For several years, the European Union has been the global leader in developing environmental and sustainability regulations. Though these rules will have a major impact on companies, until recently, their implementation seemed far off in the future.
Now the time has come for outdoor businesses to shift their operations if they want to comply with the EU rules, said Ammi Borenstein with Snaplinc Consulting.
“Many of you are going to deal with this, basically, tomorrow,” added Borenstein, who worked for outdoor companies for more than 30 years before starting his consultancy in 2018. “The EU is essentially trying to create pressure on the industry, so that it reduces its overall environmental impact across products, whether that be packaging or finished goods.”
At the Snowsports Industries America (SIA) Summit in Golden, Colorado on Sept. 28, Borenstein broke down how the new regulations came about and what they mean for outdoor brands.
EU Green Deal
The European Union’s sustainability regulations began with the Paris Agreement in 2015, which has a stated goal of holding the increase in global average temperature to well below 2 degrees Celsius above pre-industrial levels.
To take action, the EU created the European Green Deal, which, among other objectives, includes a package of policy initiatives with the ultimate goal of reaching climate neutrality by 2050.
Several areas of the EU Green Deal have created regulations that have cascaded down to the outdoor industry, including:
- Sustainability assessment and reporting.
- Packaging and extended producer responsibility.
- Use of specific chemicals.
“It affects water, it affects chemistry, but fundamentally this is about reducing the climate impact of Europe as a whole,” Borenstein said.
Expanded Sustainability Regulations
EU rules require large and publicly traded companies to publish regular reports about the social and environmental risks they face and how their activities affect people and the environment.
The biggest companies will begin reporting in 2025 on 2024 impacts, and the remaining companies will be phased in between 2024 and 2029.
For companies headquartered in Europe, any business that does more than €40 million ($42.36 million) of business annually will be required to comply in the first round, according to Borenstein.
The financial threshold for the first international companies to comply is doing €150 million ($158.86 million) of business a year in Europe, Borenstein said.
For outdoor companies, Borenstein recommends preparing by determining if the directive applies to the business. The reporting requirements direct companies to adhere to set standards, including environmental, social, and governance standards.
One key regulation is directed at deforestation. It mandates that companies perform due diligence if they use commodities such as palm oil, soya, wood, cocoa, coffee, cattle, and rubber and derived products such as leather, chocolate, and furniture. This affects all products manufactured after June 2023, Borenstein said.
“My guess is that there’s going to be a decent amount of enforcement on this one because reducing deforestation is key to reducing climate change,” he said.
To rein in greenwashing, the practice of companies making false claims about sustainability and being environmentally friendly, the EU is taking several actions. Those include banning generic environmental claims and other misleading marketing tricks as well as only allowing approved sustainability labels.
Generic environmental claims like “environmentally friendly,” “natural,” “biodegradable,” and “climate neutral” won’t be allowed.
Same for sustainability labels that aren’t based on approved certification schemes or established by public authorities. Companies also won’t be allowed to say a product is repairable if it isn’t.
“There is enough time to react, but it’s very important to get this in front of your marketing teams,” Borenstein said. “That’s so everybody understands what claims you might be making today that won’t be allowed, or claims you want to make in the future that can’t be allowed if they have to have some proof behind them.”
EU member states will be required to create systems for used packaging to be returned, reused, or recovered (including recycled). Manufacturers and importers will be responsible for packaging post-consumer.
Each country implements its packaging directives in its own way, Borenstein said. Brands are required to join a producer responsibility organization for each country they operate in.
France’s anti-waste law requires every product to have sustainability and circularity information, adhering to the country’s end-of-life labeling framework, which is similar to the recycling symbols in the United States but more detailed.
Italy requires all elements of all packaging to be identified and defined to jibe with the country’s standards. That includes gel packs, hang tags, plastic patches, cardboard boxes, “you name it,” Borenstein said. “Every single ingredient.”
The United Kingdom’s packaging requirements are like Italy’s. Borenstein said they are just as complex but also include listing the packaging weight.
The Registration, Evaluation, Authorization, and Restriction of Chemicals (REACH) compliance rules cover nearly every type of product. According to Borenstein, the list of restricted chemicals requires continuous monitoring of every added chemical and how it’s used in the supply chain. The list includes some chemicals used in snowsports products, including some PFAS.
Companies are required to monitor and disclose chemicals in their supply chains, develop systems for assessing potential exposure, and report any chemical use.
“You have to understand the chemical composition of what your products are made of, what your packaging is made of, and you have to be in a position to be able to report it out,” Borenstein said. “Or mitigate it, depending on what you’re comfortable with.”
Future Regulations, Enforcement
In the pipeline is the Ecodesign for Sustainable Products Regulation (ESPR), which is also designed to reduce a product’s environmental impact. Among other objectives, it is intended to prevent destruction of unsold consumer products and promote more sustainable business models.
The regulations could be rolled out in 2025-2026, and possibly as late as 2030.
As for enforcing these rules, Borenstein said every jurisdiction is going to have different penalties for different types of violations. The enforcement stage usually comes late in the cycle, years after the rules are made and implemented.
“The runways are pretty long, but the enforcement is pretty active,” Borenstein added. “Suffice to say that Europe does have a pretty robust history of enforcement.”
Bart Schaneman can be reached at firstname.lastname@example.org.