Updates on the European Green Deal - On the urgency of climate action and on the measures being taken
Source: European Commission
by Aydın Clara Orberk, 13 minutes
On the 4th of April 2022, the latest Intergovernmental Panel on Climate Change (IPPC) report was released, urging governments to take measures for CO2 emissions to peak by 2025 and be reduced by a quarter by 2030. To paraphrase United Nations Secretary-general Antonio Guterres, unprecedented and unlivable conditions in significant parts of the world are forecast unless governments everywhere reassess their energy policies.
The bottom line of the Report is twofold: We have alternatives in all sectors to at least halve emissions by 2030, but we have to act now. Indeed, measures are being taken on a European level. With all the talk about climate change, what is actually being done? This article discusses updates on the European Green Deal. It starts with proposals to make sustainable products the norm in the EU, then moves on to measures being taken in the highly polluting textile industry, and concludes with a critical stance on the Corporate Sustainability Due Diligence proposal.
Updates on the European Green Deal
You may have heard about the European Green Deal (EGD), Europe’s roadmap to climate neutrality by 2050. Our blog first wrote about the EGD here. It is laudable that it comprises the largest legislative package to ever pursue climate goals. But it has yet to live up to its slogan, fair, just and deliverable, as argued on our blog here. Two new sets of proposed measures within the EGD framework have been brought forward and will be analysed in this article.
First, on 30th March 2022, the Commission brought forward a package of proposals in the ‘sustainable industry’ domain to implement the Circular Economy Action Plan, one of the main building blocks of the EGD. Besides measures applying to all products, a set of measures for the textile industry, in particular, will be discussed.
Second, on 23rd February 2022, the Commission adopted a directive on Corporate sustainability due diligence after the European Parliament and the Council called upon it to do so in 2020.
Towards sustainable products becoming the norm in the EU?
Essentially, the measures brought forward in the ‘sustainable industry’ package include rules to make physical goods as energy efficient as possible, considering the design, daily use, repurposing, and the goods’ end-of-life. They relate to climate action as they will contribute to resource independence and less pollution. Furthermore, job creation in remanufacturing, maintenance, recycling and repair is expected.
Let’s turn firstly to product design: the proposal for a Regulation on Ecodesign for Sustainable Products addresses the crucial design phase which determines up to 80% of a product's life cycle environmental impact. According to the Commission, the new framework could lead to 132 megatons of primary energy savings by 2030, a saving which, in terms of natural gas, would be almost equivalent to the EU's import of Russian gas.
The proposal extends the already existing Ecodesign rules (Directive 2009/125/EC) which have saved consumers €120 billion in 2021 in two ways. First, the eco-design rules will apply to more products; and second, the scope of requirements is diversified, criteria are not limited to energy efficiency but include circularity and an overall reduction of the environmental and climate footprint.
For each product or category of products, the Commission will progressively set out the ecodesign requirements. It must be noted that the update from the former directive to a regulation leaves less room for the implementation to the Member States, such that incorrect transposition into national law or incorrect enforcement is less likely.
Moving on, once products are designed and come to the market, product-specific information requirements on the sustainability of products will ensure that consumers are better-informed and thereby support consumer awareness of the environmental impacts of their purchases. Currently, about 30 Energy-related products (‘ErP’) are regulated through some 50 measures under the current Energy Labelling Framework Regulation (Regulation (EU) 2017/1369). About half of the EU's total energy use is consumed in products already falling under the scope of this legislation. But the framework provides for two-yearly working plans in order to update and increase the ambition for already regulated products until a new regulation enters into force.
The Ecodesign and Energy Labelling Working Plan 2022-2024 was thus adopted to extend the energy-related products falling under the Regulation. It now includes consumer electronics (smartphones, tablets, solar panels), the fastest growing waste stream.
Further measures introduced in the package, but that are yet to be concretised and will not be elaborated upon further in this article include digital product passports to help track substances of concern during recycling, an extension of green public procurement, and other, to be determined incentives for sustainable products.
Textile, an industry with a high environmental impact
Concrete measures were also adopted to reduce the carbon footprint of particular product groups with significant ecological impact: construction products and textiles.
Construction products have a significant ecological impact because they determine the energy efficiency of buildings, which are responsible for about a third of the EU’s energy consumption, as well as a third of energy-related greenhouse gas (GHG) emissions. A revision of the Construction Products Regulation thus aims to make construction products more circular, in order to deliver on GHG objections. This article will however focus on measures to make the textile industry sustainable.
European textile consumption has the fourth-highest environmental and climate change impact after food, housing and mobility. It also has the third-highest water and land use consumption, and the fifth-highest use of primary raw materials. In terms of GHG emissions, in 2015 the textile industry totalled more CO2 than all international flights and maritime shipping combined. It thus is an industry with high global warming impact which requires reform in order to attain climate goals.
Essentially, the EU Strategy for Sustainable and Circular Textiles will ensure that textiles on the EU market are more long-lived and recyclable, made of recycled fibres as possible, free of hazardous substances, and produced in respect of social rights and the environment.
Credit: Tom Finsk. One garbage truck of textiles is landfilled or incinerated every second.
The EU Strategy for Sustainable and Circular Textiles up close
Firstly, the Strategy for Sustainable and Circular Textiles will introduce mandatory Ecodesign requirements such as fibre-to-fibre recyclability and mandatory recycled fibre content. Most of our clothes are made of blended fibres (e.g. the prevalent addition of elastane). This hampers recycling due to the low availability of technologies separating textile waste by fibre, such that very few clothes, if at all, are recycled - most end up in landfills in developing countries, which pollutes the ecosystems, or incinerated, releasing a lot of CO2 in the process.
In factories, 25-40% of all fabric used is leftover or thrown away, and only around 20% of collected used textiles in Europe are downcycled as industry wipes or other applications. The significant destruction of unsold or returned textiles is to be strongly minimised and eventually stopped given the important GHG release.
As a disincentive for this practice, under the Ecodesign for Sustainable Products Regulation, the Commission proposes a transparency obligation requiring large companies to publicly disclose the number of products they discard and destroy, including textiles.
Companies may rethink their business model and dealings with unsold, but undamaged clothes if consumers become aware of their practices, since revelations of practices in stark contrast to green claims - statements that products are sustainable - may drive consumers away if they turn out to be greenwashing - false or misleading claims about ecological commitments of the company.
Second, microplastic pollution will be tackled as well. Fibres in clothing are predominantly and increasingly synthetic. They release microplastics with each wash, amounting to up to 40,000 tonnes of synthetic fibres every year, which eventually enter our food chain. This can partly be remedied through mandatory design requirements under the Ecodesign Regulation. In the second half of 2022, the Commission will introduce a set of microplastic prevention and reduction measures including ecodesign requirements (to reduce the usage of synthetic fibres). Because the highest amount of microplastics is released during 5-10 first washes, target prewashing at industrial manufacturing plants and microplastic-capturing washing machine filters may also be encouraged or rendered mandatory.
Third, green claims will be verified to avoid greenwashing and allow consumers to pick truly sustainable textiles. Consumers willing to purchase more sustainable products are often discouraged from buying them by the unreliability of claims (greenwashing), as studies show that 39% of green claims could be false or deceptive. To protect consumers against greenwashing, the initiative on Empowering Consumers for the Green Transition proposes to amend the Unfair Commercial Practices Directive and the Consumer Rights Directive to only allow substantiated and verified general environmental claims such as ‘green’ or ‘eco-friendly’, notably based on EU Ecolabels. The Commission will present in the second half of 2022 a set of minimum criteria for all types of environmental claims in the context of the Green Claims Initiative.
Fourth, besides banning the combustion of unused textile, Extended Producer Responsibility (EPR) requirements will boost the reuse and recycling of textile waste. ERPs essentially make producers responsible for the waste that their products create, which is crucial to decouple textile waste generation from the growth of the textile sector. EPR requirements have proven effective in improving waste management in line with the waste hierarchy: as producers become responsible for their waste, EPR can incentivise product design that promotes textile circularity avoiding waste in the first place, and several EU Member States have already enacted or considered the introduction of EPR requirements for textiles, in line with the obligation under EU waste legislation to establish a separate collection of textile waste by 1 January 2025. The Commission will propose harmonised EU extended producer responsibility rules for textiles with eco-modulation of fees, as part of the forthcoming revision of the Waste Framework Directive in 2023.
Fifth, for textiles, information requirements and digital product passports will be introduced.
The textile industry of tomorrow: Driving fast Fashion out of Fashion
Looking forward, the EU aims to create enabling conditions for a more sustainable industry through a forthcoming Transition Pathway for the Textiles Ecosystem. This collaborative tool is currently being co-created with stakeholders. The Transition Pathway will, as the name indicates, allow for a transition to reverse the overproduction and overconsumption of clothing - companies are notably called on to reduce the number of collections per year. The Industrial Strategy of the EU will also be updated with measures aiming to drive fast fashion out of fashion, in favour of clothes of quality that are made to last, and circular.
Innovation and investments in sustainable clothing and the development of skills needed for the green and digital transitions will also be supported.
Finally, the EU aims to introduce sustainable textiles value chains globally. The focus lies on addressing the challenges arising from the export of textile waste, and on establishing due diligence for environmental and social fairness. The Corporate Sustainability Due Diligence Directive is part of that, and crucially in light of the scandal of brands having allegedly made use of forced Uyghur labour, the Commission is preparing a legislative initiative to effectively prohibit the placing on the EU market of products made by forced labour.
The Sustainable Corporate Due Diligence legislative proposal - Towards sustainable businesses becoming the norm in the EU?
The Corporate Sustainability Due Diligence Proposal comprises rules for companies to respect human rights and the environment in global value chains. Concretely, companies must:
integrate due diligence into policies;
identify actual or potential adverse human rights and environmental impacts;
prevent or mitigate potential impacts;
bring to an end or minimise actual impacts;
establish and maintain a complaints procedure;
monitor the effectiveness of the due diligence policy and measures;
and publicly communicate on due diligence.
The proposal applies to the company's own operations, but also their subsidiaries and their value chains, i.e. direct and indirect business relationships.
Companies will be obliged to take ‘appropriate’ measures to mitigate adverse impacts, the appropriateness of which will depend on the severity and likelihood of different impacts, the measures available to the company in the specific circumstances, and the need to set priorities (‘obligation of means').
Crucially, a supervision mechanism will be in place at the national level: national administrative authorities will guard the application of the due diligence and rules and have the discretion to impose fines in case of non-compliance or give orders to cease the conduct.
National authorities will also be required to set up rules governing the civil liability of companies for damages arising from a failure to carry out adequate due diligence, allowing victims who suffered damages that could have been avoided with appropriate due diligence measures to take legal action.
The rules apply to 2 groups:
Group 1: all EU limited liability companies of substantial size and economic power (with over 500 employees and over EUR 150 million in net turnover worldwide). Group 1 companies furthermore must adopt a plan to ensure that their business strategy is compatible with limiting global warming to 1.5 °C in line with the Paris Agreement.
Group 2: Other limited liability companies operating in defined high impact sectors, which do not meet both Group 1 thresholds, but have more than 250 employees and a net turnover of EUR 40 million worldwide and more.
The scheme applies to any company active in the EU with turnover thresholds aligned with the criteria generated in the EU, thus both EU and non-EU companies.
Where companies' directors enjoy variable remuneration, directors will be incentivised to implement due diligence.
A drop in the Ocean?
The Sustainable Corporate Due Diligence proposal is yet to be adopted by the European Parliament and Council but it has received important criticism. The World Wildlife Fund notably regrets that since it excludes Small and Medium Enterprises, it will apply to a tiny fraction of EU companies only, in fact only 0.02% of EU businesses. Indeed, the Directive’s name changed from Sustainable Corporate Governance to Sustainable Corporate Due Diligence following strong lobbying, reflecting a reduction in scope.
Furthermore, SMEs in high-risk sectors are not included despite their substantial environmental impact, inconsistent with the Corporate Sustainability Reporting Directive, and the list of high-risk sectors for group 2 is extremely narrow to begin with: sectors like high-carbon power production (coal, gas-fired power plants), high-carbon transport (aviation), high-carbon industry (steel, cement, chemicals) are excluded from high-risk sectors.
Furthermore, unlike in earlier, leaked versions of the proposal, the variable remuneration of directors being linked to their due diligence is discretionary and not mandatory anymore.
Finally, for group 2 companies the measures will apply two years later than for group 1, despite climate urgency.
To conclude, the Due Diligence Proposal is a step forward but excludes 99.8% of businesses in the EU.
Climate measures: the State of Affairs
As a take-away message, the latest IPCC report showed that ambitious carbon emissions cuts are much needed but not being made. The Commission released a package of new European Green Deal measures concentrating on high impact sectors, i.e. textiles, construction products, and products in general, as well as a Due Diligence Directive whose scope is however tremendously restricted as it will apply to only 0.02% of businesses. The EGD framework must be used to its full potential to move away from a fossil-fuel addicted society toward sustainable, and also more independent consumerism. The IPCC report urges governments and businesses alike to rethink their policies and business models ambitiously in order to cut emissions in order for GHG emissions to peak by 2025, and measures such as the EU Strategy for Sustainable and Circular Textiles do indeed incentivise companies to do better and contribute to climate goals. There is no better time to act than now - A shift towards a circular model would also boost Europe's overall resource independence, and our dependence on authoritarian supporting hydrocarbons is excruciatingly reminded these days.
This article would not be complete without mentioning POP Boutique Maastricht, a local student-founded and student-driven online second-hand shop. It advocates against fast fashion and donates 100% of its profits to Samos Volunteers, an NGO providing basic needs for refugees and asylum seekers arriving on Samos island, Greece. Second-hand clothes shops contribute to making the textile industry more circular by giving a new life to clothes that would otherwise be incinerated or end up in landfills. You can find POP boutique on Instagram and Vinted.’
