Swedish heavyweights Ikea and H&M welcome the EU’s new proposals for a more circular economy. But the business community must be involved in establishing the framework for these regulations.
– We need to create a system that simplifies rather than complicates sustainability efforts, says Roberta Dessi at Ikea.
Now the EU plans to end the disposable society and set standards for the circular economy. That is the message of the Ecodesign for Sustainable Products Regulation, (ESPR), presented by the European Commission at the end of March. The proposal falls within the framework of the EU’s Green Deal and the Sustainable Product Initiative, (SPI).
ESPR consists of two key areas. One is the development of a common eco-design requirement that will make products more climate-neutral and resource-efficient. The second is to introduce so-called digital product passports in which companies will be required to provide information about materials included in products that will accompany the product during its lifetime. The product passport will make it easier for consumers to make informed choices and increase businesses’ transparency by improving traceability between entities in the value chain.
The proposals have been praised by several major business representatives TN has spoken to.
– Ikea fully supports the Commission’s objectives. As a global furniture company, Ikea has a major responsibility to develop the circular economy. At the same time, the transition to a circular economy must take place throughout the entire value chain. That is why it is welcome and absolutely necessary for the EU to drive development forward and create a modern and well-functioning regulatory framework, says Roberta Dessi, Public Affairs Leader IKEA Range and Supply, at furniture giant Ikea.
– It’s positive that the EU has now reached the same conclusions.
Similar views are expressed by clothing giant H&M.
– H&M welcomes regulations at EU level as we believe they will accelerate the development of circular business models. We believe that today’s eco-design requirements need to be extended to circular design to include all actors in the value chain. As we strongly support transparency and traceability, we also believe that digital product passports can be an important tool for promoting the reuse and recycling of goods, says Pernilla Halldin, Head of Public Affairs at H&M Group.
The EU’s initiative is also in line with Ikea’s commitment to become 100 per cent circular by 2030 and H&M’s commitment that all packaging designed and produced by the H&M Group will be reusable or recyclable and that the share of recycled material usage will increase to 30 per cent by 2025 .
– We already have 9,500 articles that are based on the principle of circular design. We also have begun to develop a model for product passports that extends across the entire value chain. So, it’s positive that the EU has now reached the same conclusions, says Dessi.
– Our ambition is to offer fashion products that are made to last. That is why we are constantly testing and investing in new circular business models in areas such as second-hand, reuse, repair and recycling. We have also developed a design tool that H&M brands, designers and product development teams will be able to use in the journey towards a circular economy, says Halldin.
We must move away from the disposable society
Jenny Svärd, responsible for environmental policy at the Confederation of Swedish Enterprise, also sees the EU’s initiative as both important and welcome.
– Resource use accounts for about 50 per cent of total carbon dioxide emissions. To address this, we need to move towards a more circular economy and use our materials and products more resource-efficiently, Svärd says.
But the proposals are not without their challenges. Swedish Enterprise believes that there are several points that need to be clarified to safeguard European competitiveness.
– In terms of product design, it’s incredibly important that the legislation does not go into too much detail about how a company should design a product, says Svärd.
Furthermore, the idea of product categories must be flexible and avoid locking goods into silos. This could restrict companies’ innovation and technological development as industries evolve, which is also detrimental to competition.
– The legislation should enable continued technological neutrality and opportunities for innovation because it sets the framework for future product development, adds Svärd.
As the legislation covers all conceivable products, with the exception of food, animal feed and medicines, it will be introduced in a number of phases. By 2030, the European Commission intends to present more than 30 new pieces of product legislation that will concerns various sectors through delegated acts. This is a legislative process that requires thorough review, argues Svärd.
– We don’t want to end up in a situation where business ultimately has a limited say on these issues.
– The idea of legislating through delegated acts deviates from the normal legislative process and it must be investigated whether this is the most effective solution. We don’t want to end up in a situation where business ultimately has a limited say on these issues, says Svärd.
When it comes to the digital product passport, there are two major challenges. The first is that the information requirements risk becoming too time-consuming, especially for small and medium-sized companies.
– The information required must be proportionate to the usefulness of the information. If a lot of resources need to be spent on complying with the legislation, it loses its purpose. The second challenge is to ensure that information involving trade secret does not fall into the wrong hands, says Svärd.
To avoid excessive administrative burdens, information included in product passports should be on the basis of “need to know” rather than “nice to know”, she adds.
It is also crucial that the legislation applies to not only products manufactured within the EU but also imported products.
– The rules must be followed by all businesses operating in the internal market. Otherwise, non-EU countries could sell cheaper products without meeting the requirements. Therefore, it is necessary to establish functioning market controls that ensure that all businesses operate under the same conditions, says Svärd.
Flexible regulations required
As the rules will apply far into the future, the regulations must be dynamic and constantly relevant, Ikea believes.
– We’d like to see a flexible set of rules that keeps pace with the times. Therefore, legislators must maintain dialogue with businesses and experts. At the same time, it’s important that the regulations are science-based, says Dessi.
H&M Group also sees the importance of involving businesses in the legislative process, including the development of digital product passports.
– Digital product passports should be relevant and reliable, so the right information reaches the right recipient. We look forward to providing our insights to legislators to create a regulatory framework that makes a difference, says Halldin.
The Commission’s proposals will go to the Council of Ministers and to the European Parliament for review and approval. The legislation could come into effect at the end of this year or at the beginning of 2023.
– In principle, we’re positive about the initiative. But now we’re now looking at the details to try to get an idea of how this may affect Swedish companies, says Svärd.
– We fully understand that it’s not an easy task and there’s still a lot that needs to be examined. If we could give a recommendation, it would be to design a set of rules that simplifies rather than complicates sustainability efforts. Ikea is committed to supporting this process where we can make a difference. We believe that ESPR, if articulated, can become an important political tool, Dessi adds.