Blog

Sustainability in the product’s introduction to market

PART II
This article is part of a series of articles on sustainability in the lifecycle of a product

Getting your product into your customers’ hands

The EU has the ambition of transitioning to a truly sustainable economy and becoming carbon neutral by 2050. Starting with the publication of the European Green Deal in 2019, the EU is adopting environmental, climate and energy legislation with a wide-ranging scope, which will impact European and international companies’ entire chain of activities, both in terms of challenges and opportunities.

In a series of articles, Dr2 Consultants is analysing the impact of EU policies on four key areas of companies’ operations: the product (pre-)development, the introduction to the market, the end-of-life, and strategy and reporting. Building on the first article on the products’ (pre)development, this article focuses on sustainability in product distribution (packaging, waste, labels, and logistical activities).

Thanks to our partner Hezelburcht, this article also offers an insight into relevant EU funding opportunities for (groups of) companies in the described areas of activities.

Designing sustainable packaging to reduce waste

The EU has been trying to reduce its packaging waste since the introduction of the Packaging and Packaging Waste Directive (PPWD) in 1994. Despite the rules for packaging waste prevention and management set by the PPWD, packaging waste per inhabitants in Europe continues to increase (in 2019, EU inhabitants generated approximately 178.1 kg of packaging waste, less than half of which was recycled. This has led the Commission to launch a revision of the PPWD. Mainly, it intends to upgrade the Directive into a Regulation directly applicable in Member States, ensuring unified packaging requirements across Member States. The proposal is expected in November 2022.

Through the revision, the Commission aims at further strengthening the sustainability of packaging and reducing packaging waste through the increase of recycling targets, the creation of binding reuse targets and the establishment of recycled plastic content targets for plastic packaging. Most importantly, the Commission aims at making mandatory that all packaging on the EU market be recyclable or reusable by 2030, getting rid of all single-use packaging.

Packaging is a key aspect of the introduction of the product on the market. The legislative framework for packaging is about to drastically change, setting stricter conditions for companies on how they package their products, promoting sustainability. Companies will have to adapt their supply chains to fit these requirements.

Moreover, EU citizens are increasingly concerned with the environmental footprint of their consumption habits, and packaging is one of the main aspects taken into consideration when purchasing consumer goods. The past years have seen an increase in consumption of more sustainable packaging, such as glass or steel packaging, against plastic packaging, but also a higher interest for packaging-less options, such as bulk buying. Companies can leverage this consumer interest and distinguish themselves from competitors by addressing packaging in their sustainability strategy.

Relevant EU funding instruments

The EU grant program LIFE – focusing on environment and climate actions – offers opportunities for projects in the field of circular economy or waste (management). LIFE projects are pilots, demonstrations or best practices of at least €1 million. LIFE calls open on a yearly basis, usually in the period April-May. The LIFE call 2022 is already open with a deadline set for deadline 4 October 2022.

The polluter pays

To encourage more sustainable packaging and reduce overall environmental impact, the European Commission is leveraging the “polluter pays” principle, which requires polluters to bear the environmental and social cost of their activities or products, rather than the wider society. This should incentivize polluters to avoid environmental damage by holding them accountable.

The 2018 PPWD introduced the polluter-pays principle with regards to packaging waste, creating a mandatory Extended Producer Responsibility for all packaging by 2024. As such, the responsibility for the financing of collection, recycling and end-of-life disposal is put on producers. To encourage the design and use of packaging that is increasingly sustainable, the financial participation is to be modulated by Member States in accordance with the  “waste hierarchy” defined in the Waste Framework Directive, which informs all packaging legislation. The waste hierarchy classifies the ways to manage waste, from the most to least sustainable: waste prevention, reuse, recycling, recovery. Disposal of the packaging should only be a last resort.

The Waste Framework Directive is currently also being revised by the Commission, and will focus on reducing waste generation through reuse of products and components and improving separate collection to avoid mixed waste, facilitating recycling or reuse.

The principle of the polluter pays is an important incentive for companies to improve the sustainability of the packaging before putting their products on the market to avoid extra costs. However, opportunities can be found in revision of key waste legislation, which will make it easier to implement reuse or recycling on packaging.

Promoting sustainability on the shelf

Another key aspect of introducing a product on the market is to create consumer interest. With consumers being concerned more and more by the environmental impact of their purchases, companies are increasingly using sustainability labels or claims on the packaging of their products or in adverts as marketing tools to attract consumers.

However, due to the plethora of existing, and more or less regulated, environmental labels in the EU and worldwide, both consumers and companies can experience difficulties in determining the reliability of a label. Additionally, environmental claims are not regulated at EU level, leading to different frameworks between Member States.

In response to greenwashing, whereby companies give an exaggerated impression of the sustainability of their products or activities, the European Commission decided to introduce an obligation for companies to substantiate these claims or justify the use of certain logos through a standardized methodology. Certain misleading claims could also be forbidden. The proposal for a Regulation on substantiating environmental claims is due to be presented in November 2022.

By making the most sustainable option more easily identifiable through this proposal, the Commission notably aims at incentivizing companies to truly enhance their environmental performance if they are to safeguard a competitive edge in a market increasingly driven by sustainability considerations. Companies will also have to take this parameter in consideration in their overall strategies, including in their marketing strategy.

Reducing CO2 emissions in distribution processes

Once a product is packaged and ready to enter the market, it must be distributed. Logistics, especially the transport of products, will be impacted by the new rules to limit emissions and boost the energy transition presented in July 2021 as part of the Fit for 55 package, another key building block of the European Green Deal. Notably, emissions from the transport sector are to be included in the EU Emissions Trading System, potentially as of 2026 for commercial vehicles. This means that companies will have to purchase carbon allowances to account for the emissions of their transport activities, increasing costs.

However, the new energy and climate legislation presented in the package will provide opportunities for companies to more easily reduce the environmental impact of their logistics operations. The revisions of the CO2 emission standards for cars and vans and of the CO2 standards for heavy-duty vehicles will decrease the amount of CO2 that newly commercialized vehicles can emit, making gradually available more and more zero-emissions vehicles. The revisions of the Renewable Energy Directive, Alternative Fuels Infrastructure Regulation and Energy Taxation Directive, by increasing the availability of renewable energies and lowering their costs, and by boosting the coverage in charging and sustainable fuel refilling stations across the EU, will also make it easier and cheaper to rely on sustainably powered transport modes.

Maritime transport is also due to improve its environmental impact, with the FuelEU Maritime legislation aiming to make the uptake of sustainable maritime fuels gradually mandatory.

In general, the EU heavily supports the uptake of new mobility solutions, especially building on the digital transition, as outlined the Smart and Sustainable Mobility Strategy. The Commission encourages the use of innovative technologies such as artificial intelligence, but also data collection and data sharing, to enhance logistical efficiency. Funding opportunities are available for companies developing projects, for example on multimodal mobility or on solutions to green the last mile, under EU funding instruments such as the Connecting Europe Facility or Horizon Europe.

Companies will therefore have to consider the environmental impact of their distribution activities, which often represent a large share of a business’ emissions. However, for companies looking to improve the sustainability of their logistics operations, many opportunities will arise from the new legislation.

Relevant EU funding instruments

There are several EU grant programs aimed at making transport more sustainable. One of these is the LIFE program mentioned earlier. Another example is Interreg (such as North Sea Region (NSR)), which offers opportunities for pilot projects in the field of zero emission mobility. Within Interreg, parties from several countries – within the respective program area – are expected to test a certain solution. The 2nd Interreg NSR call of 2022 will be opened on 1 August.

In addition, CEF Transport focuses on further improving the TEN-T (Trans-European Transport Network) and making it more sustainable. CEF Transport is a is a large EU grant program with various priorities (such as improving cross-border rail connections and increasing the modal shift within ports: shifting transport of goods from road to water and/or rail). Within this EU program, a call is opened every year; the CEF Transport call 2022 will be opened in September.

Within CEF Transport there is a separate part: AFIF (Alternative Fuels & Infrastructure Facility). AFIF focuses on the rollout of the infrastructure needed for alternative fuels – including hydrogen – within Europe (note: vehicles and vessels are eligible to a limited extent). In contrast to the regular annual CEF Transport call, AFIF concerns a combination of a CEF Transport grant and a loan (which may involve a loan from the EIB). In addition, AFIF is a rolling call with several ‘cut-off dates’ / deadlines, namely: 10 November 2022, 13 April 2023 and 19 September 2023.

Furthermore, Horizon Europe provides grant opportunities for R&D projects (including in certain cases demonstrating the outcome of research). A number of Horizon Europe calls are currently open in the area of mobility (deadline: 6 September 2022). In the period 2023-2024, several calls will again be opened concerning clean solutions for all modes of transport.

Conclusion

The new European environmental rules will have strong implications on introduction to market of products, setting a trend for more sustainable choice of packaging, restricting labelling and environmental claims, and promoting logistical activities that are environmentally friendly and respectful of human rights. Companies can leverage the EU’s twin (green and digital) transition to a zero-carbon, zero-waste economy to become a front runner in terms of sustainability.

While touched upon briefly, the next article of the “Sustainability in the lifecycle of a product” series will explore the relevant legislation impacting the product end-of life.

Curious about how EU environmental legislation applies to your company’s activities? Dr2 Consultants’ European Green Deal Impact Scan and Sustainability Consulting provide you with a comprehensive overview of how EU legislation will affect your business, identifying the opportunities and challenges and highlighting how your company’s strategic goals could be updated. Want to know more? Don’t hesitate to contact us!

Similarly, are you eager to exploit funding opportunities at EU level linked to the activities described in this article? Then do not hesitate to reach out to our partner, grant consultancy Hezelburcht!

Read also:

PART I: Sustainability in product (pre-)development