Will the EU’s Ecodesign Rules Price Small Businesses Out of the Market?

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BrusselsReport.eu
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By Philbert Carbon

The EU’s Ecodesign for Sustainable Products Regulation (ESPR) is a European regulation which introduces new ecodesign requirements for businesses. Will SMEs be able to bear the costs?

The European Regulation (EU) 2024/1781 on the eco-design of sustainable products (Ecodesign for Sustainable Products Regulation) or ESPR was adopted on 13 June 2024. The reason we are discussing it today is that the regulation is due to come into force in 2026.

A digital passport for every product

This new regulation aims to fundamentally change the way products are designed, manufactured, used and managed at the end of their life. It requires companies to ‘eco-design’ their goods, meaning that, right from the design stage, they must seek to minimise the negative environmental impact of their production and incorporate measures to protect the environment.

In practical terms, the new requirements relate to:

  • durability and reparability: products must be able to be used for as long as possible, and must be easy to dismantle and repair;
  • circularity: the use of materials or substances that are harmful and/or hinder the circularity of products is prohibited;
  • resource efficiency: from the design stage onwards, and throughout their life cycle, products must optimise their energy consumption and use of resources (such as water or rare earth elements);
  • composition: products must contain a minimum proportion of recycled materials;
  • ‘remanufacturing’ and recycling: the components used and the manufacturing processes must make the dismantling and separation of components as straightforward as possible, in order to facilitate remanufacturing and recycling.

The flagship measure of the ESPR is the Digital Product Passport (DPP), the aim of which is to inform consumers and users. This passport – easily accessible, for example via a QR code – will contain detailed information on the criteria listed above.

The ESPR Directive sets out a general framework. It requires delegated acts to specify the rules applicable to each product family.

Six priority product families have been identified for the period 2025–2030. The first delegated act, which is expected to be published this year, concerns steel. This will be followed in 2027 by aluminium, textiles and tyres. In 2028, it will be the turn of furniture (except for mattresses, which will be covered in 2029), and then, probably in 2030, paints and detergents. Furthermore, in 2028, the list of products covered by the second wave will be made public.

Once the delegated act has been published, companies will have 18 months to comply. This timeframe may seem sufficient, but it is likely to prove too short if they wait until publication to take an interest in the matter, as we shall see from the example below.

It should be noted that all companies are affected, regardless of their size, provided they manufacture, import or distribute any of the products falling within the priority categories mentioned above.

Regulations on sofas

For furniture, the delegated act is expected in 2028. The regulations will therefore apply to companies in the sector from 2029 or 2030. At that point, when purchasing a sofa, for example, the customer will be able to access the Product Information Sheet (PIS) instantly via the QR code located next to the price on the label.

To enable this, the manufacturer will first have had to:

  • obtain from its suppliers the precise composition of the materials used, including the recycled content by material (for example, the percentage of recycled metal in the screws used), and ascertain whether any hazardous substances (plasticisers, flame retardants, etc.) are present;
  • carry out a life cycle assessment (LCA) based on the European PEF method, taking into account 16 environmental indicators;
  • conduct durability tests (NF EN 12520 for seats) to determine the product’s expected lifespan and its resistance to wear and tear;
  • draw up a list of spare parts and specify their availability period, and draft disassembly instructions;
  • determine recyclability by material, identify recovery channels, and specify collection and sorting guidelines.

All this data must be declared in a central European register before the sofa is placed on the market, and updated whenever changes are made. If a manufacturer has around fifteen suppliers in France, China, Italy, Poland, Turkey and so on, it is easy to imagine the workload and the time that all this will require.

The fixed costs that this new regulation will entail will, broadly speaking, be the same for a small workshop producing 50 bespoke sofas a year as for its industrial competitor producing thousands. Only those firms capable of bearing the increased costs of the regulatory framework – that is, the largest ones producing standardised products – will survive. Yet 85 per cent of the European furniture industry consists of firms with fewer than ten employees.

Innovation will be stifled

Furthermore, companies’ scope for innovation and for making their own trade-offs will be reduced. As Simon Imner of the Swedish liberal think tank Timbro puts it, “What was previously decided at the design stage, in consultation with the customer and the market, will increasingly be determined in Brussels. For small businesses with tight margins, this represents a major change in their operating conditions.”

Product design is the result of countless decentralised trade-offs between price, lifespan, materials, functionality and aesthetics. And ultimately, it is consumers who decide which sofa they want. With the ESPR, design becomes a political process. Innovation becomes the preserve of the European institutions. The sofa manufacturer will no longer choose for itself the materials to use, nor the adhesives, assembly methods or surface treatments it wishes to apply. Everything will, ultimately, be decided by European officials.

The risk is that products will become standardised, as the regulatory framework favours certain solutions at the expense of others. Innovation will be stifled. New materials, untested manufacturing methods and business models that challenge the established order will struggle to gain a foothold. This will benefit established players and disadvantage all those wishing to enter the market to shake things up.

With the ESPR, the European Commission’s entire rhetoric on competitiveness and reducing the administrative burden on businesses is discredited. Was the ‘Omnibus’ package’ (simplifying the CSRD and the CS3D) nothing more than a smokescreen?

The European Union must come to its senses. Its role is to ensure the smooth functioning of the internal market and to create stable, technologically neutral frameworks – not to specify detailed technical solutions for each product category.

Originally published in French on Contrepoints.

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