Navigating a course through Europe’s shifting regulatory landscape

Jon Ingleton reports on recent EU updates relevant to maritime interior stakeholders

Navigating a course through Europe’s shifting regulatory landscape

By Jon Ingleton |

Environmental, social and governance (ESG) legislation and regulations continue to be introduced, ratified and updated around the world in a quest to achieve an optimal return on sustainability endeavours and greater transparency in disclosures.

The EU is widely regarded as the global leader in sustainability governance, with other regions and nations seeking to follow their lead. Under the European Green Deal umbrella, the EU is aiming to create the first climate-neutral continent by 2050. The Environment Action Programme to 2030, which entered into force in May 2022, continues to set out the priority objectives that guide EU policy and action.

The European Sustainability Reporting Standards (for companies subject to the Corporate Sustainability Reporting Directive) is a new addition to the corporate reporting landscape, having entered into force in July 2023 – the first set of affected companies are compelled to apply the new rules for their 2024 financial year. These standards are designed for large and/or listed businesses – small- to medium-sized enterprises (SMEs) can currently side-step formal reporting on their corporate sustainability action. But canny SMEs are increasingly swayed by prudence, electing to informally follow the structure of one of these standards to reduce the burden of future legislation.

Sustainability reports do not in themselves provide a sustainability performance guarantee, but they do provide a transparent baseline that potential clients and investors can use to measure progress. And these reports will provide the social and economic sustainability reassurances that buyers will seek to underpin product decision-making.

Legislative negotiations are well underway for the directive on Corporate Sustainability Due Diligence which is now close to adoption following the provisional agreement reached by the European Parliament and EU Council on 14 December 2023.

The directive will compel companies to integrate due diligence to mitigate adverse impacts of corporate activities throughout global value chains. Member States will have two years to write the directive into national legislation, likely impacting large companies from as soon as 2027.

A circular building block
The Circular Economy Action Plan (CEAP) was adopted in 2020 and is “one of the main building blocks of the European Green Deal”. In May 2023, Eurostat released an updated EU Circular Economy Monitoring Framework that was developed to track the CEAP progress. The updated version now includes a new data set on ‘Global sustainability and resilience’.

A sustainable product policy framework is central pillar of CEAP and it leads with a demand to design more sustainable products. In March 2022, the European Commission introduced their ambition to make sustainable products the norm through the Ecodesign for Sustainable Products Regulation (ESPR), which states: “A clear and harmonised regulatory framework on product environmental sustainability will provide the conditions for this approach to become mainstream and drive companies that buy and sell on EU markets to innovate and invest in circular business models and the products of tomorrow.”

ESPR has been designed to enable a sectoral approach to sustainable products, aligned with current and future legislation and policies. In June 2023 the Committee on the Environment, Public Health and Food Safety adopted a revision of ESPR to incorporate longer product lifespans (including a ban on premature obsolescence), a ban on the destruction of unsold products and prioritise the adoption of these new rules within specific product groups (including textiles and furniture).

Transition for textiles
Textiles have a massive environmental impact and though clothing is the high profile priority, the EU has prioritised improvement across the entire sector with the launch of the Strategy for Sustainable and Circular Textiles in 2022 and the publication of the Textiles Ecosystem Transition Pathway in June 2023. Forward-looking actions for the textiles sector include: design requirements to increase lifespan, easier to repair and recycle, minimum requirements for recycled content, reversing overproduction and overconsumption, reducing the destruction of unsold or returned textiles and reducing the release of microplastics from synthetic textiles.

In December 2023, the EC and the European Parliament reached a provisional agreement to introduce Digital Product Passports (DPP) into the EU’s updated sustainability product legislation. Expected to come into force from 2026, DPPs are essentially a digital twin of physical products to capture and share product data from across the supply chain to “create transparency and unlock circularity.” DPPs will apply to any physical product, including components and intermediate products, made in or exported into Europe.

The Critical Raw Materials Act was formally approved by the European Parliament in December 2023 and the regulation is expected to be approved by the EU Council and published in the Official Journal in early 2024. The law currently lists 34 materials that the EU has identified as being critical to the continent’s green transition, with 17 classed as ‘strategic,’ including aluminium, lithium and cobalt. The law will inevitably put greater attention on interior products that use any of the 34 listed materials, particularly at the product’s end-of-life when there will be an unequivocal expectation to recover CRM content.

The EU has accepted historic part-responsibility for deforestation and forest degradation and introduced the Regulation on deforestation-free products in June 2023, giving impacted businesses until the beginning of 2025 to comply. The regulation is intended to cease European contributions to deforestation and forest degradation and reduce carbon emissions caused by EU consumption and production. Transparent and trusted raw material source data will reassure buyers.

Amendments to the Waste Framework Directive proposed in 2023 are intended to align the directive with textile circularity ambitions. The changes are also hoped to combat the illegal shipment of waste to non-EU countries under the pretence that the material is going to be reused. The amendments are expected to come into force for 2025.

Addressing greenwashing
According to the EU, “53 per cent of green claims give vague, misleading or unfounded information, 40% of claims have no supporting evidence and half of all green labels offer weak or non-existent verification.” Inevitably, the Commission adopted a proposal for a Green Claims Directive in March 2023 and it was overwhelmingly passed by the European Parliament in January 2024 (593 votes in favour, 21 against). It is considered to be a necessary action to address greenwashing and to stop companies from “making misleading claims about environmental merits of their products and services.” Buyers will appreciate the transparent and common approach for green claims across the EU and manufacturers will benefit from a level playing field that favours the most sustainable products. When the directive is approved by the EU Council, Member States will have 24 months to introduce it into national legislation.

It will be frustrating news for maritime suppliers who have invested in certification programmes whose flaws are exposed through this process. The Green Claims Directive will likely give a boost to the EU Ecolabel which is already regulated by EU legislation to guarantee its reliability. Almost 90,000 products have met the voluntary label’s ISO 14024 Type I backed product group specific criteria.

Other recent related EU activity includes an amendment to the rules on Packaging and Packaging Waste; EU Taxonomy criteria changes to incorporate non-climate environmental objectives; proposed Construction Products Regulation updates to harmonise the conditions for marketing construction products with the ESPR; in July 2023 three Turkish yards were added to the European list of recycling facilities, referenced in the Ship Recycling Regulation; proposed updates to the Zero Pollution Action Plan in October 2023 aim to reduce microplastic pollution, and; in July 2023 a proposal to the Chemicals Strategy for Sustainability (part of the Zero Pollution Action Plan) was put forward to ban all remaining intentional uses of mercury.

The Legislative Train Schedule provides monthly updates that follow the progress of legislative files during the current Parliamentary term.

Beyond Europe, every nation is taking steps to advance sustainability demands as they seek to meet their obligations and promises. Maritime interior supply chain participants are well advised to take steps to review their sustainability activity now to ensure current and future EU (and beyond) compliance, or risk redundancy as the doors to European (and other) markets close.

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