Here is a primer on how firms can begin a long-term strategy that aligns with the EU's ESPR climate goals. To maintain access to the EU single market, the new legislation requires embedding circularity strategies, emissions tracking, sustainability impact, and human rights due diligence into all aspects of a firm's operations.
For Ecodesign and Circularity
- Integrate circularity principles into product design (durability, repairability, recyclability, recycled content)
- Adopt digital product passports for traceability and governance
- Phase out substances and materials that inhibit circularity and recycling (e.g., non-recyclable blends)
- Incorporate recycled and renewable materials into products
- Provide information on products' environmental footprint (Scope 1, 2, 3 emissions)
- Ban destruction of unsold/returned products
- Implement end-of-life management with take-back programs and recycling plans (take-back, refurbishment, recycling plans)
- Adopt business models that extend product lifespan (repair, refurbish, remanufacture)
- Transition business models to be compatible with the Paris Agreement 1.5°C warming limit
For Human Rights and Environmental Due Diligence
- Integrate human rights and environmental due diligence into corporate policies.
- Monitor operations, subsidiaries, and value chains for risks, including contractual assurances from business partners on compliance.
- Identify, prevent, mitigate, and account for potential adverse impacts.
- Provide remediation when adverse impacts occur.
- Publicly communicate due diligence efforts and impacts. Work with partners to ensure compliance throughout the value chain.
- Establish grievance mechanisms for those affected.
Overarching Requirements
- Adopt a transition plan to align the business model with the Paris Agreement's 1.5°C warming limit
- Make related investments to enable compliance
- Support smaller partners to fulfill new obligations
- Penalties for non-compliance may include: "Naming and shaming" through public disclosure Fines up to 5% of companies' global annual revenue/turnover
- Potential market access restrictions or sales bans in the EU
EU LINKS
ESPR Final Rules
https://www.consilium.europa.eu/en/press/press-releases/2024/05/27/green-transition-council-gives-its-final-approval-to-the-ecodesign-regulation/
Human Rights Due Diligence
https://www.europarl.europa.eu/news/en/press-room/20240419IPR20585/due-diligence-meps-adopt-rules-for-firms-on-human-rights-and-environment#
