FOCUS ON SUSTAINABILITY
The ESPR sets out a range of requirements( including product durability, reusability, upgradeability and reparability). These are all requirements which can be accessed and validated via DPPs.
DPPs— the steel industry’ s route to circularity
DPPs( Digital Product Passports) stand at the heart of the EU’ s sustainability movement and are set to be mandated across the specified product groups( including the steel and furniture sectors). The delegated acts that are soon to be announced will provide steel companies with the exact requirements they need to ensure that the DPP mandate is met and their products satisfy the sustainability criteria.
DPPs, by design, act as a lynchpin for sustainability efforts by facilitating the sharing of key information on the circularity credentials of a product across the value chain. They act as a digital record of a physical product, securely keeping track of data related to its sustainability characteristics e. g. the carbon footprint of its production and more.
Through the transparent insight that they provide, DPPs will support steel companies in streamlining compliance efforts and reducing the administrative burdens associated with this EU movement.
New ESPR regulation
The Ecodesign for Sustainable Products Regulation( ESPR), which entered into force on 18 July 2024, is the cornerstone of the European Commission’ s approach to more environmentally sustainable and circular products. Products, and the way we use them, can significantly impact the environment. Consumption in the EU can, therefore, be a major cause of climate change and pollution.
The priority products for ecodesign and energy labelling requirements are steel and aluminium, textiles( with a focus on apparel), furniture, tyres and mattresses. These were selected based upon their potential to deliver on the circular economy.
The ESPR is part of a package of measures that are central to achieving the aims of the 2020 Circular Economy Action Plan and fostering the transition to a circular, sustainable and competitive economy. It will contribute to helping the EU reach its environmental and climate goals, double its circularity rate of material use and achieve its energy-efficiency targets by 2030.
Tackling multiple circularity pressures
Beyond ESPR compliance, the EU’ s recently published Steel and Metals Action plan and forthcoming Industrial Decarbonisation Accelerator Act( IDA Act) further highlight the need for steel companies to increase their sustainability criteria.
As the act focuses on setting sustainability, resilience and‘ Made in Europe’ criteria, EU steel manufacturers who comply with the ESPR will be better placed to satisfy this subsequent regulation, win larger contracts and advance their eco-image.
EU steel manufacturers that align with the ESPR can prove low-carbon intensity and high recyclability via the regulation’ s Digital Product Passport( DPP) mandate, placing them at an advantage for procurement criteria. This is also significant when noting the Working Plan’ s emphasis on product circularity and greater recyclability, highlighting how firms that are strategic in their compliance approach can satisfy two legislations at once via DPPs.
Implications for UK steel industry
The UK steel industry has held a longstanding relationship with the EU, particularly as a key target for UK steel exports. If UK manufacturers do not meet the ESPR requirements, they risk being cut off from the market. This is particularly important when we note how competitive the industry already is, and the need for modern steel manufacturers to remain‘ up to date’ and timely if they wish to remain relevant in this competitive global marketplace.
Brexit has also largely affected the steel industry, with the sector facing various challenges after the country’ s departure from the EU. As the loss of EU-funded research and development programmes has affected innovation and competitiveness while increasing administrative burdens, compliance with the EU’ s ESPR can help to‘ soften the blow’ for steel manufacturers by ensuring that firms remain‘ competitive’ from a sustainability perspective.
As both the EU and UK governments decided in May this year to link the two
regions’ Emissions Trading Schemes( ETS), steel businesses across the EU marketplace are now exempt from the Carbon Border Adjustment Mechanism( CBAM) costs and administrative burdens. Without this linkage or the improved market access in place, UK producers faced the prospect of increased trade friction with the EU. Solidifying this strong relationship with the EU for UK steel manufacturers is essential when we note that around 75 % of UK steel exports are destined for the EU.
In this context, aligning with the EU’ s ESPR is not just a matter of regulatory compliance; it’ s a chance to strategically fuel this relationship. As the EU doubles down on sustainability and circularity, steel producers that fail to meet these standards risk damaging access to a key market. Compliance with ESPR offers the opportunity to future-proof operations, strengthen ties with the EU and commit to a greener future.
An eco-future on the horizon
The EU is leading the charge when it comes to setting the green agenda for the modern steel sector via various complex regulations. To survive this shift in tides and the need to remain relevant in an increasingly eco-climate, EU steel companies must start considering compliance now with the EU movement or risk being shut out imminently.
The inclusion of DPPs remains integral to a business’ s compliance journey, supporting the steel sector to increase its eco-image and sustainability footprint through the granular and extensive data provided.
With timelines for the delegated acts now established( some taking effect as early as 2026 for sectors such as steel) businesses face significant changes in the near future. Steel manufacturers who delay action not only risk non-compliance but also the loss of their competitive edge. n
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