Companies Selling Consumer Products in the EU (Particularly Clothing, Apparel, and Footwear Companies) Beware: The New ESPR Rules on Unsold Consumer Products Have Now Entered into Force

Over the 2024 summer, new EU rules entered into force regarding unsold consumer products under the new ESPR (i.e. the Ecodesign for Sustainable Products Regulation – Regulation (EU) 2024/1781).  The legal obligations themselves are relatively concise and short in number and therefore perhaps easy to overlook.  However, companies selling or supplying consumer products in the EU/EEA – particularly companies in the clothing, footwear, apparel, textile and retail sectors – should beware and not underestimate their importance or impact.

Aim

In essence, the rules on unsold consumer products aim to stop companies from destroying or discarding unsold consumer products. The European Commission has identified the destruction of unsold consumer products by companies, particularly the destruction of unsold textiles and footwear, as a “widespread environmental problem”.[1]  The underlying objective is therefore to prevent companies from destroying or discarding unsold consumer products in the future, to eradicate this environmental issue.[2]  Some Member States have also recognized this as an environmental problem, and taken steps in this regard.[3] Therefore, the new EU rules aim to harmonize the rules across the EU/EEA in this area.

Scope and Overview

The requirements themselves relate to unsold “consumer products” meaning, in principle, any product primarily intended for consumers, excluding component and intermediate products. Certain categories of products are excluded from the scope of the ESPR (e.g. food, feed, medicinal products, etc) and therefore not generally impacted by the ESPR provisions on unsold consumer products – although related and associated products, including packaging products, may fall within the scope. “Unsold” consumer products generally means all products which have not been sold due to: surplus stock, excess inventory and deadstock, and products returned by a consumer on the basis of their right of withdrawal. This may include, for example: product returns, samples, test-kits, packaging, etc.

“Destruction” is not confined to meaning the complete ruin or demolition of a product. Instead, it is particularly wide in its scope including intentional damaging or discarding of a product as waste, with only certain, limited exceptions. Interestingly, “recycling” is not generally regarded as outside the scope of the general Article 25 ESPR ban on the destruction of unsold consumer products. Therefore, products within the scope of the general ban (see below) cannot, per se, be recycled – but must, instead, be “prepared for re-use” in the meaning of the relevant definitions, or otherwise processed in accordance with ESPR and other relevant EU law.

Legal obligations concerning the prevention of destruction of unsold consumer products extend to companies located outside of the EU/EEA in certain circumstances. Companies outside the EU/EEA selling or supplying products, or making them available, in the EU/EEA, must, therefore, fully assess these ESPR legal obligations, including compliance strategies such as documentation retention policies. 

Core Requirements

There are essentially three core requirements under the ESPR regarding unsold consumer products. 

The first applies to all relevant companies and organizations (i.e. “economic operators”), regardless of their size, and obliges them to take ‘necessary measures’ which can be reasonably expected to prevent the need to destroy unsold consumer products.  Companies will, therefore, generally be required to identify at least some measures which prevent the need to destroy unsold consumer products.  This may include, for example, an effective and constantly improved returns policy and/or predictive models to hold less unsold stock. 

The second core requirement – often referred to as the “transparency obligation” – requires companies of a certain size to disclose certain information on the amount of unsold consumer products destroyed per year on their website.  In addition, certain companies should provide this information in reports, such as management reports required under the Corporate Sustainability Reporting Directive (“CSRD”) and related law. The Commission is required to adopt implementing measures setting out the details and format for disclosure of information within the next 12 months. By 19 July 2027, and every 3 years after that, the Commission is required to publish consolidated information on the destruction of unsold consumer products.

The third core requirement is perhaps the most significant and impactful. In short, the ESPR introduces a general prohibition (ban) on the destruction of certain categories of unsold consumer products. The ban applies as of 19 July 2026. At present, only a limited number of categories of unsold consumer products are included in the ESPR ban (see Annex VII ESPR). More specifically, these categories currently relate to apparel, clothing and footwear alone. However, the Commission has been granted legal powers to expand the list of categories of unsold consumer products in Annex VII ESPR. Therefore, other categories of consumer products are likely to be included in the scope of the ban in the future.[4] 

There are a number of exceptions and exclusions to the general ESPR prohibition on the destruction of unsold consumer products. Within the next 12 months the Commission is set to adopt a Delegated Act regarding the derogations from the general ban on the destruction of consumer products on the basis of health and other grounds. There are also other exceptions (e.g. relating to SMEs) and transitional provisions concerning the general ban. In addition, the Commission is currently preparing guidance (by way of a Q&A document) regarding these provisions, which is expected to be published in the coming weeks.   

General Context

On 18 July 2024, the ESPR entered into force. The ESPR is described by the European Commission as the cornerstone of the EU’s approach to more environmentally sustainable and circular products.  It aims to significantly improve the circularity, energy performance and other environmental sustainability aspects of products placed on the EU market. The ESPR forms part of the European Green Deal and the Commission’s broader strategy for a circular economy in Europe (the Circular Economy Action Plan or CEAP). 

Moving Forward: What Must Companies Do Now?

The ESPR itself contains a number of important legal provisions including, amongst others, those which: set out a legal framework for the adoption of ecodesign requirements; introduce the “Digital Product Passport” or “DPP”; and concerning green public procurement.  Given the importance of these provisions, and given the significant amount of commentary and information on these issues – it is easy to overlook the ESPR provisions on the prevention of destruction of unsold consumer products.  However, companies which sell or supply consumer products in the EU – particularly those which sell or supply clothing, apparel and footwear in the EU – will overlook and underestimate these obligations at their peril.

EU authorities may take a particularly active stance on enforcement and penalties, without first engaging in dialogue with companies, not least as the ESPR empowers the European Commission itself (not merely EU national enforcement authorities) to require companies to provide documentary proof of information and compliance.  Penalties may include, amongst other things, forfeiting the ability to access, or retain access, to public and private contracts which include green procurement criteria and/or requirements to comply with relevant EU Law.  Companies should therefore take action now to ensure they comply.  Moreover, companies will need to understand how these ESPR provisions intersect with existing and future national law requirements in relevant EEA States (including, for example, Germany and France).

For further information please contact Marcus Navin-Jones and Eline van Bogget.