In 2020, the European Commission adopted the new Circular Economy Action Plan. The plan has been regularly updated since then, with recent regulations passed in 2023 and 2024. The detailed 30 step action plan can be divided into four parts :

1. Ensuring The Development Of Sustainable Products And Circularity In Production
2. Empowering Consumers
3. Targeting Key Sectors
4. Reducing Waste

1.0 Ensuring The Development Of Sustainable Products And Circularity In Production

Circularity in any industry must begin at how a product is designed. Any product must take into consideration minimal climate impact from how it is manufactured, to how it is used and made durable, and eventually how it is discarded.The EU has established Ecodesign directives for various products. On 5 December 2023, the Council and the Parliament reached a provisional deal on new ecodesign requirements for sustainable products.

1.1 Ecodesign

On 5 December 2023, the Council and the Parliament announced ecodesign requirements for sustainable products. The regulation applies to all products to enhance energy and resource efficiency, durability, reusability, upgradability, repairability, and recyclability. It introduces a Digital Product Passport to provide environmental sustainability information.

“The first element that makes a product green is the brain that designs it. With the agreement reached today we want to make sure that all the sustainable dimensions of product manufacturing are taken into consideration from the very first stage of its conception.”

Jordi Hereu i Boher, Spanish Minister for Industry and Tourism

Through this, the Commission gains authority to create eco-friendly design rules. For instance, they proposed a ban on destroying unsold textiles and footwear was introduced, with exemptions for small and micro companies and a 6-year exemption for medium-sized companies. The Commission can also impose new bans on destroying other unsold products. Additionally, the Commission must evaluate environmental improvements, and penalties for non-compliance are standardised while online marketplaces align with EU legislation.

The current Ecodesign Directive saved EUR 120 billion in energy expenditure and reduced annual energy consumption by 10%, as per the press release by the EU on 22nd December 2023, and the new proposal builds on this.

1.2 ‘Right to repair’

The EU wants to ensure consumers are able to seek repair instead of replacement when a product is broken or defective. On 2 February 2024, the Council and the European Parliament reached a provisional deal on the right-to-repair (or R2R) directive. The main elements are:

• Consumers can ask manufacturers to fix products that EU law says can be repaired, like washing machines or mobile phones.
• A free European repair guide will be available.
• An online platform will help connect consumers with repair services.
• Sellers will be responsible for the product for 12 months after it's repaired.
• These changes encourage both producers and consumers to make products last longer, which reduces waste and supports sustainable business practices.

1.3 Circularity in production processes

The industrial emissions directive is the main piece of EU legislation addressing industrial pollution.

The Commission has proposed to update the directive to support industries in their efforts towards the EU’s 2050 zero pollution ambition, notably by supporting circular economy techniques and investments.

In November 2023, the Council and the European Parliament’s negotiators reached a provisional political agreement on the revision of the directive on industrial emissions (IED) and the regulation on the establishment of an industrial emissions portal (IEP). The new rules aim to reduce harmful emissions and improve environmental data reporting. The EU proposes the use of the upgraded portal for data reporting called the E-PRTR (European pollutant release and transfer register).

2.0 Empowering consumers

The EU wants to prevent companies from greenwashing. On 20 February 2024, the Council adopted a directive to empower consumers for the green transition.

Thanks to the new measures, EU consumers will:

• Have access to reliable information for making green choices, including details about early obsolescence.
• Protection against deceptive green claims.
• Information about product repairability before purchase.
• Introduction of a standardised label indicating the durability guarantee offered by producers.

2.1 Green claims

The Council is also currently working on a proposal for a green claims directive, to check if the sustainability claims companies mention are true or not.

For example, if a brand makes a claim that “this t-shirt is made of 50% recycled polyester”, they must show proof. Similarly, many brands talk about “net-zero” emissions or “setting-off emissions” by climate initiatives like planting trees, they must show these are scientifically proven.

3.0 Key Sectors

The action plan focuses on specific sectors that use most resources and where there is a high potential for circularity, such as electronics, batteries, packaging, plastics, textiles, and construction. Below are the regulations that may affect the fashion industry the most.

3.1 Textiles

The Commission’s EU strategy for sustainable and circular textiles aims to make textiles more durable, repairable, reusable and recyclable by 2030.

In July 2023, the Commission proposed (currently under review) to:

• Make producers responsible for the full lifecycle of textile products, through extended producer responsibility
• accelerate the development of a separate collection, sorting, re-use and recycling sector for textiles, as member states are required to set up separate collections of textiles from households by 1 January 2025
• address the issue of illegal exports of textile waste

The ecodesign for sustainable products regulation and the waste shipment regulation are also expected to help set sustainability requirements for textile products and restrict the export of textile waste.

3.2 Packaging

Between December 2023 and March 2024, the Council has reached an agreement ('general approach') on a proposal for a regulation on packaging and packaging waste. The aim is to tackle the increase in packaging waste generated in the EU, while harmonising the internal market for packaging and boosting the circular economy.

“190kg of packaging waste was generated by each European in 2021. And this figure will grow by nearly 20% in 2030, if things stay the same. We cannot let that happen. Today’s general approach gives a strong message that the EU is committed to reducing and preventing packaging waste from all sources. This regulation is crucial in our path to a circular economy and a climate-neutral Europe.”

Teresa Ribera Rodríguez, Spanish third vice-president of the government and minister for the ecological transition and the demographic challenge

Some key measures of the proposal include:

• A target to reduce packaging waste by 5% by 2030 as compared to 2018 levels, by 10% by 2035 and by 15% by 2040.
• New re-use and re-fill targets for 2030 and 2040.
• By 2029, member states must ensure the separate collection of at least 90% annually of single-use plastic bottles and metal beverage containers by setting up deposit return systems (DRS).
• Restrictions on single-use plastic packaging, which would affect the cosmetics and toiletry brands.
• Labelling to include packaging material information and its proper disposal.

3.3 Plastics

Since 2018, the European strategy for plastics in a circular economy aims to enhance plastic packaging recyclability and contains a strong response to microplastics.

Under the 2020 circular economy action plan, the Commission is working on:

• Mandatory requirements for recycled content and waste reduction for key products

• A new policy framework on biobased, biodegradable and compostable plastics to clarify where these plastics can bring genuine environmental benefits

• Measures to address the presence of microplastics unintentionally released into the environment, with the aim of reducing plastic litter

4.0 Reducing Waste

The waste framework directive, in force since July 2020, sets out rules for member states to:

• Increase the re-use and recycling of municipal waste by 55% by 2025
• Set up separate collections of textiles and hazardous waste from households by 1 January 2025
• Ensure bio-waste is either collected separately or recycled at source by 31 December 2023
• Reach material-specific recycling targets by 2025 and 2030 for packaging

4.1 A toxic-free environment

The Council in October 2022 formally adopted a regulation to lessen how much harmful matter is allowed in waste. This affects brands that may be working with materials that lead to the release of persistent organic pollutants, such as waterproof textiles, micro plastics from polyester, etc

“This is an important step to protect our citizens and the environment. Many of these substances have brought us benefits in the past, but we were not paying enough attention to how harmful can they be. I am glad the EU leads by example and decided to tighten their limits in the recycling phase.”

Anna Hubáčková, Czech minister of environment

In June 2023, the Council adopted a revised version of the classification, labelling and packaging of chemicals regulation.

4.2 Secondary raw materials

In November 2023, the Council and Parliament set rules that say at least 25% of the EU’s annual critical raw materials consumption come from domestic recycling. In order to do so, the commission wants to improve the contribution of raw materials from the EU by making it easier for businesses in this space to function more easily. They also want to make it easier to start projects to get these materials and check if companies can get them easily. These rules aim to make sure the EU can get more raw materials from within the EU, recycle more, and develop new technologies to use less.

4.3 Shipment of Waste

The EU is updating rules to better regulate the shipments of waste going from the EU to non-EU countries,by:

• Ensuring that waste exports do not harm the environment and human health

• Addressing illegal shipments

What is the Corporate Sustainability Reporting Directive (CSRD)?

It's a new EU law starting from January 5, 2023, making businesses in the EU (and EU subsidiaries of non-EU companies) share their environmental and social impacts and how these affect their business. It's meant to help investors, analysts, consumers, and others understand how sustainable EU companies are and what risks they face. Companies listed on EU stock exchanges, large EU-based companies, and certain non-EU parent companies with big EU operations must comply by 2028.

The CSRD uses double materiality, meaning companies must report on both how their business affects sustainability and how sustainability issues affect their business. Companies must share data on sustainability policies, targets, supply chains, and risks, with audits to ensure accuracy.

EU member states will impose penalties for not following the CSRD, based on the seriousness of the breach and the company's financial situation.

Cover Image: European Cluster Collaboration Platform