In ‘The New Business Landscape: How global regulations are shaping the economy of tomorrow, today’ session at the Products of Change Conference 2024, James George, POC Advisor, gathered a panel of industry experts to discuss different areas of legislation and compliance.
A tidal wave of new and revised legislation has been reaching the business sector, and while the big picture is one of positivity and sustainable progress, the details and practicalities of the legislation presents its challenges.
“How do we make sure we’re compliant?” asked James, “But also how do we also make sure we’re pushing beyond compliance and creating change? Is policy a carrot, or is it a stick?”
It is challenging to navigate when timelines keep shifting and policies get watered down, but that is what POC is working to demystify, said James.
“We don’t have all the answers, but we have a selection of industry voices that are tackling this right now. Answering how are these policies showing up for brand owners and for retailers?” he said.
Michelle Papayannakos, director of sustainability at Paramount then came onto the stage
While Paramount is based in the US, it is still being caught in the “spaghetti soup of acronyms” that is the legislation, said Michelle, for instance, the Corporate Sustainability Reporting Directive (CSRD) is capturing 50,000 organisations that operate in the EU.
One of the key parts of the CSRD is Double Materiality assessments, which requires organisations to look at how climate change impacts them but also how they impact climate change. What’s more, added Michelle, is that double materiality assessments have to be published. But companies don’t like to put data out there that is not 100% assured. Since what is material in one sector may not be in another, there is a lot of ambiguity as to what this data should look like
“It’s an absolutely massive challenge, but everybody is going through the quagmire, but what will come out the other side of it is a lot of transparency from the corporates about how they are doing this, what their impacts are, and what they’re doing to reduce them,” said Michelle.
“It’s a developing area but it will be interesting in five years’ time to see how shareholders and investors use this data to invest in companies or hold them to account,” Michelle continued.
In most instances, you are reporting on the previous year’s data so even though some of the deadlines seem a little way off, companies need to be ready ahead of date with their reporting.
Next to the stage was Andrea Green, POC advisor and ambassador for North America
This session ran close to the beginning of the Conference, when it had just been confirmed that Donald Trump would be the next President of the US. At a sustainability conference where attendees were ready to learn about the latest global legislation, the fact that all of this might be soon thrown up into the air had to be acknowledged.
“I don’t know whether I should take my notes and tear them up into small little pieces,” expressed Andrea. “I feel like I need to take a big breath because I am not sure I have yet. I’m so sorry Moksha. I just apologise to you,” said Andrea, turning to the nine-year-old sustainability advocate and POC Conference keynote speaker, Moksha Roy.
“BUT it means that all of us in this room are just going to have to work harder. We’re just going to have to pull up our big girl pants, and we’re going to do this together,” said Andrea, receiving an impassioned round applause and cheers from the audience.
“We know we’re on the right path, and we have our secret shining bullet which is California. So we’re going to put on our rosy faces and talk about the laws that have been passed in California,” Andrea continued. California has been leading the way in terms of climate legislation in the US, recently signing into action laws which will hold garment and textile brands responsible for the end of life of their products.
The Climate Corporate Data Accountability Act and Financial Risk will be both for public and private companies, and mean that any large companies over a certain size will have to report their Scope 1 and 2 emissions and a year later in 2027, their Scope 3 emissions.
“So for all of us that means all the licensors; all the companies that do business in California will have to comply,” which will be a game changer, said Andrea.
Another big one is the SEC Climate Related Disclosure; “I don’t know what’s going to happen to that one. It could just end up going away, I don’t know. Companies are already well on their way to reporting so I don’t know what’s going to happen,” Andrea added, “I think we’re in for some very big shifts in our political, economic foundation.”
However, coming out of California, this law is really going to apply to everyone and what’s being asked of the licensees from the licensors.
“So I am going to hold onto hope that all of us collectively can do this and that we can move forward and we won’t have to apologise too much to Moksha and her generation,” Andrea concluded.
Discussing the topic of ESPR, was Jonathan Baker, COO, Fabacus
“Adopted 20 July 2024, this regulation is across all products except food, feed and medicine; it’s all about product circularity. This is an important piece of legislation because it’s going to make products a lot more visible to consumers or shoppers,” said Jonathan.
This will require products to prioritise:
- Durability and reusability
- Repairability and upgradability
- Recycled content and resource efficiency
- Recyclability and end-of-life management
- Environmental impact
- Digital Product Passport (DPP)
Every product category will slightly differ on what is recorded and captured within the data requirement. The key questions are: What makes up the product? How to make it last longer? How is it treated at the end of its life?
DPPs will be mandated by 2030 so every single product will have a unique data carrier, often, but not exclusively, in the form of a QR code.
Each category will be rolled out in different stages, however; garments, footwear, furniture, mattresses, electronics, paints and chemicals, are all being prioritised first.
The EU is aiming for substantial market compliance by 2030 for these prioritised categories. First working plans are expected in the first half of 2025, which will define specific requirements for these categories, with expected compliance required by 2027.
Mike Swain, POC’s packaging ambassador, continued the conversation towards Extended Producer Responsibility (EPR)
EPR essentially ensures that “The polluter pays,” setting out a large set of rules and policies to ensure this.
The UK has implemented significant updates to its EPR regulations for packaging in 2024. These changes aim to ensure that producers cover the full costs of managing the waste from their packaging, thereby encouraging more sustainable practices. Key developments include:
- EPR Payment Delay: While initial data submissions for packaging occurred in April 2024, the first EPR payments have been deferred until October 2025. This gives businesses more time to adapt to the new system.
- New Reporting Requirements: Companies need to submit detailed packaging data, with larger organisations required to report twice a year. For 2024, packaging data from January to June must be submitted by October 2024.
- Recycling Labels: By March 2026, all packaging must include clear “Recycle” or “Do not recycle” labels to assist consumers in proper waste disposal.
- Costs and Obligations: Under the EPR, businesses are now responsible for 100% of the net costs of collecting and treating household packaging waste. This represents a shift from the previous system, where costs were shared across the supply chain.
EPR is a core component of the EU’s Circular Economy Action Plan (CEAP). “It is starting with packaging, because it is the most visible and it is the easiest one for people to approach in this kind of format,” said Mike.
“A lot of data will need to be captured,” Mike explained, “It is based at the product level and asks how will you gather data for your products and how will you pull it all together as a measure of what your impact is and you are charged accordingly. If you have good data, you will be charged appropriately, if you have bad data, the governments will find a way to figure out you haven’t reported properly.”
Therefore, data fidelity is “absolutely key” – reports show that even CFOs aren’t confident in the data they are getting.
“So please gather your data, if you don’t think you need to gather data, gather it anyway, because there is what I call the new data economy – people will supply you with data; products and data, services and data, utilities and data, will come in. You will have a black box, you will put value to that data and change it and turn it into the products that you produce. That data is then valuable to someone else.
“This is the new data economy that is going to make a difference and it’s going to sit alongside the financial economy.
“So if you have a product and you have better data, you have a competitive advantage,” said Mike.
By 2030, most of the systems will be implemented in the UK and EU. Since the EU is bigger than the UK, it will have to follow through with what is important to the EU, and the UK will have to follow suit.
Anyone who trades with the UK and EU will have to figure out how they are going to align with these processes, particularly with packaging as it is the first one to be enacted.
This all comes under EU Green Deal and UK policy to tighten obligations in areas such as product labelling, reuse and recyclability standards, and promoting eco-design.
Then James returned to touch briefly on EUDR
The policy is to ensure commodities are deforestation free, they follow the legislation in the country they are produced and they follow the due diligence statement. However, it has recently received a 12-month deadline push-back.
“[EUDR is] the enabling conditions that help you make change; they are the enabling levers and tools that you have at your disposal to have those conversations with your suppliers and leadership, to understand how you change that business model,” said James.
“There’s a lot coming, and our ambition at POC is to help you navigate that now as we roll forward into 2025,” he concluded.
