Dear reader,
Welcome to Publyon’s monthly Sustainability Newsletter. In this month’s edition we take a short look at the latest agreement reached on the Packaging and Packaging Waste Regulation and then we delve into the EU’s Deforestation Regulation. Last but not least, Publyon’s Managing Partner Margreet Lommerts shares her insights on how companies can stay ahead of the game in the next legislative term.
The spotlight
Packaging and Packaging Waste Regulation
This month marks a pivotal moment in the journey of Packaging and Packaging Waste Regulation (PPWR) within the European Union. As we await the decision, it will soon become clear whether the proposed regulations will be adopted in the current legislative term. This potential development holds significant implications for sustainability efforts and the future of packaging practices across the EU.
In the meantime, let’s go through the main highlights of the provisional agreement:
- Banning per- and polyfluoroalkyl substances (PFAS) in food packaging and food contact applications.
- Reducing packaging waste by set percentages by 2030, 2035, and 2040, and phasing out certain packaging practices such as individual portions of condiments by 2030.
- The agreement also emphasizes support for reuse and refill initiatives.
- Additionally, it outlines plans for structured waste management, including separate deposit-return systems for single-use plastic and metal beverage containers and targets for recycled content and recyclability.
The PPWR negotiation process has been highly lobbied and contentious, reflecting the varied perspectives within different sectors. In late February 2024, the European Parliament also adopted stricter rules for plastic waste management, aiming to ban exports to non-OECD countries and impose stricter regulations on exports to non-EU OECD countries. These combined changes signal significant shifts in Europe’s waste management systems in the coming years.
Policy update
The EU Deforestation-free Regulation
On 29 June 2023, the Regulation on deforestation-free products entered into force. To minimise deforestation and forest degradation, the legislation regulates the presence of products (including from import) in the Single Market which are associated with deforestation. Operators and traders have until 30 December 2024 to implement the new rules. Micro and small enterprises will enjoy a longer adaptation period, as well as other specific provisions, which will apply starting from 30 June 2025. However, since its entry into force, the Regulation has been at the centre of numerous backlashes coming from EU Member States and third countries.
What happened?
In latest news, it appears that around 20 EU agriculture ministers want farmer-friendly tweaks to the EU’s deforestation Regulation. As such, the ministers ask the Commission for a temporary suspension of the Regulation allowing for a “feasible implementation” of the law accompanied by a revision of the text. European Commissioner for the Environment Virginijus Sinkevičius, said he is ready to “carefully listen” to the member states’ demands, and stated these issues could be addressed via secondary legislation (implementing acts).
On another recent occasion, Commissioner Virginijus Sinkevičius acknowledged that Brussels is late in drafting a number of technical documents aimed at ensuring the new law on deforestation-free products is properly implemented. However, he stressed that the delay won’t prevent it from applying starting towards the end of 2024 and early 2025.
Among the technicalities still being sorted out is a benchmarking system that will rank the risk of deforestation of countries and regions across the world. The Commission is working to ensure the methodology for the benchmarking system is objective and transparent and, until the benchmarking system is ready, all countries are automatically going to be classified as ‘standard risk’. The benchmarking system has stirred discontent with the bloc’s trading partners, particularly in South America, which say it could hurt their reputation in trade relations with the bloc and other trading partners around the world.
What does it mean for your business?
A review of EU deforestation requirements as requested by EU member states may arrive in the next legislative term and bring softer requirements for EU farmers, in particular those who work in organic farming. At the same time, the implementation of a blanket ‘standard risk’ label may mean that industries importing commodities or derived products withing the scope of the regulation, and which are required to police their supply chains under the new rules, won’t be able to benefit from simplified due diligence checks for commodities coming from low-risk areas until the benchmarking is in place.
Expert interview
Margreet Lommerts
Margreet Lommerts is Managing Partner at Publyon where she supports companies in the transition to a new sustainable economy. In this edition, she shares her insights on how public affairs can increase companies’ competitiveness in the next legislative term. She also explains why sustainability is here to stay on policymakers’ agenda in spite of a priorities shift.
During the past mandate, the von der Leyen Commission introduced a “green wave” with its ambitious work programme, the European Green Deal. The Programme set ambitious sustainability goals. Ranging from a Climate Law that sets binding targets for the EU to reduce its greenhouse gas to renewable energy with policies that promote the development and deployment of renewable energy sources such as wind, solar, and hydropower. The EU was supposed to transfer into the world’s first climate neutral continent in 2050.
With the current legislative term coming to an end and against the backdrop of various crises, it is a great time to take stock of the Green Deal and the past mandate, look at some trends and developments and assess the future of the Green Deal.
Can you give an example of how you support companies in the transition towards a sustainable economy, based on your daily practice?
As part of the European Green Deal, the Commission back in 2021 launched a legislative Package to prepare all sectors of the EU economy to reduce greenhouse gas emissions by at least 55% by 2030. In the road transport sector, the focus of the legislative proposals was very much on hydrogen and electric fuel sources, instead of bio-gas-based fuels. For one of our clients, a leading company in the retail sector of biomethane, Publyon executed a lobbying campaign to create favourable regulatory conditions related to fuels. The core message that we conveyed was that a swift decarbonization of all sectors of the European economy cannot be attained without fuels such as biomethane.
Was the lobby a success?
The final legislative acts did not include biomethane as a transition fuel, the institutions opted for full electrification of cars and vans by 2035. However, the CO2 emissions performance standards legislation includes a requirement to review progress towards the Internal Combustion Engine ban goal in 2026 which opens another opportunity to include biomethane.
Since the adoption of the legislation, the world has changed significantly. With the war in Ukraine and subsequent energy crisis, we observe a shift in the Commission’s approach towards biomethane. The Commission is now more supportive of biomethane as a transition fuel. This shift in approach lays the groundwork for a fresh EU climate policy centred on strategic independence, industrial competitiveness, and technological impartiality.
Have you seen a priority shift throughout the past legislative term?
Yes and no. The Fit for 55 Package for example already addressed the potential unfair competition posed to EU industries by the green transition with a proposal such as the Carbon Border Adjustment Mechanism.
Following the war in Ukraine, the Commission put more emphasis on strategic autonomy, safeguarding energy security and protection of the industry, in combination with a carbon reduction agenda.
A set of new proposals was launched to steer the policy shift such as the EU industrial Strategy, REPowerEU, EU Economic Security Strategy and the Economic Security Package.
A good example is the announced effort to enhance the EU’s competitiveness which includes a plan to cut back reporting requirements by 25% in the long-term. The more practical question is whether the reporting requirements will indeed go down or whether this is more rhetorical.
Do you expect the ambition of the Green Deal to water down?
2024 is a transition year with the upcoming EU elections. The European Parliament is expected to make a swing to the right and the largest European political party, the EPP, is in full campaigning mode, trying to attract as many voters as possible with pro-industry promises.
Over the past months, indeed, some significant sustainability regulations will not move forward. The Commission, for example, decided not to move forward with the Sustainable Use of Pesticides Regulation as a direct result of the farmers’ protests. And the final vote on the Nature Restoration Law was postponed as there is no majority at Council level.
However, there is no indication that the overall climate ambition of the Commission is going to be watered down. In its manifesto, the EPP is fully committed to the 55% emissions-reduction target and the goal of climate neutrality by 2050. It says that Europe must not de-industrialise on this ambitious path but must show the world that the carbon-neutral transformation can be achieved successfully through our businesses.
In other words, to achieve the climate targets, the European Commission will have to tackle the loss of biodiversity and pollution. Without this, the climate targets are unworkable. The sole domain experiencing a notable reduction in regulatory aspirations is within the realm of agriculture to avoid more farmers’ protests.
Furthermore, I doubt whether a move to the right will have implications for sustainability policies. Right wing politicians tend not to engage in the drafting of legislation, they tend to focus on populist issues. As a result, politicians who are involved in the shaping of legislation, will have more influence.
To conclude, there is no evidence the ambition of the Green Deal is watering down. The Climate targets remain, the farmers are likely to see a relief in sustainability requirements, but this does not apply to other sectors.
The challenge in the next mandate is that the implementation of the European Green Deal requires significant political will and consensus among EU member states, as well as substantial investments in green infrastructure and technologies. Negotiating and enacting the necessary policies and funding mechanisms can be challenging, especially given differing national priorities and economic constraints.
What do you recommend companies to focus on in relation to their sustainability efforts?
As said before, the ambitious climate targets have been set. The reporting requirements are also increasing and will target more companies in the future.
Companies can prepare for the European Green Deal, by taking proactive steps across various aspects of their operations. Research shows that companies that are intrinsically motivated to integrate ESG policies in their operations are performing better.
My advice to any company and organisation is to have a process in place to manage the impact of (upcoming) EU sustainability policies onto their operations. In other words, by integrating EU policy developments into the governance of your enterprise you can ensure your company stays ahead of the game.
Legislation may not impact your business today but could in the future. Let’s take the example of the reporting requirements of the Corporate Sustainability Due Diligence Directive. This regulation currently applies to bigger corporates, but the scope will be broadened to SMEs in the future. By anticipating these requirements companies can ensure their long run competitiveness.
Blog
Corporate Sustainability Due Diligence Directive
This blog post is your guide for the Corporate Sustainability Due Diligence Directive which, once approved, will impact around 5000 companies across the EU. Here we explain what it means, how it affects your business, and what you will need to do to comply.
READ ARTICLE
Podcast
'Beyond the Ballot' podcast
Competitiveness and sustainability: how can these two terms make peace in the next EU mandate? And how can we make sure organisations retain their competitiveness within the EU? How can we ensure the EU plays a solid role in revitilising the economy in the face of competition from China and US? Watch Episode 2 of our podcast on YouTube.
listen on spotify
Eliza Druta
Hi, my name is Eliza and I am curating this newsletter to bring Brussels’ main sustainability insights to your inbox, every month. Do not hesitate to reach out should you need more information on the newsletter’s content or if you have suggestions for our next editions.
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