Why you need to know about Environmental, Social and Governance (ESG) factors
March 2022; Environmental, social and governance – ESG explained, the EU Commission is presenting today a package of European Green Deal proposals to make sustainable products the norm in the EU.
As announced in the Circular Economy Action Plan, the Commission is proposing new rules to make almost all physical goods on the EU market more friendly to the environment, circular, and energy efficient throughout their whole lifecycle from the design phase through to daily use, repurposing and end-of-life.
The Commission is also presenting today a new strategy to make textiles more durable, repairable, reusable and recyclable, to tackle fast fashion, textile waste and the destruction of unsold textiles, and ensure their production takes place in full respect of social rights.
A third proposal aims to boost the internal market for construction products and ensure that the regulatory framework in place is fit for making the built environment deliver on our sustainability and climate objectives.
Finally, the package includes a proposal on new rules to empower consumers in the green transition so that consumers are better informed about the environmental sustainability of products and better protected against greenwashing.
With today’s proposals, the Commission is presenting the tools to move to a truly circular economy in the EU: decoupled from energy- and resource dependencies, more resilient to external shocks and respectful of nature and people’s health. The proposals build on the success of EU’s existing Eco-design rules, which have brought remarkable reductions in EU’s energy consumption and significant savings to consumers. In 2021 alone, existing eco-design requirements saved consumers €120 billion. The rules have also led to a 10% lower annual energy consumption by the products in scope.
By 2030, the new framework can lead to 132 more of primary energy savings, which corresponds roughly to 150 bcm of natural gas, almost equivalent to EU’s import of Russian gas.
The EU Green Deal is now becoming reality
What does this mean for companies? Will they become ‘veterans’ who think of change in terms of risk and cost management? Or will they be ‘reformers’ – It’s clear that a business’s ESG strategy is becoming more and more significant when it comes to securing tenders and ensuring engagement from customers. Moreover today’s company’s consider their brands to be pivotal to their success. It’s therefore crucial that leaders understand the importance of ESG and its impact on brand value and long-term business viability.
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