Destruction of unsold products: what brands need to do to comply with ESPR

Ecodesign has become an essential pillar in the strategy of companies seeking to reduce their environmental impact. With the adoption of the Ecodesign for Sustainable Products Regulation (ESPR ) by the European Union, a new legal framework aims to ensure that marketed products comply with strict sustainability and life-cycle management criteria, including the way unsold products are handled. This regulation marks a decisive turning point for brands, and imposes specific measures to avoid the unnecessary destruction of unsold products.

Why is the destruction of unsold products a major issue?

According to the European Commission, millions of still-usable products are destroyed every year, contributing to increased waste and CO2 emissions. In the European Union, an estimated 4% to 9% of unsold textiles never reach the consumer.

ESPR aims to counter this trend by imposing clear obligations on companies. Brands must now rethink their management of unsold goods, to avoid systematic destruction and favor more sustainable solutions.

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At what point in the manufacturing process can a product be considered an "unsold consumer product"?

Once a consumer product has been made available on the market but has not been sold, or has been sold but returned by a consumer, it is considered an unsold consumer product. These must be final products. Product components or intermediate products are not considered consumer goods.

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ESPR's obligations regarding unsold products

The text of ecodesign regulation 2024/1781 stipulates that unsold products must be managed sustainably. Here are the main obligations arising from it:‍

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1. Annual report on unsold products: Every year, companies must declare the quantities and types of unsold products, as well as their management (donations, recycling, sales at reduced prices, etc.). This requirement is reinforced by thetransparency obligation detailed in article 24, which requires companies to publish this information on their website. This report could be integrated into the CSRD obligations for companies subject to sustainability reporting.

How will the reporting obligation apply to company structures? Can a report for the entire group of companies be included on the website?

Article 24 requires economic operators to publish information on unsold consumer products on their websites. It is up to the economic operator to determine how to disclose the required information according to the structure of his company, as long as the information is published on his website in a clear and visible manner. Consolidated disclosure by a parent company is possible, for example by referring to this consolidated disclosure on the subsidiary's website.

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2. Ban on destruction: For certain categories such as clothing and clothing accessories, a strict ban on destruction will apply two years after the regulation comes into force for large companies, and six years for medium-sized companies.

Does the definition of destruction include product recycling?

Destruction is defined as the intentional deterioration or scrapping of a product as waste, with the exception of destruction for the sole purpose of preparing the product for reuse, including refurbishment or remanufacturing operations. This means that destruction covers the last three activities in the waste hierarchy, namely recycling, other forms of recovery (including energy recovery) and disposal.

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3. Priority to reuse or recycling: companies are encouraged to explore alternatives to destruction, such as resale or donation to associations. Recycling materials is also highlighted as a viable option, especially in sectors such as fashion and electronics‍

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How can brands prepare?

Inventory valuation and forecast optimization:

The first step to avoiding unsold stock is optimized inventory management. Thanks to high-performance forecasting tools and management systems, brands can better anticipate demand and reduce overproduction.

Resale and donation strategies :

Many companies are turning to platforms for reselling second-hand or discounted products, particularly in the fashion and electronics sectors. Donations to associations or partnerships with charities are also viable options.

Recycling and reusing materials :

Investment in recycling technologies can enable companies to reintegrate unsold materials into their production chain, thereby reducing their environmental impact.

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Benefits for brands

Complying with ESPR doesn't just mean avoiding regulatory sanctions. For brands, these new obligations also present opportunities:

• Enhanced reputation: By demonstrating their commitment to sustainability, brands can improve their image with consumers who are increasingly concerned about the environmental impact of the products they buy.
• Reduced storage and destruction costs: Reusing or reselling unsold products enables companies to avoid the high costs associated with destruction and prolonged storage of products.
• Access to government incentives: Some regulations provide incentives for companies that adopt sustainable practices and minimize the destruction of their products.

Conclusion

ESPR requires a paradigm shift for brands. It's no longer a question of simply producing and selling, but of rethinking the entire product life cycle, including the management of unsold products. By adopting more sustainable strategies, companies can not only comply with legislation, but also strengthen their competitiveness by meeting the growing sustainability expectations of consumers and regulators.

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