In 2024 and beyond, there will be more regulations that will impact the retail and e-commerce sectors. We know there is a lot to keep track of, and it can feel overwhelming. However, it’s critical to keep up with the new laws and regulations. This helps you avoid fines and also contributes to making retail and e-commerce shopping more sustainable.
We cover a few of the upcoming regulations to be aware of in this article.
So, let’s dive in!
The most recent sustainability proposal impacting retailers is the Green Deal. The Green Deal is “a set of proposals to make the EU’s climate, energy, transport, and taxation policies fit for reducing net greenhouse gas emissions by at least 55% by 2030.” The aim is to make Europe the first climate-neutral continent.
It was adopted by the European Council in 2020, and since then, there have been laws and regulations put forth to keep the European Union (EU) on track to meet its ambitious goals. The proposal also aligns with and honors the Paris Agreement, which was put forth in 2015 and finalized in 2021. This agreement is focused specifically on preventing global temperatures from increasing.
The Green Deal is specific to the EU but has global implications. Any companies that want to do business in or with an EU member state must abide by these regulations.
The products sold in stores and online all need to be sourced, produced, shipped, sold, and eventually face the end of their life and be disposed of sustainably. Therefore, it is inevitable that retailers are impacted by laws and regulations implemented to support the deal.
We’ll cover several upcoming regulations that impact you as a retailer or e-commerce business in 2024 and beyond.
More laws and regulations have already been implemented under the deal; some don’t directly impact or apply to you as a retailer or e-commerce business. In this article, we’ll cover the main ones you should be aware of and prepared for.
To be able to substantiate sustainability claims and practices, there needs to be proper reporting in place. That’s where these reporting regulations come in! Transparency and accountability are key objectives in all of the reporting regulations.
The main objective of the ESRS is to specify which sustainability information a business needs to report on to be in line with the Green Deal. It will ensure everyone is reporting on the same metrics and standards so it’s easier for the EU to track progress, and for consumers to more easily understand claims made by companies about their sustainability efforts. It can become confusing if every company uses own metrics and methods. If everyone is reporting in the same way, everyone’s life becomes easier!
The ESRS focuses on reporting in three main areas:
Currently, not all companies are subject to the regulation. However, this is mostly small to medium businesses that aren’t listed in regulated markets. Make sure you do some digging to be sure of whether or not you are required to follow the ESRS. Expect to be prepared to fulfill this regulation in 2025 or 2026, depending on the size of your company.
The Corporate Sustainability Reporting Directive (CSRD) is legislation that, “…requires companies to publish regular reports on their environmental and social activities.” This regulation expands the areas companies need to report on and expands the types of companies that need to report. With this regulation, even the smaller retail and e-commerce companies need to be reporting under the CSRD.
Just like with the ESRS, companies will need to report in areas of governance, environmental impacts, and social impacts.
Companies that check two out of the following three requirements are subject to this regulation.
The CSRD is intended to expand the scope of the older Non-Financial Reporting Directive (NFRD). This means it will impact more businesses in the EU. If you’re a smaller retailer or e-commerce company, this would be the regulation to check out first to see if you’re subject to it.
Depending on your company, you could be impacted by the CSRD between 2025 to 2027.
Since the Green Deal is an EU proposal, it makes sense we’ve been talking mostly about reporting regulations that impact EU member states. However, it does impact any companies that are a part of the business model of an EU member state. This, along with environmental concerns being incredibly high around the world, is leading other countries like the United States to implement reporting regulations.
The US SEC proposal for climate-related disclosure is very similar in its objectives to the ESRS and CSRD—it simply is a regulation that directly applies to US companies. It would require US companies to disclose their impacts on the environment. It would require them to disclose in the areas of:
Depending on your company and where your company is located, this could impact your business this 2024 filing year or come into effect between 2025 and 2027.
Now, let’s discuss a couple of proposals that are outside of the reporting realm.
The EU Sustainable Product Initiative’s goal is, “to make sustainable products the norm on the EU market and reduce their overall environmental and climate impacts.” It relates to the circular economy aspect of the Green Deal in wanting the end-of-life of a product to be considered at the very beginning of its life—the design stage. The initiative’s objective is to create standards around how to make products sustainable from design. This means products will need to be made more “durable, reliable, reusable, upgradable, repairable, easier to maintain and refurbish, and be energy and resource-efficient.”
It also will encourage products to be made out of recycled materials, and ensure products are made out of materials that are easy to recycle and upcycle. The proposal will apply to any physical product on the market, except for a few select industries.
It will require more transparency and information to be provided to consumers about your products, how sustainable they are, and how to care for them during and at the end of their life.
The regulation has not yet passed, so companies don’t have to worry about being compliant now. Yet, it’s good to be aware of this initiative and to start preparing for the requirements.
The Right to Repair Act has roots in the US and the EU. The legislation applies mainly to electronics like mobile phones and computers, but there is a movement to extend its scope to the fashion industry.
In the US, it is not yet passed at a federal level— meaning each state decides its own rules as to how the law must be applied. Currently, four states have enacted legislation related to the right to repair.
In the EU, the right to repair is already in force in some industries like electronics. The legislation wants to encourage companies to offer the option of repair and refurbishment before offering a new product to the customer.
The retail and e-commerce sectors are facing a wave of sustainability regulations. While keeping up with these changes might seem overwhelming, it’s a golden opportunity to shape a more sustainable tomorrow.
It will be important to avoid fines and to continue nurturing your brand’s reputation among consumers who prioritize sustainability.
We’ve highlighted a few upcoming regulations, but the key is to stay informed. So, make sure you’re regularly researching and consulting with sustainability experts to ensure you’re on top of it all. By proactively embracing these changes, your business can not only survive but thrive in a sustainable future.
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