CSR in Europe

With the Deforestation Regulation, the European legislator intends to increase EU demand for and trade in products whose supply chains are not linked to deforestation and forest degradation, or to minimize consumption of products that do not meet these requirements. A number of goods (beef, cocoa, coffee, palm oil, soy, and timber) and related products will only be permitted to be placed on the EU market and exported from the EU if they meet certain requirements, including being considered “deforestation-free,” i.e., not produced in a manner that damages forests.

The European Parliament adopted the regulation on 19.4.2023 by 552 votes to 44 with 43 abstentions. It now still requires formal approval by the Council, which should no longer be a real obstacle, however, given the political agreement already reached in December 2022. The regulation will then enter into force 20 days after publication in the Official Journal of the EU.

The European Commission proposed a revision of the Waste Shipment Regulation to make the export of waste to third countries more sustainable, to facilitate the transport of waste for reuse/recycling within the EU, and to step up the enforcement to counteract illegal shipments of waste.

A revised text adopted by the European Parliament was published on January 17, 2023, and will now serve as the basis for further discussions in the Council of the European Union.

Reducing packaging waste and promoting recycling of packaging is the stated objective of another draft Directive issued by the European Commission on November 30, 2022. This goal is intended to be attained through, among other means, improved packaging design and an increase in the proportion of recycled materials in packaging.

The proposal is currently under consideration by the Council of the European Union, which published initial working documents in December 2022.

With a further proposal for a Regulation dated September 14, 2022, the European Commission is specifically targeting products made using forced labor. The Regulation aims to prohibit the placing on the market, distribution, and export of products made using forced labor. The proposed prohibition applies to products of any type, including their components, regardless of the sector or industry. Business owners will need to take steps to identify, prevent, mitigate, and, if necessary, eliminate the hazards of forced labor not only within their own companies but throughout the entire value chain.

As part of the deliberation held by the Council of the European Union on January 31, 2023, the European Economic and Social Committee published an Opinion containing proposals for improvement.

Additionally, the EU food system is set to become more sustainable. The EU Commission launched an initiative by which it intends to define the requirements and responsibilities of all actors in the EU food system as well as introduce rules on sustainability labeling of food products (Sustainable food system framework initiative).

The EU Commission released a preliminary impact assessment. Next steps are scheduled for Q3/2023.

The purpose of the Ecodesign for Sustainable Products Regulation is to create more environmentally sustainable and circular products. The Regulation is intended to build on the current Ecodesign Directive, which presently only applies to energy-related products, and to enable regulatory intervention at various phases of the product life cycle to reduce negative impacts along the entire value chain. The service life of products is supposed to be extended, repair and recycling facilitated, and requirements will be established for chemicals/materials used, energy and resource efficiency, carbon and environmental footprints, and information requirements (including a Digital Product Passport).

On February 10, 2023, a (now) second compromise proposal was published following numerous discussions.

The European Commission has identified twelve end-use products (textiles and footwear; furniture; ceramic products; tires; detergents; bed mattresses, lubricants; paints; cosmetics; toys; fishing gears; absorbent hygiene products) and seven intermediate products (iron & steel; non-ferrous metal products; aluminum; chemicals; plastics; pulp & paper; glass) along with a variety of horizontal measures (durability; reusability; post-consumer recycled content) identified as eligible for initial action under the Ecodesign for Sustainable Products Regulation.

The Conflict Minerals Regulation entered into force on January 1, 2021. Similar to the U.S. Dodd-Frank Act (2010) and the OECD Due Diligence Guidance for Responsible Supply Chains of Minerals from Conflict-Affected and High-Risk Areas (2011), the European Union created binding sourcing standards for the entire supply chain in 2017 (cf. our November 2020 Distribution Law Update). The Regulation aims to help stem the trade in the economically significant minerals tin, tantalum, tungsten, their ores, and gold, which are required for products such as cell phones, automobiles, and jewelry. The Conflict Minerals Regulation seeks to prevent the profits from the trade in these minerals and metals being used to fund armed conflict.

Another proposed set of actions of the European Commission dated March 16, 2023 (Critical Raw Materials Act) is aimed at securing access for the European Union to a sustainable supply of key raw materials. To ensure the long-term viability of increased raw material production, new raw material initiatives are to be implemented in a sustainable manner. This includes, for instance, taking into account environmental protection, socially responsible practices, and respect for human rights.

To ensure resilience of the supply chains, the proposed Regulation also requires certain large companies to perform an audit of their strategic raw materials supply chains, comprising a company-level stress test.