becoming binding EU law. The average timeline from proposal to formal adoption under this procedure is around 18 months – so the earliest we can expect the new laws to be adopted would be the end of 2023. However, even once adopted, it may still be some time before they actually start to apply. For example, once the Ecodesign of Sustainable Products Regulation has been adopted, the Commission will still need to adopt product-specific legislation so that the new rules can start applying in full. And the proposed Directives once adopted will need to be transposed into national law by the various Member States.

The Commission is expected to publish Part 2 of the Circular Economy Package in July, which is likely to cover a new proposal for a Regulation on substantiating environmental and green claims, a policy framework for bio-based plastics, and a review of the Packaging and Packaging Waste Directive. A legislative initiative on the right to repair is also expected in Q3.

The Circular Economy Package has been described as a “game-changer” that could make the EU a global standard setter in sustainability. It is expected to create economic opportunities for innovation (e.g. in re-manufacturing, recycling and repair) and strengthen the market for recycled materials. It is also expected to promote more sustainable business models, such as leasing and renting. Frans Timmermans, who is in charge of the European Green Deal, thinks “increasingly businesses should offer [goods] as a service rather than as owning a product”.

Materials typically account for more than 40% of the input costs of EU manufacturing companies so the Commission expects the new rules will also lead to significant cost savings for businesses.