The EU Commission apparently wanted to clear the desks before the end of the year and has alone in the week from 22.11. to 07.12. 2022 5 heavyweights of laws either finally enacted or presented as draft. In our year-end post, we take a look at what will be on our minds in 2023. What do we need to pay attention to now? And most importantly, how can agile companies take advantage of the new opportunities that are emerging. In detail, we report, among other things, on Part 2 of the Circular Economy Act (green claims, bioplastics and microplastics, sustainable consumption of goods, etc.), the Corporate Sustainability Reporting Directive (CSRD), the new Packaging and Packaging Waste Regulation, the Single-Use Plastic Fund and the Deforestation Regulation.
Corporate Sustainability Reporting Directive (CSRD)
The draft of the Corporate Sustainability Reporting Directive (CSRD) was approved by the European Parliament on November 10, 2022 and by the Council on November 28, 2022. The new ESG reporting obligation has thus been adopted.
Staggered entry into force of the regulations
The provisions of the directive will take effect in a staggered manner between 2024 and 2026:
- from January 1, 2024 for large public interest entities (with more than 500 employees) already subject to the Non-Financial Reporting Directive (NFRD), with reports due in 2025;
- From January 1, 2025, for large companies not currently subject to the NFRD (with more than 250 employees and/or sales of €40 million and/or total assets of €20 million), with a reporting requirement until 2026; and
- from January 1, 2026 for listed SMEs and other companies whose reports are to be prepared in 2027. SMEs can be exempted from the obligation until 2028.
The CSRD regulations are intended to address inadequacies in the existing Non-Financial Reporting Directive (NFRD) legislation. They were considered insufficient and unreliable.
Instead, the CSRD is intended to introduce more detailed requirements for reporting on the impact of companies on the environment, human rights and social standards. To this end, the criteria based on the EU taxonomy and the European Union’s climate targets will also be queried. At the same time, regulators are concerned with putting an end to greenwashing.
CSRD Reporting Standards
The CSRD reporting standards are also available. They are intended to form the basis for future reporting and are a potpourri of the already familiar indicators from GRI (Global Reporting Initiative), TFCD/EU Taxonomy Criteria, Carbon Disclosure Projects (CDP) and in part EcoVadis (sustainability rating).
The European Commission will adopt the first set of reporting standards by June 2023. For all companies, now is the time to do a data GAP analysis and establish a roadmap to be ready to report from 2024.
Closed Substance Cycle Waste Management Act – Part 2
On November 30, 2022, the EU Commission published the second part of the Circular Economy Package. The content is quite something – from “green claims” to bioplastics and microplastics to the sustainable consumption of goods (right to repair) and more.
For example, the second part of the circular economy package includes the following initiatives:
- Packaging Waste Directive (PPWD; see the following article).
- A proposal for a regulation to substantiate environmental claims using the methods of the ecological footprint of products and organizations (Green Claims; see B+P Newsletter of May 2022).
- A Communication for a Policy Framework for Bio-based, Biodegradable and Compostable Plastics.
- A proposal for measures to reduce the release of microplastics into the environment.
- A sustainable consumption of goods initiative – promoting repair and reuse.
Supply Chain Act
The first year of the Supply Chain Act’s entry into force is approaching. The Federal Office of Economics and Export Control (BAFA) has published the first handouts on implementation. It includes information on how to conduct a risk analysis in terms of the Supply Chain Sourcing Obligations Act (Lieferkettensorgfaltspflichtengesetz – LkSG).
Disposable plastic stock
On November 03, 2022, the German government approved the Single-Use Plastic Fund. The levy is to be paid by manufacturers from spring 2025. The product volume placed on the market in the calendar year 2024 is intended as the basis and basis for calculation.
Political jungle 2023: A lot of shadow and for agile companies also a lot of light
You’ll find that things certainly won’t be boring on the policy front in the new year. New bureaucratic monsters will populate the space – but so will new opportunities for fast and agile responding companies. As B+P, we support our customers from the packaging industry on their journey through these political shoals so that they can find and exploit their opportunities.
Excursus: There is no silver bullet
When I entered the sustainability world 15 years ago as a newbie, voluntary commitments and sustainability standards were THE solution tool (silverbullet). At some point, the euphoria faded.
We all know that the “silver bullet” to solving our problems does not exist and the calls for legal frameworks a “level playing field” have become louder and louder.
Particularly here in Europe, one now has the feeling that politics, after a long period of not listening, is now throwing itself full force into the field of sustainability. In 2022, I already had the feeling that I would need a whole wall full of flipcharts to keep track of all the European and, in some cases, non-European legislative initiatives, drafts and decisions in the field of sustainability and the circular economy. In 2023, I will probably need a whole room.
Our focus topics for 2023:
- Packaging and Packaging Waste: Formerly a “Directive”, the Packaging Waste Directive has become a Regulation in the revision. The new “R” in PPWR means that the contents must be implemented 1 to 1 in the member states immediately – without the detour of translation into national law.
- What has leaked out of leaked documents on the revision up to the editorial deadline of this newsletter sounds extremely challenging for the packaging industry and will lead to exciting discussions outside and inside the companies in 2023.
- We see massive risks, but also opportunities, above all in the possible recyclate quotas and recycling requirements.
- In a joint statement, numerous packaging industry associations and organizations have expressed their concerns about the contents of the new PPWR.
- Single-use plastic fund: Of course, regulations on the establishment of the single-use plastic fund will also be of great interest to plastic packaging companies. The law provides a further impetus to take a close look at its products and the end-of-life of these. As briefly reported above, the levies will be collected from producers from 2025 onwards on the basis of the volumes placed on the market in 2024.
- CSRD, sustainability reporting, sustainability management: Due to the adoption of the CSRD on 28.11.2022 (see above), the time has come for our industry, to put it exaggeratedly, to turn the sustainability hobby into a professional job.
- Companies should use the next few years to establish or expand a professional and efficient sustainability management system. After all, sustainability management is ultimately a formalization of sustainability reporting.
- Pure reporting only adds value to companies if it is used to identify and work on strengths and weaknesses. Not least with the aim of positioning the company in a way that is fit for purpose (see B+P Newsletter of September 2022).
- As mentioned above, the draft CSRD reporting standards are a potpourri of already known indicators (GRI, TFCD/EU taxonomy, CDP etc.). Who now makes a data GAP analysis and establishes a roadmap to be reportable from 2024, improves his EcoVadis ranking as a win/win at the same time!
- Green Claim Initiative: It will be exciting to look at the final rules of the Green Claim regulation. How are they to be understood and applied? What is the legally compliant approach to calculating a product carbon footprint. These are all questions that will occupy us in 2023.
- Supply chain legislation: As mentioned above, the German Supply Chain Act will come into force on January 1. Even though it only applies to very large companies with more than 3,000 employees for the time being, we are already noticing in the supply chain that this will of course also indirectly affect other companies. As the EU is very eager to get down to business in this field, we expect that in 2023
- an import ban on raw materials and products from regions and countries with forced labor, child labor and deforestation is adopted and
- the Human Rights Due Diligence Act is passed. Compared to the requirements in the HRDD ACT, the Supply Chain Act is a nice little preparation.
- Deforestation Regulation: The adoption of the Deforestation Regulation is of particular interest for companies in the cartonboard sector. With regard to the issue of deforestation, new regulations and due diligence criteria for the pulp & paper supply chain are expected.
- Climate change: the big picture at the end. For in all the current crises, we must not forget climate change as the most fundamental and ultimately existential crisis for us all. Accordingly, we cannot afford to slacken our efforts to decarbonize.
- At the COP27 in Sharm-El-Sheik (see also the annual outlook in the sustainability section of this newsletter), it became clear that politicians are not capable of acting globally. This is precisely why it is now all the more up to the EU and companies. They must show that a transformation of the economy is possible after all.
- Climate strategies, definition and implementation of new business models, further development and closing of loops, design for recycling and new reusable models: They all point the way to a more resilient and climate-friendly future. This is exactly what we will continue to focus on in 2023.