Details correct at date of publication
There’s currently a wave of sustainability legislation underway in the EU and other countries. In an effort to decarbonize the retail industry in the race to net zero, new company-level regulations require most businesses to, among other things, set and report on ambitious climate targets and increase due diligence in their supply chains.
At the same time, scrutiny of product claims is growing, ranging from strict advertising guidelines (in the UK, Netherlands, France and the Nordics) to mandatory product environmental labeling in France.
The resulting upcoming changes can be categorized into:
- Company requirements related to Environmental, Social, and Governance (ESG) disclosure and target-setting (primarily climate but also other social and environmental impact areas)
- Product requirements on what companies are allowed to sell in the EU (related to design, packaging and circularity)
- Communication requirements on so-called “green claims”, related to how companies are allowed to market the products they’re selling and which additional information should be included
Most of these rules are coming into force in the next 18-24 months (2024 to 2025), so retailers need to prepare by improving their supply chain traceability and investing in software to accurately measure and report their impacts. Find out more below.
A Summary of Key Legislation Changes Affecting Retail from 2023
What You Need to Know About Upcoming Retail Legislation Changes
Company Legislation
Company legislation will mandate most businesses to set and report on ambitious climate targets and increase due diligence in their supply chains, incentivized by sustainability-linked financing. This means:
- New reporting requirements from FY24 for listed companies
- Stricter supply chain due diligence
- Emissions reduction targets
- Taxonomy-aligned financing
Stricter Rules for Product Claims
To tackle greenwashing within the EU, stricter rules for product claims are coming into play, plus new mandatory environmental product labeling in France.
This means:
- No more 'green claims' without comprehensive supporting data
- Scrutiny of 'highly polluting sectors', including textiles and electronics
- An effective ban on ‘carbon-neutral’ labeling in France (from January 2023)
- Mandatory environmental and circularity labeling for textile products in France (starting 2023 for larger companies)
Product Footprinting
From 2024-2025, product footprint labeling is coming to France based on a standardized approach that will be introduced for textiles.
This means:
- Voluntary footprint labeling in France from 2024, mandatory as soon as 2025
- Multi-impact environmental footprinting to support product claims
- Increased need for supply chain traceability and quality environmental data
When are Retail Legislation Changes Happening?
Most rules are coming into force in the next 12 to 24 months, depending on the size of your business. It is business-critical to get ahead of changes now to avoid delays in operations or financial penalties from regulators.
The Retail Legislation Changes That Are Happening Now
Some of the changes are imminent and require immediate action.
The most significant changes to get prepared for in the near future are:
- Penalties for making green claims without adequate evidence in the EU in the coming years, based on the EU’s new Green Claims Directive. However, many countries, including the UK, France, Sweden, Norway and the Netherlands, already have their own guidelines, which are being actively enforced.
- Higher standards for climate and sustainability reporting in the EU based on the Corporate Sustainability Reporting Directive. This applies to listed companies from FY24 and large companies with more than 250 employees and an annual turnover of €40 million from FY25.
- ‘Eco Score’ labeling for textile products in France, based on the Climate and Resilience Law n° 2021-1104. This is expected to start from 2024 on a voluntary basis and become mandatory from 2025-26 for multiple sectors, including textiles.
How Vaayu Can Help You Prepare for Upcoming Legislation Changes in Retail
Given the increasing focus on data and digitalization, access to accurate, real-time environmental impact data and streamlined digital tooling are becoming critical to business success in the future in accordance with all new legislation changes.
As such, retailers must choose the right tech partner to help navigate the increasingly dynamic legislative landscape and avoid the penalties and teething pains that accompany it.
Our proprietary software and in-house team of climate and sustainability experts help you to:
- Calculate your carbon footprint and set targets in line with regulations
- Meet new product labeling standards in France and across the EU
- Highlight your ESG performance to investors and external stakeholders
Vaayu’s team of experts also supports you all the way from compliance to competitive advantage — arming you with accurate and real-time carbon data and helping you prepare for new legislation while positively influencing key business metrics and accelerating your decarbonization journey.
In short, retailers should use 2023 to prepare their businesses and value chain partners for what’s to come. Research, conducting change management, choosing strategic partners and collecting granular, accurate, real-time data will be invaluable.
For more information on how Vaayu can help you, reach out to a member of our team.
