Introduction to the Ecodesign for Sustainable Products Regulation (ESPR)

The EU’s new Ecodesign for Sustainable Products Regulation (ESPR), which entered into force in July this year (supplementary rules in Delegated Acts to follow), establishes a new framework on behalf of EU member states, for the setting of eco-design requirements to support the global manufacture of environmentally sustainable products and to ‘move the dial’ towards a more circular economy. A key pillar of the regulation is the proposed introduction of Digital Product Passports (DPP) for traded goods. The metals, garments, footwear and consumer electronics product groups are likely to feature in the product groups earmarked for its early adoption
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The ESPR draws together current thinking about addressing issues of the environment and climate change, with the policy instruments, mechanisms, and technologies to give it practical effect. Which is likely to have significant implications for international value / supply-chains, market access, and compliance at the border, for a range of different product groups assessed as having a high impact on the environment and therefore significant scope for improvement.

The aim is to stimulate, and indeed accelerate, the transition away from conventional 'linear' manufacturing models (e.g. fast fashion), towards ‘circular’ ones which embrace holistic sustainability, taking due account of the life-cycle of the products made. Where a product’s production processes, maintenance, repair, recyclability and/or disposal are integral considerations from the outset, when deciding upon how they are to be manufactured. Going forward the focus is to be on minimising waste generation, improving the durability and quality of products, and on the extension of their useful life.

The Digital Product Passport (DPP) and Its Role in ESPR Implementation

This revolution in international value / supply-chains, is to be based upon new arrangements and information requirements that should make them far more transparent by product category, with all manner of detailed digital data being generated by, and made available to, the various stakeholders and actors in any given chain, in accordance with protocols to be agreed (including for example, manufacturers, exporters, importers, intermediaries, retailers, regulatory authorities, accreditation bodies, service providers, and consumers, among others). A key enabler by which this change to the trade landscape is to be brought about is the DPP, which may be phased in within the EU from 2027.

The DPP is to be an essential component in operationalising the ESPR. It is envisaged as a product-specific data set, to be electronically accessed through a data carrier (i.e. a unique electronically scannable identification code on some form of label/tag),  to electronically register, process and share product-related information up and down value / supply-chains, to recognised standards and in accordance with agreed protocols, and access rights. It is to be a repository of all the requisite data concerning the product to which it is affixed, providing a comprehensive picture of the product’s life-cycle, likely to include information, for example, on its: material composition and origin, processing, environmental performance, supply-chain (the details / unique identifiers of each party), customs commodity code, economic operator registration and identification (EORI) number, compliance documentation etc. It is believed that the traceability within the DPP will enable consumers to make informed, environmentally sustainable purchasing decisions, and to hold companies to account for their sourcing and manufacturing practices, thereby influencing the direction businesses take.

One of the main challenges for businesses, especially those ordinarily having responsibility for the placing of goods on the EU market (e.g. importers, distributors etc.) is thinking through the implications of the degree of transparency and traceability throughout entire value / supply chains made possible by a DPP, from raw material sourcing to manufacturing processes and transport to market, through to the product’s end-of-life disposal. Company decisions and practices are likely to come under a greater level of scrutiny from newly empowered and better informed customers, and possibly regulators, taking full advantage of what will become a more data rich operating environment. Will your company cope? ‍‍

Preparing Your Business for the Transition

Given this, you may consider it wise to make a start in reviewing current operations, and planning for appropriate adjustments to be made in the ‘direction of travel’ outlined above. A key aspect of this will be around ensuring that there is a thorough internal understanding, across business functions, of the value / supply-chains of which your company is a part, of its role within each, and of the nature, type, quality and availability of the data which it systematically generates, collects, communicates and keeps, with an eye to assessing how easy it will be for you to make the kinds of changes referred to. Your enabling ICT infrastructure is also likely to require review, to ensure that it is sufficiently flexible to support transition. In some cases, these exercises of themselves can pay dividends for companies, in the generation of new ideas of ways of working and how operations might be made more efficient.

Of course, the use of DPPs is also likely to provide new opportunities for companies to get closer to their customers and better understand their needs and how their products are used, which may in turn inform product / service design and innovation. It will also enable companies which learn to integrate DPPs into their operations, to show their ‘green credentials’, demonstrate their commitment to sustainability, build trust, tell product stories and provide usage information, and generally open up a new dimension to the relationship with the customer. The use of DPP data may also enable efficiency gains and/or qualitative improvements to be made to compliance and security processes and in general value / supply-chain management.

The responsibility for ‘policing’ DPP at the EU border is to be assigned to the EU’s customs authorities, which will, as a minimum, be required to verify the existence of a DPP for a product by checking that its unique identifier and commodity code correspond to the data stored on a DPP registry. The DPP should facilitate better targeted checks, which should help both businesses and regulators, in meeting their compliance assurance obligations. In time, products will likely only be permitted to be placed on the EU market, used, or released to free circulation if a corresponding DPP is available. The data included in the DPP are intended, in part, to allow EU customs authorities to enhance and facilitate risk management and enable more effective border control.

It appears that the DPP is to be a key enabler for forcing matters of environmental sustainability higher up corporate agendas, and there would seem to be significant commercial and operational implications for companies’ international supply / value chain strategies to be considered going forward.‍

Need Help Preparing for the Ecodesign Regulation Changes?

Navigating the complexities of the EU's Ecodesign for Sustainable Products Regulation (ESPR) and Digital Product Passports (DPP) can be daunting. If your business requires expert guidance to understand the implications, ensure compliance, or get your supply chains ready for these changes, our team of customs and trade consultants is here to assist.

We specialise in helping companies adapt to regulatory shifts, optimise their operations, and maintain seamless market access. Contact us today for a consultation, and let us help you stay ahead in this new era of sustainable trade.

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‍‍This article was written by Christopher Starns, Customs & Trade Advisor (BKR Consultants Limited).