Swedish Enterprise’s preliminary comments on the European Commission’s Sustainable Product Initiative
On 30 March, the European Commission presented its horizontal legislative proposal for sustainable products, Ecodesign for Sustainable Product Regulation, within the Sustainable Product Initiative (SPI). The overall aim of the regulation is to adapt products for climate neutrality, resource efficiency and a circular economy, reduce waste and make sustainable products the norm within the EU.
The regulation entails a major shift for society as it will lead to new product design, changed production processes, changed business models, and consumption patterns within the EU. The proposal is a key step towards a more circular economy in Europe. Because a more circular economy – where materials and products are managed more efficiently in terms of resource use – is a vital part of achieving climate goals, the regulation is therefore also an important part of those efforts.
The European Commission’s proposal covers all products except food, animal feed and medicines and will be of considerable significance for the whole business community, as it will form the basis of virtually all product legislation within the EU. The regulation establishes the framework for how performance and information requirements are to be regulated in future product-specific legislation. The Commission plans to present more than 30 pieces of new product legislation, (through delegated acts), by 2030.
Swedish Enterprise supports efforts to create a more circular economy to achieve the climate goals and other sustainability goals and believes that the proposal contains several positive parts. However, there are also a number of challenges that need to be addressed in the regulation and in future product regulations. It is crucial that the regulation strengthens the competitiveness of European business.
Swedish Enterprise would like to make the following general comments about the proposed regulation:
- It is difficult to get an overview of what the legislation will entail in concrete terms, as many details are to be specified in the forthcoming product-specific, delegated acts. In many respects, therefore, it is difficult to take a position on the proposal.
- The efficient functioning of the single market is vital to business and the development of the circular economy. It is therefore important that product requirements are set at EU level and that contradictory national legislation is avoided. It is positive that the European Commission’s legislative proposals are in the form of a regulation, which ensures greater harmonisation on the EU Single Market.
- The regulatory framework for sustainable products must improve the competitiveness of European business and future product requirements must be set with regard to the international competitiveness of European companies.
- The regulation is comprehensive and broad-based in its scope. It is important that requirements that are set in this regulation, and in future product-specific legislation, are synchronized with other relevant legislation. Other legislation also needs to be adapted to enable the implementation of requirements set out in this legislation. It is problematic that the regulation refers to technical criteria in the taxonomy that have not been developed and impact assessed for application in conjunction with this legislation.
- The regulation proposes future product-specific legislation to be developed through delegated acts. Delegated acts should primarily be used to establish technical criteria since the current legislative process has been deviated from. The European Commission proposes the establishment of an Ecodesign forum that will involve various actors and contribute to the development of the delegated acts in conjunction with the proposed legislation. How business will be represented in the forum is currently unclear and there needs to be dialogue with business about how this would be done. It is important that this forum includes broad representation from business.
- It is positive that the European Commission is choosing to broaden the scope of the Ecodesign Directive to include more products and product groups. However, it is important that ecodesign requirements are set only for those products where it is deemed relevant to achieve high levels of environmental and climate benefit, and that thorough impact assessments are carried out. Products that for safety reasons, or their product-specific characteristics, are not suitable to be subject to the regulation should be excluded. The selection of which products will be subject to performance and information requirements must take place through a systematic and transparent process with broad involvement of business.
- Information sharing is a key aspect of the circular economy and for making circular business models work. Swedish Enterprise supports the introduction of product passports as a tool for promoting the circular economy. The European Commission’s proposals require businesses to share certain information, but it is not clear which information is to be shared, how information is to be shared, or shared to which recipient or recipients. The proposal refers instead to specifying this on a product-by-product basis through delegated acts. For businesses, sharing information entails legal, technical, contractual and commercial, and often complicated, considerations that may mean that certain information cannot be shared. To ensure that product passports are limited to only relevant and necessary information that companies can share, it is important that the interests of business are fully incorporated in future product legislation.
- In its current form, the regulation is incompatible with the need to protect knowledge-based assets, including information that, according to the proposal, may be shared within the product passports. Such protection is vital for the competitiveness of European businesses, which is also incorporated in the European Commission’s Action Plan on Intellectual Property Rights, which is part of the Industry Strategy. This must be addressed in future product legislation.
- The regulation is based on static definitions of product categories. It is important that the regulation and future product-specific regulations promote innovation and technological development and safeguard technological neutrality. Innovation often leads to new types of products and services, which in turn also changes sectors.
- The regulation is comprehensive and will pose challenges for business, especially for SMEs, to manage and implement. In future product-specific legislation, the overall administrative burden that requirements involve, technical opportunities and investment requirements as a result of such requirements must be considered. It is positive that the European Commission is proposing that a number of measures be taken to support SMEs in these respects.
- The regulation is primarily focused on original manufacturers and on new product manufacturing. Many sections of the regulation lack focus on how existing products will be affected by the regulations and how such products are to be subject to and managed in terms of future performance and information requirements. This must be clarified.
- In parallel to more product requirements being set, it is vital that market surveillance are strengthened to ensure compliance and an equal playing field in the market. It is positive that the European Commission is proposing strengthened market surveillance and measures to increase co-ordination of market surveillance within the EU.