The fourth industrial revolution has been fueled by an explosion of information. From social media to home appliances, everything produces data. This includes details about our health, location, preferences, and behaviours. The amount of data we create is expected to grow exponentially, and around 150 years from now, digital bits will exceed atoms on Earth. In 2020 alone, 79 trillion gigabytes of data were generated — but where does all the data go, who owns it and has the right to use it, and what is the best way to share it?
This article sets out to summarise the main data debates and the European Union’s (EU) regulations that arise from them. In particular, you will learn about the complex landscape of data governance in the EU, including the advantages and challenges of big data, privacy concerns, and key regulations like GDPR and the Data Act.
We will also explore the development of common data spaces across various sectors, such as the European Single Access Point for finance, manufacturing data spaces, and the European Dataspace for Smart Circular Applications, which aim to foster innovation, sustainability, and economic growth while maintaining data sovereignty and protection.
Consumer data can be used for various purposes, and while some data applications are promising, others are potentially harmful. Diverse aggregated data delivers richer insights and helps in meeting the needs of new products and services. For example, the use of data has the potential to allocate resources better to fight malaria, consequently saving up to 5 billion euros. Furthermore, harmonised data collection can enable large-scale collaboration, hence accelerating innovations in such fields as AI and circular economy. Data pooling also creates an opportunity to increase transparency and data sovereignty by keeping companies and individuals who generated it in control and empowering those stakeholders affected by data processing to access it. Data sovereignty is the principle that digital information is subject to the laws of the country where it is generated, even if stored or processed elsewhere under data residency or localisation rules.
At the same time, risks to privacy and security arise when personal data is handled inappropriately. Security breaches or loss of data are almost inevitable, while privacy protection is costly and time-consuming — unless effective legal and technological measures are put in place.
Sometimes, the benefits of data are not accessible to all, creating knowledge and power asymmetry between firms who own the data and individuals who do not. Instagram and Facebook can see what people like and share, Google what we search for, and Amazon what we buy. Big corporate players start accumulating capital by collecting and selling this behavioural and other data as a market commodity. When Google began using personal data for advertisement, it managed to increase its revenues by a shocking 3590%7. Similarly, Facebook’s 2019 revenue accounted for 20% of the $333 billion worldwide digital advertising market. Even as businesses capture the growing potential of the data economy, many data subjects pay little attention to what happens to their information.
There are two potential explanations as to why the majority of the users are careless with their data, even when such an attitude is unfavourable. First, it might lie in the fact that consumers are not yet accustomed to seeing data as a unit of exchange, thinking in conventional monetary terms. Unless it is money, it is not valuable, or not valuable enough. Another explanation might be that data subjects do not see data as something that can be owned.
Some people stress the need to not only start treating data as a tradable property that can be owned, but also as a fundamental right to privacy4. However, by doing so, they forget that privacy and data protection are already human rights in many jurisdictions. For example, Article 8 of the EU Charter of Fundamental Rights - which was created in 2000 - states:
"Everyone has the right to the protection of personal data concerning him or her. Such data must be processed fairly for specified purposes and on the basis of the consent of the person concerned or some other legitimate basis laid down by law. Everyone has the right of access to data which has been collected concerning him or her, and the right to have it rectified."
In those regions where data regulations are already in place, the problem then lies within the weak legal regimes that do not develop fast enough and cannot account for nascent threats. To utilise the benefits of data proliferation without suffering the risk associated with it, successful data management has to enhance the flow of information in the economy while simultaneously effectively protecting it. The issue calls for tighter and more detailed technological regulations, which policymakers in the European Union (EU) have started to respond to.
At the centre stage of these efforts to ensure the effectiveness of regulation is the EU, with its dynamic and innovative data economy that is estimated to grow to 829 billion euros by 20253. In February 2020, the European Commission published the European data strategy. The framework sets a general direction for data regulations. The strategy increases the availability of data for better EU-wide decision-making, while keeping those who generated it in control.
The priorities are:
The strategy for data is not only limited to guaranteeing privacy but also focused on ensuring secure management of the data economy as public infrastructure, which includes handling (collection, storage, and distribution) of data. The key data management initiatives are the General Data Protection Regulation (GDPR), Data Act, and European data spaces (the European Single Access Point, data spaces for smart manufacturing, and the European Dataspace for Smart Circular Applications).
In May 2018, the EU rolled out the General Data Protection Regulation (GDPR). The GDPR is believed to be one of the most rigid privacy and security regulations in the world9. It establishes a harmonised framework for the protection of personal data by setting requirements for collecting, storing, and managing it.
The regulation mainly applies to:
The GDPR describes 6 conditions under which firms have a right to collect personal data, such as the presence of a formal opt-in of a data subject. In all of these cases, firms are required to be transparent about how the data is managed13. The GDPR is a complex and elaborate law, but the minimum information to be included is:
Another focus area of the regulation is users’ empowerment. The increased transparency around what happens to the data gives the subjects the right – after it has been collected – to access, rectify, erase, and transfer the data, as well as to lodge a complaint about data usage12.
Within organisations that regularly process large scales of users’ data as a core business activity, compliance with these requirements has to be monitored by a data protection officer designated by the company. The officer serves as a contact point for data subjects and the Data Protection Authority. The officer is also responsible for keeping a record of company acts. Firms that violate the EU’s privacy rules risk fines up to either 4% of their annual turnover or 20 million euros. Furthermore, additional measures such as an order requesting to stop data handling might be considered.
The European Data Act is the first deliverable of the European data strategy. The proposal was published on 23rd February 2022 and entered into force in January 2024. The European Data Act aims to make valuable data more accessible between companies and consumers in all economic sectors. It harmonises rules on fair access to and use of data, cloud switching, and transfers by setting relevant obligations for stakeholders.
Such obligations are of a contractual, commercial, and technical nature and specify who, other than manufacturers or other data holders, is entitled to access the data generated by products, under which conditions and on what basis. Examples of the requirements are designing products in a way that makes the data they collect easily accessible by default, ensuring a secure transfer of data to other providers, or pushing providers to prevent unlawful third-party access to non-personal data held in the EU.
The stakeholders affected by the regulation are companies handling data, providers of Internet of Things (IoT) products, and cloud service providers. Fines will be imposed on those non-compliant with the requirements.
As regulations, the GDPR and the European Data Act set rules governing obligations for organisations handling data to protect consumer data and encourage information sharing. However, to fulfil some of its obligations, the policies need to be complemented by a relevant digital infrastructure. For example, to ensure a secure transfer of data to other providers, a system that can read data in a single format must be established to make a successful data transfer. This is in part fulfilled by the introduction of industry-specific common European data spaces.
The European strategy for data includes an objective to create common and interoperable data spaces3. Data spaces connect governance frameworks (e.g. the GDPR and the European Data Act) and relevant digital infrastructure (tools and services) for secure and scalable data merging, processing, and sharing across the EU. Data stored in the European data spaces includes information that is required to be publicly disclosed under EU legislation – such as the CSRD, GDPR, or ESPR – as well as voluntarily shared data.
The European data spaces are currently being created in 14 fields of economic and public interests, with an intention to gradually enlarge to other sectors:
One of the data spaces currently being developed for the financial sector is the European Single Access Point (ESAP). The European Single Access Point offers an ability to examine public financial and sustainability-related information that firms operating in the EU have to share in accordance with the standards for reporting, such as the Sustainable Finance Disclosure Regulation, the EU Taxonomy, and the Corporate Sustainability Reporting Directive (CSRD). The measure aims to ensure that key stakeholders such as investors, banks, customers, and consumers can easily access the required information about entities and products.
The proposal text describes a set of technical principles to be followed when collecting the information:
The initiative is scheduled to be operational by summer 2027. From this date, management reports, annual financial statements, sustainability statements, and audit reports will be made available via ESAP.
In the industrial sector, the data spaces for smart manufacturing aim to enable key actors in the supply chain (e.g. supplier, client, service provider), including those firms involved with the circular economy (e.g. remanufacturing and recycling companies), to access large amounts of manufacturing data. Thus, addressing the industrial data silos and high fragmentation of the supply chain digitalisation.
The dataspaces are now being created for specific value chains through several workshops with stakeholders. Some questions under discussion are:
In November 2021, the Commission published a call for proposals to establish two viable manufacturing data spaces. The work started around July-September 2022 and will last 1-2 years.
Similarly, there is a plan to create several data spaces for information necessary for reaching the objectives of the European Green Deal20. One of these data spaces is the European Dataspace for Smart Circular Applications (EDSCA), which is a registry that makes available the relevant data for enabling circular value creation along supply chains. This data is related to such applications and services as:
The call for proposals for working on the data space was published in 2021 and the project started around July-September 2022 and lasted two years. The EDSCA first assisted in the creation of DPPs for electronics and batteries, and then expanded to textiles and building materials.
Read more about the DPPs and the requirements for the battery passports.
The European Commission sees several key advantages in setting up data spaces16.
Ultimately, the European Commission believes the standards will provide a coordinated technical infrastructure prioritising the findable, accessible, interoperable and reusable principles. It is essential to bear in mind, however, that whether all these aspirations become a reality depends greatly on the implementation of the strategy, as well as its effectiveness in addressing key challenges associated with data processing mentioned at the beginning of the blog post.
Big data offers both significant opportunities and potential risks. To harness its benefits while minimising harm, a robust governance system with strict, harmonised rules for data handling is essential — an approach the EU has already begun to implement. The European data strategy sets a general direction for data regulation, prioritising the single market for data and data economy.
Following the strategy, the General Data Protection Regulation sets out to protect users’ personal data. The European Data Act establishes the harmonised rules to encourage information sharing by service providers and firms handling data. The regulations require the establishment of industry-specific common European data spaces (e.g. the European Single Access Point (ESAP) for the financial sector, European Dataspace for Smart Circular Applications (EDSCA) for reaching the objectives of the Green Deal, and two other dataspaces for smart manufacturing that are yet to be defined). These spaces connect the aforementioned governance frameworks with relevant digital infrastructure for secure and scalable data merging, processing, and sharing.
Besides the GDPR that came into effect in 2018, other policy measures are still in development. The European Data Act was published in December 2023 and will become applicable on 12 September 2025. The least progress has been made with data spaces. Among them, the most defined are the data spaces in the financial sector. The main challenge in policy formulation for other sectors seems to lie in defining what data to share and through which medium (e.g. centralised versus decentralised storage).
To be ready for the new requirements for data spaces, firms need to start preparing now. For example, the regulations around the ESAP and EDSCA require the data to be included in DPPs or annual management reports to be disclosed in a machine-readable format. Hence, organisations should already start thinking about how to implement a new secure and scalable enterprise system for storing and sharing data that is to be made public.
Stakeholders should closely monitor the policy progress because the European data strategy, being the first fully fledged data management framework, will define how the narrative around big data (should data be owned, be seen as a unit of exchange or perceived as a fundamental right, and other) will evolve and, most importantly, will test how to implement in practice.
Want to know more about other regulations mentioned in this article? Read our blog post explaining the digital product passports (DPPs), battery passports, CSRD, and ESPR.
Circularise provides an end-to-end traceability solution for complex supply chains. We help companies verify the origins, certificates, CO2 footprint, and other material and product data on the blockchain to improve their ESG performance, demonstrate responsible sourcing, and enable a circular economy at scale.
Every year, a total of 15 billion trees are cut down, contributing to the loss of 10 million hectares of forest annually – an area about the size of Scotland and Wales combined.1 This not only devastates ecosystems and accelerates biodiversity loss but also poses significant challenges to global supply chains and businesses worldwide.
In response, the EU Deforestation Regulation (EUDR) aims to promote the use of “deforestation-free” products and reduce the EU's contribution to global deforestation.2 It applies to both products produced within the EU and potentially exported, as well as products imported into the EU market. EUDR covers key goods like cattle, cocoa, coffee, palm oil, rubber, soy, and wood, along with their by-products.
Under the EUDR, companies have to ensure their products originate from land where no deforestation or forest degradation has occurred since 31 December 2020 and comply with relevant laws in the country of production. In order to comply, businesses must go beyond basic compliance and leverage innovative digital traceability solutions.
This article will explore the nuances of the EUDR, its purpose, implementation timeline, the businesses and products affected, and the data requirements for compliance. It will also examine how technologies like blockchain and digital product passports can simplify and enhance EUDR due diligence processes.
As global warming becomes an increasing concern worldwide, one of the main responses from the EU is the Green Deal. The Green Deal policy aims to make the EU the world’s first climate-neutral continent by 2050. Its focus lies in reducing greenhouse gas emissions, promoting sustainable practices, and transforming various sectors such as energy, agriculture, and industry.3
The EUDR is a key component of the broader Green Deal, complementing other targeted policies to address the most critical sectors. Together, these measures drive progress toward the ultimate goal of climate neutrality by 2050. EUDR replaced the EU Timber Regulation (EUTR), which was primarily focused on fighting illegal logging4, while the EUDR expanded its scope to include a wider range of activities that are linked to deforestation.
This change in scope acknowledges that a large portion of deforestation is actually legal. Therefore, the EUDR aims to combat both legal and illegal deforestation. Aligning EUDR with the Green Deal highlights the EU’s commitment to reducing its impact on global forests and combating climate change, reflecting a comprehensive approach to address environmental concerns and promote sustainable supply chains.
The main objective of the EU Deforestation Regulation (EUDR) is to address global deforestation and promote sustainable supply chains by5:
The policy aims to fight global deforestation and promote sustainable supply chains through several core objectives:
These objectives collectively work to protect forests, reduce carbon emissions, and foster responsible business practices worldwide, widening the impact far beyond EU borders. However, this has implications for businesses, mainly increased due diligence obligations and restrictions to market access.
The EUDR’s revised implementation dates are set for 30 December 2025 for large businesses and 30 June 2026 for micro and small enterprises.6 This delay was given to grant third countries, member states, operators, and traders more time to prepare for the extensive due diligence obligations required due to concerns of not being able to comply in time.
Despite the postponement of a year, businesses must still prepare for the regulation's complex and wide-ranging requirements. EUDR demands rigorous supply chain monitoring and geolocation data collection, down to the level of "plots of land".7 Therefore, mapping your supply chain to implement an end-to-end traceability solution is essential for compliance.
The scope of industries affected by the EU Deforestation Regulation (EUDR) includes agriculture, timber, soy, palm oil, cocoa, and rubber. In all cases, the responsibility to comply falls on the business placing the product on the EU market, not on the producer.8 Companies in these sectors must ensure their products are deforestation-free, traceable to their source, and compliant with local laws.
For the palm oil industry, this regulation affects producers of food, cosmetics, and cleaning products, requiring detailed geolocation data and documentation to prove sustainable sourcing. Similarly, the rubber industry faces strict requirements for products like tyres and inner tubes, which fall under EUDR’s scope. Businesses must implement robust traceability systems, conduct supply chain audits, and mitigate risks of deforestation.
The regulation especially impacts supply chains and market competitiveness, potentially shifting trade patterns and restricting market access for non-compliant products. While this can lead to increased operational costs, it can also create competitive business advantages for early adopters of sustainable practices as more businesses seek out EUDR-compliant suppliers.
Businesses must collect, organise, and retain the following information for five years from the date of placing relevant products on the market or exporting them:
The regulation highlights a three-tier system which will be used to assess countries or specific regions within them. Member States and third countries, or their subdivisions, will be categorised into one of the following risk levels9:
Companies sourcing from high-risk areas face stricter due diligence requirements, increased compliance costs, and potential market access challenges. Those sourcing from low-risk regions may benefit from simplified procedures and easier market entry. This system will likely influence supply chain management strategies, with companies potentially shifting away from high-risk sources. It also requires enhanced supply chain traceability and transparency, especially for high-risk products.
This risk-based approach could influence how businesses adjust their operations and risk mitigation strategies as businesses navigate compliance with the EU’s zero-deforestation goals. At the same time, companies must balance these adjustments with managing compliance costs and maintaining market access.
EUDR presents both significant challenges and opportunities for businesses. Businesses face implementation difficulties due to limited guidance from the EU Commission and concerns about the reliability of the proposed IT system for registering due diligence information.10 There's also a risk of smallholder exclusion as larger companies may opt to simplify their supply chains for compliance. Legal and trade-related issues arise from potential conflicts between geolocation data sharing and national regulations, with some countries viewing EUDR as a technical trade barrier. The increased administrative burden and compliance costs pose additional challenges.11
To address these issues, businesses are adopting various solutions and preparation strategies:
Collaboration has emerged as a vital strategy, with companies engaging industry associations, NGOs, and government bodies to share best practices and collectively address challenges. Various consultancy firms, technology providers, and certification bodies are also developing solutions to assist businesses in complying with EUDR requirements. As the regulation's implementation date approaches, these preparatory actions are becoming increasingly critical for affected industries. Companies need to implement effective traceability systems that ensure the origins of their raw materials are well-documented. This is where understanding the different chain of custody models becomes essential for managing risk and proving compliance.
Under the EUDR, the primary responsibility for compliance lies with economic operators and traders active in the EU market for relevant commodities and products12.
Non-compliance is heavily penalised, including fines of up to 4% of EU annual turnover, temporary bans from public contracts and funding, and potential confiscation of non-compliant goods13. Under EU law, greenwashing could also lead to severe consequences for companies that inadvertently mislead consumers about the environmental impact of their products or services. Regulatory crackdowns, hefty fines, and reputational damage are all risks businesses face if their sustainability claims are not backed by verifiable data.
Beyond mere compliance, EUDR preparation offers long-term benefits in traceability, sustainability, and risk mitigation. Despite the implementation deadline being extended to 30 December 2025, businesses should not delay their preparations. Early compliance efforts can also help align with other sustainability regulations, such as the Ecodesign for Sustainable Products (ESPR), as well as the US Inflation Reduction Act (IRA).
Early adopters of digital compliance tools can gain a significant competitive advantage by demonstrating a commitment to sustainability. This not only strengthens brand reputation but also enhances market positioning.14 Businesses should proactively explore digital traceability solutions that help ensure regulatory compliance and drive operational efficiency and sustainability.
Circularise offers a leading platform for end-to-end traceability, providing solutions like digital product passports to streamline data collection and sharing while safeguarding sensitive information.
This is Part 7 of the series "Get Ready for ESPR: Shaping the Future of Sustainable Business."
The Ecodesign for Sustainable Products Regulation (ESPR) is going to be transformative, but it comes with its fair share of challenges. Businesses must navigate overlapping reporting requirements, tight deadlines, and the need to modernise outdated systems — all while ensuring that suppliers and stakeholders stay engaged. This article will explore these challenges in detail and provide actionable strategies to help your organisation.
The ESPR does not operate in isolation. Businesses must also comply with other reporting frameworks, such as the Corporate Sustainability Due Diligence Directive (CS3D) and the Corporate Sustainability Reporting Directive (CSRD). The overlap between these frameworks can create confusion and increase the administrative burden. You can address this by:
The ESPR introduces staggered compliance deadlines, with some requirements starting as early as 2025. For businesses operating across global supply chains, these deadlines can feel unmanageable, especially for those who have yet to start preparing. Get started by:
Suppliers are facing increasing demands to provide data, implement new processes, and meet various compliance standards. "Supplier fatigue" can lead to delays or lapses in cooperation, hindering your compliance efforts. For companies operating across multiple regions, aligning supply chain operations with ESPR can be challenging, particularly when working with non-EU suppliers unfamiliar with the regulation. Address this challenge by:
Traditional systems, such as email chains or siloed databases, are no longer sufficient for managing the complex data-sharing and traceability requirements of ESPR. In order to not rely on outdated systems and risk falling behind in your compliance efforts, you can:
Achieving ESPR compliance requires input from multiple departments, including design, legal, procurement, and marketing. Misalignment between these teams can lead to delays and inefficiencies. Therefore, it is important to:
Meeting ESPR requirements often involves significant upfront investment in technology, staff training, and operational changes. Here are some ways to manage this challenge:
While the path to sustainability has its challenges, each obstacle presents an opportunity to strengthen your organisation’s sustainability practices. By addressing overlapping reporting frameworks, engaging suppliers, modernising systems, and fostering internal alignment, businesses can not only meet regulatory requirements but also position themselves as leaders in the transition to a circular economy.
This concludes our ESPR 7-part series and email course designed to help you navigate the challenges and opportunities of the Ecodesign for Sustainable Products Regulation (ESPR). We hope these lessons have provided valuable insights into compliance strategies, sustainability practices, and the tools you need to succeed in a circular economy.
📚 Explore the series at your own pace.
Part 1: What you need to know about ESPR
Part 2: Horizontal rules under ESPR
Part 3: Sustainable discarding and destruction of products under ESPR
Part 4: ESPR enhances traceability and transparency with digital product passports
Part 5: Specific ESPR requirements for manufacturers, importers, distributors, and retailers
Part 6: Why stakeholder collaboration matters for ESPR compliance
This is Part 6 of the series "Get Ready for ESPR: Shaping the Future of Sustainable Business."
This article will explore how different teams within your company can collaborate to not only comply with the Ecodesign for Sustainable Products Regulation (ESPR) but also maximise your competitive advantage.
Complying with the ESPR is not a task for one department — it’s a cross-functional effort. From ensuring sustainable product design to managing supply chain traceability and aligning financial strategies, every team must play a role in embedding sustainability into the business. By understanding these roles, organisations can ensure seamless compliance while unlocking benefits such as cost savings, enhanced customer trust, and competitive market positioning.
Design and engineering teams are at the forefront of ESPR compliance. They must create products that meet the regulation’s strict sustainability requirements while balancing performance and cost.
Key responsibilities:
💡 Example: Stress test components to identify potential weak points and ensure compliance with ESPR durability standards.
Supply chain teams play a crucial role in ensuring traceability and ethical sourcing, both key aspects of ESPR compliance.
Key Responsibilities:
💡 Example: Use batch-level or item-level DPPs to track material flows and share sustainability data with partners.
Operations teams must adapt production lines and processes to meet ESPR requirements while maintaining efficiency and safety.
Key responsibilities:
💡 Example: Adapt production lines to incorporate recycled materials and reduce energy consumption.
The finance and legal teams ensure compliance with ESPR’s regulatory framework while mitigating financial risks associated with non-compliance.
Key responsibilities:
💡 Example: Develop a compliance budget that includes investments in IT infrastructure for managing DPPs.
Sales and marketing teams must communicate the sustainability benefits of ESPR-compliant products while ensuring transparency with customers.
Key responsibilities:
💡 Example: Add direct links to DPPs on product pages and train sales teams to explain sustainability features effectively.
ESPR compliance requires a shared commitment across all departments. Each stakeholder must understand their role and collaborate to ensure the company meets the regulation’s sustainability and circularity goals. By embedding compliance into daily operations, organisations can not only avoid penalties but also position themselves as leaders in sustainable business practices.
In Part 7, the final article, we’ll address how to tackle challenges in ESPR compliance and refine strategies for continuous improvement.
📚 Explore the series at your own pace.
Part 1: What you need to know about ESPR
Part 2: Horizontal rules under ESPR
Part 3: Sustainable discarding and destruction of products under ESPR
Part 4: ESPR enhances traceability and transparency with digital product passports
Part 5: Specific ESPR requirements for manufacturers, importers, distributors, and retailers
Part 7: Turning compliance challenges into opportunities with ESPR
This is Part 5 of the series "Get Ready for ESPR: Shaping the Future of Sustainable Business."
The Ecodesign for Sustainable Products Regulation (ESPR) imposes several compliance obligations on various players across the product value chain, from manufacturers to retailers. Here, we will cover the key responsibilities of manufacturers, importers, distributors, and retailers in ensuring their products meet the sustainability and design criteria outlined by the ESPR. Understanding these obligations is crucial for not only complying with EU regulations but also positioning your business for greater sustainability and transparency.
Manufacturers play a critical role in the ESPR by ensuring that products meet sustainability standards from the start of the design phase. This section outlines the key responsibilities of manufacturers to ensure products are ESPR-compliant.
Importers are responsible for ensuring that products from outside the EU comply with ESPR regulations before entering the market. This section covers the specific obligations importers need to follow.
Distributors are responsible for ensuring that products meet ESPR standards when they reach retailers and consumers. Distributors must verify that all required documentation is in place, halt sales of non-compliant products, and assist in corrective actions. Here’s an outline of the essential obligations distributors must follow.
Retailers play an important role in ensuring that customers are informed about the sustainability of the products they purchase. Retailers must the DPP easily accessible and ensure compliance with labelling and transparency requirements. Below are the key obligations retailers need to follow under ESPR.
In this article, we covered the core ESPR obligations for manufacturers, importers, distributors, and retailers, including product design, documentation, labelling, and corrective actions. These steps are essential for compliance and promoting sustainability throughout the product lifecycle. We prepared this in a handy table. If you wish to get it delivered to your inbox, sign up for our ESPR course below.
In Part 6, we’ll explore the roles of different stakeholders within a company and what they can do to ensure ESPR compliance across the organisation.
📚 Explore the series at your own pace.
Part 1: What you need to know about ESPR
Part 2: Horizontal rules under ESPR
Part 3: Sustainable discarding and destruction of products under ESPR
Part 4: ESPR enhances traceability and transparency with digital product passports
Part 6: Why stakeholder collaboration matters for ESPR compliance
Part 7: Turning compliance challenges into opportunities with ESPR
This is Part 4 of a the series "Get Ready for ESPR: Shaping the Future of Sustainable Business."
A digital product passport (DPP) is an effective traceability system that collects and shares critical data about a product throughout its lifecycle, from production to disposal. This information is designed to help businesses, consumers, and other stakeholders understand the environmental impact of products, as well as their materials, performance, and recycling potential.
Under the Ecodesign for Sustainable Products Regulation (ESPR), DPPs are mandatory for many product categories, and their role is essential in driving the EU's transition to a circular economy.
Digital product passports are mandatory for a wide range of products regulated under the Ecodesign for Sustainable Products Regulation (ESPR). These include the following:
Manufacturers, importers, distributors, and retailers of these products must ensure their DPPs are accessible by 19 April 2025. The European Commission will update the list of products subject to DPP requirements as the ESPR evolves.
The ESPR outlines several key data points that must be included in a DPP to ensure transparency and traceability across the product lifecycle. These data requirements help stakeholders better understand the environmental and sustainability impacts of products.
Here are the critical elements of a DPP:
Each product must be uniquely identifiable to ensure traceability throughout its lifecycle. This includes:
Details regarding the performance and sustainability of the product, including:
Products must provide detailed information about substances that could be harmful to human health or the environment:
This section provides information that extends the product's useful life and ensures safe disposal:
DPPs should include information that supports sustainability efforts and reduces environmental impact:
Details that enable product repair, replacement, and modularity:
Information that helps ensure materials stay in use within the circular economy:
Implementing a DPP system requires a robust data infrastructure and cooperation across the supply chain. While the process can seem daunting, the right tools and technology make it manageable:
Start by identifying the key information that should be included in the DPP for your products. This may include product specifications, sustainability data, and lifecycle tracking.
Work with stakeholders across the supply chain to define the data-sharing process and ensure that all parties have access to the necessary information.
Use technologies such as barcodes, QR codes, RFID tags, and blockchain to store and transfer DPP data. This makes it easier to implement and ensures that the data remains secure and accessible.
Ensure that proprietary information is protected, and use encryption or decentralised systems to maintain the integrity and privacy of the data.
Regularly update the DPP to reflect changes in the product, including modifications to materials, performance, or end-of-life management.
Digital product passports are a powerful tool for businesses to improve product transparency, enhance sustainability efforts, and comply with the Ecodesign for Sustainable Products Regulation (ESPR). By providing detailed, accessible data about a product’s lifecycle, DPPs enable stakeholders to make more informed decisions, drive circular business models, and meet growing consumer demand for sustainability.
In Part 5, we’ll talk about the specific requirements for different actors across the value chain and explore how collaboration and shared accountability can drive effective compliance and sustainability under ESPR
📚 Explore the series at your own pace.
Part 1: What you need to know about ESPR
Part 2: Horizontal rules under ESPR
Part 3: Sustainable discarding and destruction of products under ESPR
Part 5: Specific ESPR requirements for manufacturers, importers, distributors, and retailers
Part 6: Why stakeholder collaboration matters for ESPR compliance
Part 7: Turning compliance challenges into opportunities with ESPR
This is Part 3 of the series "Get Ready for ESPR: Shaping the Future of Sustainable Business."
This article dives into the rules around the discarding and destruction of unsold products under the Ecodesign for Sustainable Products Regulation (ESPR). As part of the EU’s ongoing sustainability efforts, businesses are encouraged to shift away from wasteful destruction practices and instead prioritise circular economy strategies such as reusing, refurbishing, or donating unsold goods. We will also examine the upcoming regulations on product destruction and the steps businesses can take to comply, reduce environmental impact, and foster a circular economy.
Under the ESPR, businesses must focus on reuse, refurbishment, or donation of unsold products rather than discarding them. If a business does discard products, it must provide detailed information about the discarded items, including:
Businesses must report the number and weight of discarded products.
The reason for discarding the products should be clearly stated (e.g., unsold, damaged, outdated).
Information on how the discarded products are being handled, including:
This information must be made publicly available on the company’s website and included in its annual sustainability report.
Businesses must ensure that the information is transparent and accessible. Medium-sized enterprises are required to comply with these disclosure requirements by 19 July 2030. While micro and small enterprises are currently exempt, they are encouraged to already adopt sustainable practices.
It is important to know that the European Commission or national authorities may request further documentation regarding the handling of discarded products. Businesses must provide this documentation within 30 days of the request. The appropriate formats for disclosure will be provided by the European Commission on 19 July 2025.
The ESPR prohibits the destruction of certain unsold products starting 19 July 2026, with specific rules applying to apparel and footwear. This prohibition aims to reduce waste and encourage the donation, reuse, or recycling of unsold goods.
The affected products include the following:
These rules apply to medium-sized enterprises from 19 July 2030. Micro and small enterprises are exempt for now but are still encouraged to avoid destroying products.
There are several exemptions to the destruction ban, including:
The European Commission may also add other exemptions by 19 July 2025.
To comply with ESPR rules on discarding and destruction of products, businesses should take proactive steps:
By adopting these measures now, businesses can stay ahead of ESPR requirements and contribute to reducing waste while promoting circularity in their operations.
By prioritising reuse, refurbishment, and donation over destruction, businesses can reduce waste, align with EU sustainability goals, and foster circularity. The ESPR encourages businesses to adopt sustainable practices in product disposal and to provide transparency in handling discarded products. As the regulations evolve, businesses must stay proactive in meeting compliance requirements to minimise environmental impact and contribute to a more sustainable economy.
In Part 4, we’ll show you how digital product passports (DPPs) enhance traceability and transparency, and how they can support your sustainability goals.
📚 Explore the series at your own pace.
Part 1: What you need to know about ESPR
Part 2: Horizontal rules under ESPR
Part 4: ESPR enhances traceability and transparency with digital product passports
Part 5: Specific ESPR requirements for manufacturers, importers, distributors, and retailers
Part 6: Why stakeholder collaboration matters for ESPR compliance
Part 7: Turning compliance challenges into opportunities with ESPR
This is Part 2 of the series "Get Ready for ESPR: Shaping the Future of Sustainable Business."
The horizontal rules in the ESPR set the foundation for product sustainability, aiming to improve the durability, reparability, and recyclability of products while reducing their overall environmental impact. Applicable across different product categories, these rules create a uniform standard that ensures products meet sustainability requirements at various stages of their lifecycle.
Here are the key horizontal rules that must be considered under the ESPR:
Products must be designed to last longer, reducing the need for frequent replacements and contributing to a reduction in waste. Durable products are essential for supporting circular economy practices by ensuring that products are used for longer periods, reducing the overall consumption of resources.
Reliability ensures that products perform as expected over time, reducing the frequency of product failures and minimising waste associated with defective or non-functioning products.
Designing products for reuse is critical to promoting circularity. Reusable products can be easily repaired, refurbished, or repurposed, reducing the demand for new raw materials and minimising waste.
Products should be designed in a way that allows for easy upgrades. This is particularly relevant for electronics and technology, where products can be improved with newer software or hardware, extending their useful life and reducing the need for complete replacements.
Repairability is a key factor in reducing waste and increasing product lifespan. Products should be designed to allow easy repair, with accessible spare parts, repair manuals, and modular components. The JRC report suggests that repairability standards should be harmonised to make it easier for consumers and businesses to repair products, reducing waste and improving sustainability.
Products should be designed with materials that are easily recyclable, ensuring that when the product reaches the end of its life, its components can be effectively recovered and reused. This includes the use of recyclable materials and design strategies that facilitate disassembly.
Incorporating post-consumer recycled content into products helps reduce the demand for virgin materials, conserving natural resources and supporting the recycling industry. The JRC report highlights the importance of promoting the use of recycled materials as part of the EU’s broader sustainability goals.
Products should be designed to allow for maintenance and refurbishment, enabling them to be restored to their original function. This helps extend the product's life and reduces the environmental impact associated with the disposal and production of new products.
Energy use is a critical factor in product design. Products must be designed to minimise energy consumption during their lifecycle, including production, use, and disposal phases. Energy-efficient products contribute to reducing carbon emissions and lowering the environmental footprint of the product.
Reducing water use in product manufacturing and use phases is vital for ensuring the sustainability of resources. Products should be designed to minimise water consumption and maximise water efficiency throughout their lifecycle.
Efficient use of resources involves designing products that minimise the extraction and consumption of raw materials. Products should be designed to use fewer resources while maintaining their functionality and quality, reducing waste and conserving natural resources.
Products should be designed in a way that allows them to be remanufactured, extending their lifecycle and contributing to the circular economy. This involves creating products that can be disassembled, cleaned, and reassembled to restore them to a functional state.
Designing products for material recovery ensures that valuable materials can be extracted and reused at the end of a product’s life. This reduces the need for new raw materials and supports a more sustainable approach to resource management.
A product’s environmental impact, including its carbon footprint, should be minimised. The design process should focus on reducing emissions and the overall environmental footprint of the product throughout its lifecycle.
Products should be designed to minimise the generation of waste during production, use, and disposal. Reducing waste at all stages of the product lifecycle is essential for a circular economy.
The presence of hazardous substances, such as toxic chemicals or materials that hinder recycling, must be monitored and controlled. Products should be free from substances that can negatively impact health, the environment, or recycling processes.
To effectively implement the horizontal rules under the Ecodesign for Sustainable Products Regulation (ESPR), follow these instructions to ensure your products meet the required sustainability standards and contribute to the EU’s circular economy goals.
To facilitate easier compliance, ensure that your products meet standardised criteria for repairability and recyclability. Develop consistent product design specifications that support easy repairs, access to spare parts, and simple disassembly for recycling. Align these standards across your product lines to ensure uniformity in your sustainability practices.
Ensure that your products feature clear and easy-to-understand labels that communicate essential sustainability information. This includes data on the product's repairability, energy efficiency, recyclability, and environmental footprint. Clear labelling will help consumers and businesses make informed decisions based on sustainability features and contribute to better compliance with ESPR.
Develop and implement standardised metrics to assess and report on key circular economy aspects, such as resource efficiency, material recovery, and carbon footprint. These metrics will help you track the environmental impact of your products, report progress on sustainability goals, and ensure compliance with the ESPR’s resource use and recycling requirements.
Drive innovation in your product design by focusing on areas like product modularity, energy efficiency, and the use of sustainable materials. Look for opportunities to exceed the minimum ESPR requirements and introduce circular business models that reduce waste, improve energy efficiency, and use renewable resources. Offering incentives for innovation can help your company stay ahead of regulatory changes and lead the way in sustainability.
In Part 3, we’ll dive into the details of the regulations on discarding and destruction of products under ESPR.
📚 Explore the series at your own pace.
Part 1: What you need to know about ESPR
Part 3: Sustainable discarding and destruction of products under ESPR
Part 4: ESPR enhances traceability and transparency with digital product passports
Part 5: Specific ESPR requirements for manufacturers, importers, distributors, and retailers
Part 6: Why stakeholder collaboration matters for ESPR compliance
Part 7: Turning compliance challenges into opportunities with ESPR
This is Part 1 of the series "Get Ready for ESPR: Shaping the Future of Sustainable Business."
Sustainability is no longer optional with the Ecodesign for Sustainable Products Regulation (ESPR). Companies are facing a critical moment to make changes and adapt or risk falling behind. These new standards are not just a legal obligation; it is also an opportunity to improve efficiency, cut costs, and lead the way in a rapidly evolving market.
This 7-part series will help you understand and implement ESPR compliance. We will break down the regulation into actionable steps so that your company can not only meet the requirements but also turn compliance into a competitive advantage.
Beyond aligning with legal expectations, you’ll learn how ESPR compliance can:
Whether you’re a business leader, a product designer, or part of a sustainability team, the insights in this course will prepare you to confidently navigate ESPR and future-proof your operations.💡
This series will empower you to transform ESPR compliance from a hurdle into an opportunity, helping your business align with sustainable goals, improve operational efficiency, and reduce costs — all while staying ahead of regulatory demands.
Gaining a deeper understanding of the Ecodesign for Sustainable Products Regulation (ESPR) can unlock many new opportunities. But first, let’s dive into the core principles of ESPR and why it’s set to redefine sustainable product design.
The Ecodesign for Sustainable Products Regulation (ESPR) is part of the EU Circular Economy Action Plan and the European Green Deal, designed to foster a more sustainable and circular economy. Officially in force as of 18 July 2024, this regulation aims to reduce environmental impact by improving product sustainability and circularity. ESPR replaces the previous Ecodesign Directive (2009/125/EC) and introduces significant changes to how products sold in the EU market are designed, produced, and disposed of.
To comply with ESPR, businesses must design their products with these key principles in mind:
To effectively prepare, businesses must be aware of key deadlines:
The regulation will be rolled out progressively, so businesses need to stay informed about future updates.
ESPR brings important updates to the earlier Ecodesign Directive:
ESPR impacts all actors in the product value chain:
SMEs will receive tailored support to ensure compliance, including financial help and access to best practices.
The regulation applies to most products in the EU market, with a few exceptions (e.g., food, medicines, some vehicles). The first batch of priority products to comply with ESPR includes: iron and steel, aluminium, textiles, furniture, tyres, detergents, paints, lubricants, chemicals, and energy-related products.
This is just the first batch. The EU will continue to add more products to the list of regulated items, with the next batch expected by 2027.
If a product complies with the regulation, it cannot be banned or restricted from the EU market by individual member states, even if it doesn’t meet their national laws. This ensures that businesses focusing on ESPR compliance can have access to the broader EU market without facing local trade barriers.
By understanding the ESPR, you'll be better equipped to understand and prepare for the changes it will bring to your business. It’s not just about legal compliance; it’s about fostering a more sustainable future and improving the competitiveness of your business within the EU market.
In Part 2, we’ll focus on identifying the specific requirements for your business under ESPR.
📚 Explore the series at your own pace.
Part 2: Horizontal rules under ESPR
Part 3: Sustainable discarding and destruction of products under ESPR
Part 4: ESPR enhances traceability and transparency with digital product passports
Part 5: Specific ESPR requirements for manufacturers, importers, distributors, and retailers
Part 6: Why stakeholder collaboration matters for ESPR compliance
Part 7: Turning compliance challenges into opportunities with ESPR
The environmental impact of battery production is considerable: the production of a single 1,000-pound electric vehicle (EV) battery requires processing about 500,000 pounds of raw materials.1 By establishing a comprehensive Battery Regulation, the European Union (EU) is paving the way for responsible battery production, reduced carbon emissions, and a circular economy. The EU Battery Regulation Amendment has been a game-changer for the battery industry. This set of rules aims to make batteries more environmentally friendly by tackling two main issues: reducing hazardous materials in batteries and increasing recycling rates.
Since its implementation, the regulation has significantly impacted how the battery industry operates. Companies have had to adapt their processes and rethink their approaches to battery production and disposal.2 One of the most relevant results of this regulation has been the growing importance of battery traceability.
Battery product passports, in particular, have emerged as a crucial tool. These passports serve as a digital identity for batteries, allowing manufacturers, consumers, and recyclers to track a battery's journey from production to end-of-life. The focus on traceability isn't just about compliance – it's about creating a more transparent and circular supply chain. As you move towards a greener future, these measures ensure that batteries, while powering devices and vehicles, don't come at the cost of the environment.
For businesses in the battery sector, staying ahead of these regulations and embracing traceability measures like battery passports isn't just good practice – it's essential for long-term success in the European market. This article will help you understand the timeline of the regulation, the context it falls in, the purpose it serves, as well as who the implementation responsibility falls on, which are key elements you need to understand to successfully navigate the Battery Regulation Amendment.
From 1st February 2027, all EV and industrial batteries on the EU market will require a unique battery passport to be identified with a QR code. However, there are several important dates to keep in mind:
These targets are part of a bigger picture which aims to reach certain goals by:
The EU chose a phased roll-out approach, rather than implementing and enforcing it all at once. due to four main reasons:
The Battery Regulation is part of a broader branch of regulations that aims to help the EU's sustainability transition efforts, falling under broader plans such as the EU Green Deal. The Battery Regulation was adopted following the EU Strategic Action Plan for Batteries and is replacing the requirements under the 2006 Batteries Directive.
Figure 2: The Battery Regulation concerning the EU Green Deal.
However, the revised Battery Regulation takes a different approach than its predecessor. While the 2006 Batteries Directive is focused more on waste management and recycling, the current Battery Regulation is more focused on sustainability-related issues, covering the entire lifecycle of batteries, from raw material extraction to recycling.
The Battery Regulation modernises the EU's legislative framework for batteries, aiming to transform the EU into a modern, resource-efficient, and competitive economy. Battery passports are a specific type of digital product passport (DPP) designed for batteries and are a key part of the regulation. They share many characteristics with general DPPs, but are tailored to the unique requirements of the battery industry and related regulations.
A battery passport is a document that stores relevant battery data throughout the entire battery lifecycle, containing detailed information about a battery’s production, testing, and history and helps the battery recycling process. This will ensure that batteries comply with the Battery Regulation Amendment, as well as the Ecodesign for Sustainable Products Regulation (ESPR).
In other words, a battery passport is a digital record of every battery, documenting its entire lifecycle — from its origins to production, performance testing, and eventual recycling.
Regardless of the origin, the batteries with a capacity over 2kWh will require a battery passport to be listed in the European market5:
The Battery Regulation places a considerable obligation on manufacturers and suppliers across several industries. This means changes to their supply chains, manufacturing processes, and potentially even investments in new technologies to meet these requirements. On the other hand, suppliers will need to provide the necessary data for the battery passport and work closely with manufacturers to ensure compliance.
Download our guide to view the table of the Battery Regulation obligations for manufacturers, importers, distributors and second-life operators.
While data requirements for digital product passports (DPPs) have been defined by the Ecodesign for Sustainable Products Regulation (ESPR), implementation requires the whole supply chain to cooperate and define the crucial information that could prevent a product from going to waste. Data requirements for the specific products or product groups might differ and more information will be published in the Supplementing Acts to the ESPR. For now, here are the data requirements for DPPs you need to know:6
For a complete list of the requirements for DPPs laid out in the ESPR, follow our step-by-step guide on how to comply with ESPR for manufacturers, importers, distributors and retailers.
The following legal requirements under the Batteries Regulation came into effect on 18 August 2024.7
As the regulation provides in-depth requirements regarding the technical specifications of manufacturing a battery, and what is required for a battery passport, it poses somewhat of a challenge for manufacturers. However, it is the party placing the battery on the EU market that holds the responsibility of ensuring that all the required data is entered into the digital record and that the information is correct and up to date.
The main actor responsible for implementing the battery passports is the economic operator, which is defined as per (Article 2,1(19)) as:
“Any entity (manufacturer, authorised representative, importer, distributor or fulfilment service provider or any other natural or legal person)8”
This means that whoever puts the product on the EU market is responsible. Therefore, the economic operator is subject to obligations concerning:
Therefore, the economic operator is responsible for creating, updating, and storing the battery passport information throughout the battery's lifecycle. They have to ensure the batteries meet all the rules, like having the right safety labels (CE marking), before selling them in stores or online, or before they're used for the first time in Europe.
It doesn't matter where the battery was made; everyone involved needs to follow these rules for making batteries, getting them ready to be reused, fixing them up for a new life, and selling them.
Battery passports will require input from cell producers, module producers, battery producers, automotive OEMs, battery service, refurbishing, and repurposing companies. For manufacturers, this means that they have to adapt to changes in supply chain management and traceability to make sure they have access to the EU market and avoid fines.9
The Battery Regulation explains three main access groups for the battery passport, each with different levels of access.
The public can easily access general, non-confidential information about a battery, including its type, model, basic performance, and sustainability metrics (e.g., carbon footprint and recycled content). This transparency allows consumers to compare battery options and make informed decisions about batteries or products containing them.10
The main difference between this group and the general public is that it has more complete access to data within the battery passports. This can include detailed technical specifications, compliance documentation, and supply chain information. These bodies need access to this data to verify compliance with EU regulations, conduct market surveillance activities, and enforce safety and environmental standards. Having a higher level of access allows these bodies to effectively oversee the battery market and ensure adherence to the Battery Regulation.
Persons with legitimate interest are individuals or entities who have a valid reason to access and use sensitive battery information that is not publicly available, such as battery composition details, disassembly instructions, and the state of health data. Some examples are battery manufacturers, recycling companies, or repair and refurbishment services. They act as a middleman because they can access more detailed information than the general public, but less than the regulatory bodies. To get access to this information, actors have to demonstrate their legitimate interest to the relevant authorities, such as battery repair, reuse, and recycling, supporting the circular economy goals of the regulation11.
Battery passports can be complex because of the large amount of information they need. As a result, several challenges arise when you begin to implement them.
Managing the data efficiently is a challenge in itself. The regulation requires actors to collect, integrate, and certify extensive data throughout the battery lifecycle. This requires transparent and efficient communication between actors to ensure everybody along the supply chain can provide the information needed.12 Managing the data silos between battery supply chain actors is key –- without everybody's input the battery passport will not be complete, and hence not comply with the regulation; which can either facilitate or stagnate data completeness, accuracy, and up-to-date status.13
Other than coordination challenges between supply chain actors, confidentiality concerns are an important challenge.14 Establishing trust between access groups can be difficult, due to data security concerns.15 An important point to consider is the lack of standards for data interoperability, which can make data sharing a challenge. Hence, there are still gaps to be filled within the regulation.
In addition to coordination challenges, the infrastructure needed to keep these systems running and the data safe is an important consideration. The blockchain technology needed to facilitate the confidential sharing and verification of data can be costly and complex.16 Ensuring interoperability between different systems and platforms that access groups and actors along the supply chain use can be overwhelming.17
While it is important to acknowledge the challenges surrounding the implementation of the battery passport, there are ways for the economic operator to ensure compliance. So how do you achieve compliance with the Battery Regulation?
Step 1: Start by assessing how prepared you are to meet the compliance requirements and pinpoint strategic business opportunities within the battery passport framework.
Step 2: Establish processes for continuous data collection and updating, especially for dynamic data like battery state of health.
Step 3: To address data gaps, complete a thorough audit of existing data across the battery lifecycle. Identify critical information gaps based on regulatory requirements. Then, develop strategies to collect missing data, potentially through collaboration with suppliers and partners.18
Step 4: Implement systems for ongoing data collection and verification. Consider investing in emerging technologies and platforms that facilitate secure data sharing and verification.
The Battery Regulation and the introduction of mandatory battery passports mark an important step toward a sustainable and transparent battery ecosystem. By requiring detailed lifecycle data, promoting circular economy principles, and ensuring compliance with strict sustainability standards, it sets a precedent for increased transparency and lifecycle focus across industries, potentially influencing global standards.
For businesses, this represents not just a challenge but also an opportunity. Adapting to these requirements can drive technological advancements, improve consumer trust, and open doors to new markets. Battery passports are more than just a compliance tool; they are a gateway to reshaping how batteries are designed, used, and recycled.
As industries prepare for full implementation, collaboration, technological readiness, and robust data management will be key to success. The future of batteries lies in transparency, traceability, and sustainability — a future that benefits businesses, consumers, and the planet alike.
