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ESG

Sustainable products

In the EU, new rules under the Right to Repair Directive will come into force on 31 July 2026, whereby products will need to meet new repairability requirements and processes for product warranties may need to be reviewed.

Under the Ecodesign for Sustainable Products Regulation, the ban on the destruction of unsold apparel, clothing accessories and footwear took effect on 19 July 2026 for large enterprises (medium-sized enterprises must comply by 19 July 2030). New secondary legislation under the Ecodesign for Sustainable Products Regulation is expected soon in relation to the product priorities identified last year, including textiles (by 2027) and furniture (by 2028).

New rules also come into force under the Empowering Consumers for the Green Transition Directive by 27 September 2026 whereby consumers must be given pre-contract information about the sustainability of the product. The EU has also announced plans to introduce a new Circular Economy Act in 2026 to address e-waste and measures regarding the single market for waste, secondary raw materials and their use in products. In the UK, the Product Regulation and Metrology Act paves the way for regulations similar to the EU in respect of reducing or mitigating products' environmental impacts. Also on 27 July 2026, the UK Government opened a call for evidence seeking views on "digital product records" (DPRs) and how the UK should approach them (e.g. Digital Product Passports), the call for evidence closes on 21 September 2026.

Packaging

In the EU, the Packaging and Packaging Waste Regulation will repeal and replace the Packaging Waste Directive on 12 August 2026. This will reduce packaging waste by setting binding re-use targets, restricting certain types of single-use packaging, and requiring economic operators to minimise packaging.

Greenwashing

In the EU, new rules on greenwashing under the Empowering Consumers for the Green Transition Directive will start on 27 September 2026. This includes a ban on unsubstantiated generic environmental claims (such as "environmentally friendly", "eco-friendly", "green", "biodegradable" and "carbon friendly"), claims based on greenhouse gas offsetting, overly-wide environmental claims (for example about an entire product when it only concerns an aspect) and misleading sustainability labels.  Although not formally withdrawn, the Green Claims Directive, which proposed to regulate the substantiation and communication of green claims, remains politically stalled.

In the UK, the ASA and CMA have continued to focus on greenwashing. In January 2026, the CMA published new guidance on making green claims across the supply chain, and we reported on ASA rulings about three fashion retailers' ads in our article here. Companies should note that, under the Digital Markets, Competition and Consumers Act, the CMA is empowered to fine companies up to 10 per cent of global turnover for breaches of consumer law, including misleading green claims. The failure to prevent fraud offence (under the Economic Crime and Corporate Transparency Act) also means that companies could now be held criminally liable for greenwashing, unless they can demonstrate reasonable procedures to prevent misleading claims and statements.

Sustainability, due diligence and disclosure

In the EU:

  • Under the Corporate Sustainability Reporting Directive (as amended by the EU Omnibus I Directive), EU undertakings and non-EU issuers with more than 1,000 employees and €450 million annual turnover must report in line with revised standards from 2028, covering financial years starting on or after 1 January 2027. Non-EU ultimate parent companies of groups that exceed €450 million annual turnover in the EU, and which have an EU subsidiary/branch with net turnover of more than €200 million, must report from 2029, on financial years starting on or after 1 January 2028.
  • Under the Corporate Sustainability Due Diligence Directive (as amended by the EU Omnibus I Directive), in-scope companies must comply with due diligence obligations by 26 July 2029 and publish required disclosures by 1 January 2030. This includes: EU undertakings with more than 5,000 employees and annual turnover of over €1.5 billion; non-EU undertakings exceeding €1.5 billion turnover in the EU; and undertakings with franchising or licensing agreements in the EU, where turnover exceeds €275 million and royalties are more than €75 million.
  • Application dates left unchanged by a simplification review, the Deforestation Free Products Regulation (as amended in December 2025) will apply from 30 December 2026 for large/medium-sized operators and from 30 June 2027 for micro/small operators. Only large and medium-sized "primary operators" (i.e., those placing regulated commodities/derived products on the EU market for the first time) remain obligated to carry out full due diligence.
  • Applicable from December 2027, the Forced Labour Products Regulation prohibits products made with forced labour being imported into/sold in/exported from the EU market.

In the UK:

  • On 25 February 2026, the Government published the final UK Sustainability Reporting Standards (UK SRS S1 and S2) for voluntary use, closely aligned to ISSB standards. The FCA has consulted on proposed amendments to UK Listing Rules, which would require listed companies to report in line with UK SRS. Separately, the Government is expected to launch a consultation later this year on equivalent changes to the UK Companies Act, which would similarly affect large private companies.
  • The Government has also consulted on requiring UK-regulated financial institutions and large companies to develop and implement credible transition plans, aligned with the 1.5°C goal of the Paris Agreement. It is yet to publish its response.
  • The Government is considering legislative options to strengthen the Modern Slavery regime, including introduction of mandatory human rights and environmental due diligence measures, and a new "failure to prevent" obligation in relation to forced labour.
  • On 23 June 2026, the Government announced its intention to move forward with its own due diligence regime in relation to forest risk commodities, aiming to deliver the necessary secondary legislation in 2027. Compared to the regime first promised in the Environment Act 2021, a new policy proposal indicates closer alignment with the EU Deforestation Free Products Regulation and a significant lowering of turnover thresholds (from £50 million to £1 million). Companies that have previously considered themselves out of scope of a future FRC regime may need to reassess.