Sustainability regulations explained by Ecochain

Sustainability regulations

There are so many regulations with regards to the sustainability and environmental impact of a product. Some are coming up and some are already here. Keeping up with these regulations can be tough. Ecochain helps you stay on top of these regulations with information and provides software to calculate and work on your environmental footprint.

 

Sustainability regulations

Regulation Industries affected Date came/coming into effect Region Summary Risk of non-compliance
Corporate Sustainability Reporting Directive (CSRD) and European Sustainability Reporting Standards (ESRS) General In effect since January 5, 2023 but being phased in

Large companies will be required to report starting in 2024, while listed SMEs will be required to report starting in 2026

European Union Companies must report on sustainability factors, like environmental impact, social impact, and governance practices including things like greenhouse gas emissions, water use, waste generation, employee diversity, and human rights due diligence. To be reported in standardized European Sustainability Reporting Standards (ESRS). This will make it easier for investors and other stakeholders to compare the sustainability performance of different companies. – Fines
– Increased cost of capital
– Loss of business
Ecodesign for Sustainable Products Regulation (ESPR) General Coming into effect
January 1, 2024 – December 31, 2024
European Union The Ecodesign for Sustainable Products Regulation (ESPR) is a proposed EU regulation aiming to significantly expand and strengthen the existing Ecodesign Directive. Compared to the current Ecodesign Directive, which mainly focuses on energy-related products, the ESPR will apply to a much broader range of products, including textiles, furniture, electronics, and construction materials. It will set stricter ecodesign requirements for products, considering resource use, circularity, durability, repairability, recyclability, and environmental impact throughout the product lifecycle. Products will require a “Digital Product Passport” containing information about their environmental footprint, materials used, and disassembly instructions. – Fines
– Market restrictions
– Increased capital costs
Inflation Reduction Act (IRA) Building & Construction March 1, 2024 United States The Inflation Reduction Act of 2022 (IRA) is a legislation aimed at tackling several key issues including climate change. It’s the largest piece of federal legislation ever to address climate change. According to the Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT), the IRA will invest $783 billion in provisions relating to energy security and climate change. This includes $663 billion in tax incentives and $27 billion for a green bank created by amending the Clean Air Act. None specified yet
Carbon Border Adjustment Mechanism (CBAM) General October 1, 2023 European Union (New) tariff system targeting imports to the EU, focusing on goods from non-EU/EFTA countries with less strict climate policies. It aims to prevent carbon leakage by imposing a carbon levy on specific exports from these countries. The levy is linked to the EU Emissions Trading System (ETS) carbon price for the same goods produced within the EU. CBAM’s goal is to capture more than 50% of emissions in ETS covered sectors. None specified yet
Green Claims Directive General March 1, 2024 European Union This aims to tackle greenwashing and ensure reliable, comparable, and verifiable green claims about products sold to consumers. It is a significant step towards building a more sustainable and transparent marketplace in the EU. While it poses some challenges for businesses, its long-term benefits for consumers, environmental protection, and fair competition are considerable. – Fines
– Increased cost of capital
– Loss of business
Packaging and Packaging Waste Regulation (PPWR) Packaging March 1, 2024 European Union A fundamental piece of legislation that aims to harmonize national measures on the management of packaging and packaging waste. It sets out recycling targets for packaging materials and requires member states to take measures to prevent the generation of packaging waste. – Fines
– Increased cost of capital
– Loss of business
Batteries Regulation Batteries February 18, 2024 European Union The Battery Regulation Amendment aims to greenify the battery industry. It outlines plans for better battery recycling, strict supply chain checks, and reducing greenhouse gas emissions. Regulation initially proposed on 10 Dec 2020, replacing EU Battery Directive (2006) Source – Fines
– Market restrictions
– Increased capital costs

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Irem Sanal Sustainable business specialist