/CIRCULAR ECONOMY

02.04.2022

The European Union takes another step in the green consumption revolution, with new initiatives emerging...

The green consumption revolution is already underway and took another important step on March 30th with the publication of new proposals within the European Green Deal. The objective of these new goals is to make sustainable products the norm in the European Union.

In this way, the focus is on promoting circular, renewable, and recyclable business models, as well as empowering consumers for the green transition. The new rules aim to transition almost all physical products in the EU's economy to be more sustainable, less environmentally degrading, and energy-efficient throughout their entire lifespan.

"Ecodesign”

Although the concept of "ecodesign" dates back to the early 1990s, it is gaining more strength in recent years. Its use emphasizes reducing environmental impacts and production costs, and it is essential for the circular economy, a strategy that aims to maximize the value of products for as long as possible.

The concept is applied in the conception phase of merchandise. In other words, sustainability considerations need to be incorporated from the very beginning. The European Commission states that product design is responsible for 80% of the environmental impacts that will occur throughout its life cycle.

As a result, the new proposals focus on expanding the range of products covered by "ecodesign" rules and deepening the standards. This means that new requirements will be imposed on more products and services.

According to the European Commission, the new rules build upon existing ones and have shown "impressive results in reducing EU energy consumption and significant cost savings for consumers." In 2021 alone, the existing "ecodesign" requirements resulted in a savings of 120 billion euros for consumers. Additionally, there was a 10% reduction in annual energy consumption during product manufacturing.

Now, the proposed standards will go beyond energy savings. All products produced within the EU must be "durable, reliable, reusable, repairable, easy to maintain, refurbishable, recyclable, and energy-efficient."

Consumer empowerment

Following the findings and proposals of the latest report by the Intergovernmental Panel on Climate Change (IPCC), the new package of measures in the European Green Deal emphasizes the role of consumers in the ecological transition.

In recent years, the academic community has highlighted the need to support supply-focused sustainability policies (aimed at large farmers and industries) with incentives for projects that target demand (aimed at changing consumption habits of the population, aligning producers with social sustainability desires).

According to the latest IPCC report, simple changes in habits that do not have a significant impact on quality of life could quickly bring benefits in reducing carbon dioxide emissions. Among these changes are, for example, reducing the consumption of GHG-intensive meat production and using alternative transportation.

"If we do not change our consumption patterns, it will not be possible to achieve the European Green Deal, simple as that!" said Didier Reynders, EU Commissioner for Justice. Reynders further asserts that most consumers in Europe are willing to transition their habits, but there are still many cases of "greenwashing" actions.

Greenwashing and access to information

"Greenwashing" occurs when companies or individuals falsely highlight sustainable characteristics in products to attract consumers concerned about the consequences of their consumption habits. The term can be translated as "greenwashing" or "green makeup."

The most effective way to combat this practice is to impose transparency rules on companies. This way, consumers will have access to all the necessary information to make the most sustainable decisions.

Among the measures of the European Green Deal is the prohibition of the use of generic terms on packaging, such as "Green" or "Eco," as well as other information about durability and repairability.

"It's time to end the 'take, make, break, and throw away' model, which is very damaging to the planet, our health, and the economy," said Frans Timmermans, Executive Vice-President of the European Green Deal.

Changes in the market

A study conducted by the UN Global Pact Network Brazil in partnership with Stilingue, a social media monitoring company, published in 2021, revealed that the ESG (Environmental, Social, and Governance) theme had a six-fold increase in the number of searches from 2019 to 2020.

"This analysis allows us to say that companies have a great opportunity to explore actions of their brands more effectively," said Rodrigo Helcer, CEO and co-founder of Stilingue.

Globally, the scenario is the same. Increasingly, the reports published by publicly traded companies focus on the sustainability measures that the company adopts or plans to implement.

In the financial market, ESG funds gain popularity year after year. According to Rob Berger, a Forbes advisor, "[...] more and more people also want their money to reward companies that have a positive impact on the environment and society."

Other initiatives that use technology as an ally in transitioning consumption habits are also gaining strength. This is the case with "Smart Contracts" that can incorporate real-life data into the blockchain and automatically reward people who change their consumption patterns towards a more sustainable life.

The advantage of technology is enabling the purchase and sale of assets conditioned to terms in a reliable manner among people worldwide, anonymously, and without the need for a central controlling entity. In other words, technology can evaluate individual behavioral changes and automatically compensate them based on pre-established criteria.

Previously, only large producers could be evaluated and subsequently rewarded for sustainability measures, such as emissions reduction and the resulting benefits in carbon credit certificates. Now, the entire population can have access to these advantages.

Sources:

The Best ESG Funds Of May 2022 – Forbes Advisor

The Sustainable Products Revolution: the New European Commission Proposal » Renewable Matter

Estudo revela a evolução de práticas ESG no Brasil (noticiasustentavel.com.br) Research: Actually, Consumers Do Buy Sustainable Products (hbr.org) New proposals to make sustainable products the norm (europa.eu)

Pacto Ecológico Europeu | Comissão Europeia (europa.eu)