The European Commission announced its 'Green Deal' in March 2022, setting out how it intends to help the European Union become climate-neutral by 2050. A comprehensive package of measures to achieve this has followed, with more than 100 associated pieces of legislation either concluded or in the pipeline. Here we look at progress on some of the more significant recently finalised ones relating to consumer protection and corporate governance.
EmpCo Directive
The so-called EmpCo Directive (Directive for empowering consumers for the green transition through better protection against unfair practices and through better information), came into force on 26 March 2024. It will amend the Consumer Rights Directive (CRD) and the Unfair Commercial Practices Directive (UCPD). It will apply from late 2026 – 30 months after it comes into force.
Among other things, the EmpCo Directive expands the CRD's pre-contractual information requirements to include information about environmentally friendly delivery options, conformity guarantees, the length of time for which software updates will be supplied and information about repairability. Where a producer offers a free guarantee for over two years, the information must be displayed by traders made aware of that via a harmonised label.
The UCPD is amended to:
- Include 12 new automatically unfair practices relating to misleading environmental information.
- Expand what qualifies as a "main characteristic" of a product to cover certain environmental and social aspects.
- Add two additional prohibited misleading actions around making environmental claims and advertising irrelevant benefits.
The legislation implementing the Directive will apply to consumer products and services supplied in the EU (read more here).
Ecodesign Regulation
The Ecodesign Regulation was published in the Official Journal on 28 June 2024. It sets up a framework for ecodesign requirements for sustainable products and amends Directive 2020/1828/EU (representative actions for consumer protection) and Regulation 2023/1542/EU (batteries and waste batteries) plus repeals the European Ecodesign Directive 2009/125/EU.
The Ecodesign Regulation establishes a framework for setting out ecodesign requirements for sustainable products to increase the product lifecycle. With a few exceptions (including for defence and security products), it will apply to all products and covers product durability, reusability, upgradability and repairability. It also contains rules on the presence of substances which negatively impact environmental footprint, and information requirements including for a digital product passport.
The Regulation is aligned with the Digital Services Act in relation to products sold online. It came into force 20 days after publication and will apply from 24 months after entry into force. The Ecodesign Directive has been largely repealed from 18 July 2024.
Corporate Sustainability Due Diligence Directive
The Corporate Sustainability Due Diligence Directive (CSDDD) was published in the Official Journal on 5 July 2024.
The CSDDD introduces a sustainability due diligence duty for large EU companies and large non-EU companies with significant EU activity. This requires them to address human rights and environmental issues throughout their supply chains.
The compliance threshold for EU companies is:
- Those with over 1000 employees and worldwide turnover of more than EUR450 million in the last financial year and parent companies of groups reaching that threshold.
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Companies or parent companies of a group that have franchising or licensing agreements in the EU with independent third party companies in return for royalties where: the agreement ensures a common identity, business concept and the application of uniform business methods; royalties amount to more than EUR 2.25 million in the last financial year, and the company or group had a net worldwide turnover of more than EUR 80 million in the last financial year.
For non-EU companies and group parents, the thresholds are:
- Those generating net turnover of more than EUR 450 million in the last financial year (regardless of number of employees).
These are subject to limited exemptions.
Member States must transpose the Directive within two years. There are then staggered implementation dates ranging from three to five years.
Right to Repair Directive
The Right to Repair Directive was published in the Official Journal on 10 July 2024, entering into force 20 days later. Member States must transpose the Directive by 31 July 2026. Article 15 (which amends the Goods Directive) will not apply to sales contracts concluded before 31 July 2026.
The Directive will introduce:
- A new right to repair for consumers both within and beyond the legal guarantee period. This will not take away the right of the consumer under existing EU legislation to choose between repair and replacement while a product is within its guarantee period.
- Manufacturers are required to conduct repairs within a reasonable time and (unless the repair is free) for a reasonable price.
- An extended guarantee of one year after a product has been repaired.
- A requirement on manufacturers to publish information about their repair services, including indicative information on the most common repairs.
- Options for consumers to borrow products while theirs are being repaired.
- A prohibition on contractual or technological measures (through hardware or software) which prevent the use of second-hand, compatible and 3D printed spare parts by independent third party repairers (in line with applicable laws – presumably this will include intellectual property rights).
- An obligation on Member States to introduce at least one measure to promote repair – this might include repair vouchers or funds.
- A European repair platform to help consumers access repairers, whether in their own Member States or cross-border. Repairers will be able to advertise their services on the platform.
This will impact UK manufacturers. Notably the Directive provides that where an EU consumer purchases a product from a non-EU based manufacturer, the manufacturer's EU representative should perform the repair. Failing that, the EU importer or distributor will be responsible. UK manufacturers will need to think about clarifying this, either by appointing a representative (if they don't have one) or by clarifying with importers or distributors who will carry out repairs.
Works in progress
Among legislation still to come in this area, worth noting are:
- The Packaging and packaging Waste Regulation – this aims to reduce packaging waste and restrict certain types of packaging. The text has been agreed and a final version will now be published by the European Parliament after which the Council will adopt the Regulation. This is expected to happen most likely in autumn 2024. Read more here.
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The Green Claims Directive (‘Directive on substantiation and communication of explicit environmental claims’), a draft of which was officially presented by the EU Commission on 22 March 2023 and is still being negotiated (see more here). The EU Council has adopted its negotiating position (here) but it is unlikely to be agreed before 2025.
What does this mean for you?
This legislation all (to varying extents) covers businesses not only in the EU, but also those in the EU supply chain regardless of where they are based. In some cases, the UK has parallel legislation which will introduce similar but not identical requirements in the UK. This makes the regulatory environment particularly challenging for cross-border businesses which may trend to the 'highest common denominator' rather than have to apply different criteria to different products and activities.
