ESPR, CSRD, CS3D and more acronyms to know
Part 2 of the most important acronyms in EU politics that affect fashion today and in the future
Welcome to The Crisps–your weekly newsletter on anti-greenwashing and honest fashion communication. In this issue, we look at some of the most important acronyms of EU politics affecting fashion and its communication. Ps: We’re giving away three pro subscriptions for 2024 – find out how to participate in the raffle further below. Good luck!
Yesterday marked an important day in European politics because the EU Parliament and Council agreed on stricter (but strict enough?) rules to protect human rights and environmental impacts along global supply chains. And it was the perfect timing because we wanted to cover the EU Corporate Sustainability Due Diligence Directive (CS3D/CSDDD) this week anyway.1
So in this issue, you will read about CSDDD (CS3D) but also about ESPR, CSRD, UCPD, and LCA and what these concepts, regulations and directives mean for your communication.
In case you missed the first part, in which we covered EGD, CEAP, SSCT, GCD, PEF, EPR and DPP, check out our last issue here.
Please note: We’re taking a little break over the European winter holidays. This is the last issue of 2023. We will be back in the first week of January 2024.
CS3D/CSDDD - EU Corporate Sustainability Due Diligence Directive
The EU Corporate Sustainability Due Diligence Directive signifies a pivotal shift toward more transparency for corporate practices. Crafted as a regulatory framework, the CS3D aims to assist companies in recognizing and mitigating sustainability-related risks embedded in their supply chains and sourcing operations.2
Operating in tandem with the EU Corporate Sustainability Reporting Directive (CSRD), the CS3D stands as an integral component of the EU Green Deal, a comprehensive strategy aiming to address climate change and make Europe the world's first “climate-neutral bloc” by 2050.
Scheduled to attain the status of EU law in 2024, the CS3D is expected to be turned into national law by Member States by 2026.
The CS3D's scope spans across various company groups and timelines:
From 2026, Group 1 comprises EU companies with 500+ employees and €150 million+ in net annual turnover.
From 2028, Group 2 includes EU companies in high-impact sectors (textiles, agriculture, extraction of minerals) with 250+ employees and a turnover of €40 million or more.
From 2029, Group 3 includes non-EU companies active in the bloc with a turnover threshold aligned with Group 1, generated within the EU.
From 2030, Group 4 encompasses non-EU companies active in the bloc with a turnover threshold aligned with Group 2, generated within the EU.
The CS3D mandates companies to:
Conduct due diligence to identify actual or potential impacts on human rights and the environment throughout the entire value chain.
Formulate action plans to mitigate identified risks within their own operations and supply chains.
Continuously monitor and assess the effectiveness of due diligence processes.
Maintain transparency by communicating their due diligence efforts.
Align their business strategy with the 1.5°C target of the Paris Agreement (applicable to Group 1 and Group 3 companies)
What does it have to do with communication?
The CS3D places a strong emphasis on transparency & data. Companies covered by the directive are required to communicate extensively about their due diligence efforts, including identifying and mitigating human rights and environmental impacts throughout their value chains. Companies also have to track their improvements so clear and comprehensive reporting is essential for stakeholders to understand a company's sustainability practices.
Of course, that’s not all. We will cover the CS3D along with critical analysis in a separate issue soon so we can dive into more details with you!
ESPR - Ecodesign for Sustainable Products Regulation
The proposal for a new Ecodesign for Sustainable Products Regulation (ESPR), published on 30 March 2022, is the cornerstone of the Commission’s approach to more environmentally sustainable and circular products. The proposal builds on the existing Ecodesign Directive, which currently only covers energy-related products.
The proposal establishes a framework to set ecodesign requirements for specific product groups to significantly improve their circularity, energy performance, and other environmental sustainability aspects. It will enable the setting of performance and information requirements for almost all categories of physical goods placed on the EU market (with some exceptions, such as food).3
The framework will allow for the setting of a wide range of requirements, including on:
product durability, reusability, upgradability, and reparability
presence of substances that inhibit circularity
energy and resource efficiency
recycled content
remanufacturing and recycling
carbon and environmental footprints
information requirements, including a Digital Product Passport
The rules proposed under ESPR will apply to all products placed on the EU market, whether produced inside or outside the EU. ESPR will be compliant with international trade rules and the European Union will continue to work in partnership with producing countries who share the goal to improve the sustainability of their products. Moreover, the EU will be providing support to partner countries and assess possible impacts on third countries thoroughly. New measures such as the digital product passport will be developed in an open dialogue with international partners to ensure that they help remove trade barriers for greener products and lower costs for sustainable investments, marketing, and compliance.
What does it have to do with communication?
The EU Green Deal works towards a range of goals including increasing circularity, protecting resources, and reducing trash. By introducing a framework for setting ecodesign requirements, they put down a path for products to be recyclable, repairable, and reusable. But all of it is only worth our while if the information is passed down to consumers. They need to know WHAT to do with their products and HOW to do it (as in how to care for their products correctly, what to do with them once they no longer wear them, how to repair them, and what can be repaired).
All of the information has to be accessible to the consumers but also to other stakeholders. ESRP will for example make it easier for recyclers to sort textiles because they will know all of the components. The Digital Product Passport will hold all essential information that they can still access even if the physical tag is detached.
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CSRD – Corporate Sustainability Reporting Directive
Since January 5th, 2023 the Corporate Sustainability Reporting Directive has been in effect as part of the European Union’s Green Deal – though the timeline for reporting under the new rules is in effect for fiscal year 2024 (for reports published in 2025).
Its emphasis is on modernizing environmental, social, and corporate governance reporting with common standards.4 CSRD applies to all large companies and all listed companies except listed micro-enterprises. Major new rules include a “double materiality” perspective meaning companies have to report both on their impacts on people and the environment, showcasing how the risks materialize for investors.
What does it have to do with communication?
CSRD emphasizes transparency in reporting, requiring companies to disclose their environmental, social, and governance (ESG) impacts. It’s doing so by aiming to establish common reporting standards that make it easier for stakeholders to compare the sustainability performance of different companies. Companies are also encouraged to engage with stakeholders in the process of identifying and reporting on sustainability impacts – not only sharing the positive efforts but also potential risks.
The requirement to report on both the impacts on people and the environment reflects a "double materiality" perspective. This means that companies need to communicate not only how their activities affect the environment but also how social factors impact their business. Communication needs to address both dimensions to provide a holistic view of sustainability performance.
If you don’t know by heart what EGD, CEAP, SSCT, GCD, PEF, EPR and DPP mean, check out our last issue here:
UCPD - Unfair commercial practices directive
The Unfair Commercial Practices Directive (UCPD) is a regulatory framework aimed at fostering fair practices within commercial activities. It is designed to prevent deceptive practices and ensure transparency in the interactions between businesses and consumers.
Together with broader EU consumer protection efforts the UCPD establishes a set of rules to combat unfair commercial practices. This directive is integral to creating a level playing field and safeguarding the rights and interests of consumers.
The UCPD categorizes and prohibits various unfair commercial practices. These encompass misleading actions, misleading omissions, and aggressive commercial practices that could potentially deceive or coerce consumers.5
What does it have to do with communication?
The UCPD outlines specific commercial practices that are considered unfair including false claims directed at consumers. And here is also where the proposal of an EU Green Claims Directive and the Unfair Commercial Practices Directive will go hand-in-hand in the future.
The EU Green Claims Directive will be crucial in fighting greenwashing as businesses will be obligated to undergo a verification process before such claims can be made and brought to the market. But the EU Green Claims Directive (under the proposal from March 2023) will not be mandatory for businesses with less than 10 employees and 2 million Euros turnover. However, their claims are still covered by the UCPD. So even though a range of companies will not be covered by the EU Green Claims Directive they still can’t go too wild on their environmental marketing tactics as the UCPD still protects consumers.
Another difference between the two directives lies in the kind of claims each covers. While the EU Green Claims Directive proposal introduces specific rules regarding the substantiation, verification, and communication of voluntary environmental claims and labeling schemes in the EU market, the UCPD addresses misleading commercial practices more broadly.
The combined effect of the UCPD and the Green Claims Directive contributes to consumer empowerment by promoting transparency and access to trustworthy information. This transparency empowers consumers to make informed choices aligned with their environmental values.6
LCA – Life Cycle Assessment
Life Cycle Assessment is a scientific method to measure the environmental impact of a product or process in 15 impact categories over a defined lifetime. The impact scenarios include global warming, land use, and eco-toxicity among others. There are usually two definitions of a lifetime: cradle-to-grave and cradle-to-cradle.
In both lifetime approaches data is measured starting at the extraction or cultivation of raw material to each stage of manufacturing, transportation, and product use. But there are two different ending scenarios: With cradle-to-grave, you collect data until the end of life where products are disposed of. With cradle-to-cradle, you collect data on how to keep material and components in the economic loop – for example by recycling or repurposing.
Here is how it works:
Brands can use the results from the LCA to adapt their business and supply chain decisions – across all departments from design to sourcing and manufacturing etc.
However, LCA does not provide an accurate and interconnected picture of all environmental impacts of a garment as it leaves out important factors such as social impacts and has to be put into context. It also doesn’t show you solutions on what to change to reduce the environmental impact of your product or service. The results from an LCA however can help you decide what measures to take.
What does it have to do with communication?
We dedicated an entire issue to how to use LCAs for fashion communication, what not to do, and what to keep in mind if you do use LCAs. You can dive deeper into the topic here:
Have a fantastic start to 2024!
All the best,
Tanita & Lavinia
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Disclaimer: The content and opinions presented in The Crisps newsletter are for informational purposes only and do not constitute legal, ethical, or professional advice. The Crisps does not endorse any specific brands or products mentioned in its content.
European Council. (2023, December 14). Corporate sustainability: Due diligence - Council and Parliament strike deal to protect environment and human rights. Retrieved from https://www.consilium.europa.eu/de/press/press-releases/2023/12/14/corporate-sustainability-due-diligence-council-and-parliament-strike-deal-to-protect-environment-and-human-rights/
Entsalo, H., Kalimo, H., Kautto, P., & Turunen, T. (2023). Analysing regulatory instruments in sustainability transitions: A combined ‘intervention points’ and ‘roles of law’ approach to the European Union's Ecodesign framework. Sustainable Production and Consumption, 42, 125-137.
Baumüller, J., & Grbenic, S. O. (2021). Moving from non-financial to sustainability reporting: Analyzing the EU Commission’s proposal for a Corporate Sustainability Reporting Directive (CSRD). Facta Universitatis, Series: Economics and Organization, (1), 369-381.
Kortelainen, S. (2022). Impacts of the Corporate Sustainability Due Diligence Directive (CSDDD)‒A Supply.
Nišević, M. (2022). Profiling consumers through Big Data Analytics: The interplay between the GDPR and Unfair Commercial Practice Directive.
Galli, F. (2022). EU Law on Unfair Commercial Practices. In Algorithmic Marketing and EU Law on Unfair Commercial Practices (pp. 157-179). Cham: Springer International Publishing.