EUROPEAN COMMISSION Brussels, 30.3.2022 SWD(2022) 85 final COMMISSION STAFF WORKING DOCUMENT



IMPACT ASSESSMENT REPORT

Accompanying the document Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL

amending Directives 2005/29/EC and 2011/83/EU as regards empowering consumers for the green transition through better protection against unfair practices and better information























































{COM(2022) 143 final} - {SEC(2022) 166 final} - {SWD(2022) 86 final}



Table of contents 1.Introduction: Political and legal context 2.Problem definition 2.1.Problem 1: Consumers lack reliable information at the point of sale to make environmentally sustainable consumption choices 2.2.Problem 2: Consumers face misleading commercial practices related to the sustainability of products 2.3.What are the problem drivers? 2.4.How will the problems evolve without intervention? 3.Why should the EU act? 3.1.Legal basis 3.2.Subsidiarity: Necessity of EU action 3.3.Subsidiarity: Added value of EU action 4.Objectives: What is to be achieved? 4.1.General objectives 4.2.Specific objectives 5.What are the available policy options? 5.1.What is the baseline from which options are assessed? 5.2.Description of the policy options 6.What are the impacts of the policy options and how do they compare? 6.1.Problem 1: Consumers lack reliable information at the point of sale to make environmentally sustainable consumption choices

6.2.Problem 2: Consumers face misleading commercial practices related to the sustainability of products 7.Preferred policy options 8.How will actual impacts be monitored and evaluated? Annex 1: Procedural information 1.Lead DG, Decide Planning/CWP references 2.Organisation and timing 3.Consultation of the RSB 4.Evidence, sources and quality Annex 2: Stakeholder consultation 1.Introduction and overview of the consultation strategy 2.Consultation activities and tools 3.Evidence, sources and quality 4.Main stakeholder feedback per consultation activity 5.Feeding the consultation results into the Impact Assessment Annex 3: Who is affected and how? 1.Practical implications of the initiative 2.Summary of costs and benefits Annex 4: Analytical methods 1.Selection of criteria and sub-criteria for assessing the impacts of the policy options 2.General approach to assess the various impacts

3.Socio-economic impacts 4.Approach to monetisation of costs and benefits Annex 5: Additional data and explanation of estimates of consumers and environmental impacts 1.Problem 1: Consumers lack reliable information at the point of sale to make environmentally sustainable consumption choices 2.Problem 2: Consumers face misleading commercial practices related to the sustainability of products Annex 6: Overview of relevant existing and upcoming national legislative initiatives Annex 7: Overview of EU legislation relevant for the problems the initiative aims to address Annex 8: Impacts of the policy options – detailed assessment 1.Problem 1: Consumers lack reliable information at the point of sale to make environmentally sustainable consumption choices 2.Problem 2: Consumers face misleading commercial practices related to the sustainability of products Annex 9: Detailed results from the Cost and Benefit Analysis and from the Multi-Criteria Analysis 1.General approach to compare the various option/options 2.Presentation of the results per sub-problems Annex 10: Monitoring indicators Annex 11: Options discarded at an early stage 1.Problem 1: Consumers lack reliable information at the point of sale to make environmentally sustainable consumption choices 2.Problem 2: Consumers face misleading commercial practices related to the sustainability of products Annex 12: Consequences of the problems for Consumers, the Market and the Environment 1.Consequences of Problem 1 2.Consequences of Problem 2

Annex 13: Analysis of product scope for providing durability/reparability information



Glossary Term or acronym Meaning or definition CEAP Circular Economy Action Plan CRD Consumer Rights Directive DCD Digital Content Directive CBA Cost-benefit analysis CPC Consumer Protection Cooperation LCA Life-Cycle Assessment MCA Multi-criteria analysis OEF Organisation Environmental Footprint OEFSR Organisation Environmental Footprint Sector Rules OPC Online Public Consultation PEF Product Environmental Footprint PEFCR Product Environmental Footprint Category Rules SGD Sale of Goods Directive SPI Sustainable Product Initiative UCPD Unfair Commercial Practices Directive



1.Introduction: Political and legal context The European Green Deal sets out a comprehensive strategy to transform the EU into a fair and prosperous society, with a climate-neutral, resource-efficient, clean and circular economy in which economic growth is decoupled from resource use and where negative impacts on natural capital and biodiversity are reduced. To deliver the European Green Deal, there is a need to rethink a number of EU policies and among them also production and consumption. The aim of reforms is to encourage the needed changes both in consumer and business behaviour. To achieve this two-fold objective, the Circular Economy Action Plan (CEAP) and the New Consumer Agenda set out several mutually reinforcing and complementary actions. A number of initiatives are being taken already with the aim to ensure that products, both goods and services, sold to EU consumers are fit for the above objectives. Given that the current consumption of products is recognised to represent an unsustainable burden on the environment, this Impact Assessment (IA) presents policy actions to facilitate the needed changes in consumer behaviour to achieve climate and circularity objectives under the European Green Deal. As the initiative aims to deliver on the European Green Deal, and thus to reduce the burden of consumption on the environment, it covers primarily environmental sustainability. However, as per its mandate, the initiative aims to tackle social and ethical aspects of sustainability where relevant, i.e. in relation to sustainability labels and digital sustainability information tools. This is due to the fact that labels and tools already widely present on the market often cover other aspects of sustainability, and thus fall within the problem definition identified by this initiative. Data from a 2009 Eurobarometer show that 83% of EU-27 citizens considered a product’s impact on the environment an important element when deciding which products to buy. Moreover, many European citizens believe that “changing the way we consume” is the most effective way to tackle environmental problems. The COVID-19 crisis does not seem to have dampened the public’s awareness of this need to address climate change, nor their willingness to do so. Studies even suggest that the crisis has re-intensified citizens’ support for tackling environmental problems. When asked about the long-term impact of the COVID-19 crisis, between 66% and 76% of consumers surveyed in 4 EU countries in May 2020 said they “will buy products that are better for the environment, even if they cost more”. The challenge is to unlock this potential through policy measures that empower, support and enable European consumers to play an active role in the green transition. In one of its recent resolutions, the European Parliament has called on the European Commission to show strong political ambition when designing this and other related initiatives. It calls specifically to develop measures on the provision of pre-contractual information on the lifespan and reparability of products as well as measures to combat premature obsolescence or greenwashing among other aspects. In the recent Council Conclusions on the New Consumer Agenda, Member States have “welcomed the Commission’s intention to propose measures in order to promote sustainable consumption by improving consumers’ right to accurate and effective information, and to better protect them against certain practices such as unsubstantiated green claims and greenwashing”. With such rules, the EU27 as one of the largest economies in the world, can act as a standard-setter for options to encourage sustainable consumption in other jurisdictions. Objective and scope of this initiative Within the area of environmental sustainability, this initiative focuses on those aspects of environmental sustainability which can be most appropriately addressed by horizontal consumer law. As foreseen in the CEAP and the New Consumer Agenda, this initiative tackles the identified problems via a revision of consumer law, setting general requirements that would complement more targeted rules contained in sectoral legislation, e.g. on specific products or product groups. It therefore focus on empowering consumers in their decision-making process, and does not consider the use of other non-consumer law instruments that may in addition provide further solutions for better empowering consumers for the green transition, such as, for example, fiscal policy instruments or sectorial policy instruments. As per its mandate under CEAP, this consumer law initiative will tackle problems identified with the consumer’s decision-making process at the point of sale and business-to-consumer commercial practices (i.e. any act, omission, course of conduct or representation, commercial communication including advertising and marketing, by a trader, directly connected with the promotion, sale or supply of a product to consumers). It will address the provision of reliable consumer information, in particular the fact that consumers lack reliable information at the point of sale for choosing more environmentally sustainable products. It will also strive to better protect consumers against unfair commercial practices, such as greenwashing, early obsolescence of consumer goods or non-transparent voluntary sustainability labels and digital information tools, which are not compatible with the green transition. Results from a consumer survey carried out to support this initiative show that a lack of reliable information about products’ environmental sustainability, reparability and lifespan feature among the main obstacles preventing consumers from adopting more sustainable consumption behaviours. According to recent consultations, 85% of respondents reported being unsatisfied or only partially satisfied with the environmental information available to them, due (among other factors) to the fact that such information is generally not sufficient to support consumer decision-making. Another survey showed that 82% of the participants agreed that it is difficult to find information on how long a product will last and on its reparability. In addition, 86% agreed that they would like to receive better information on how long a product will last and 83% agreed that they would like to receive better information on how easy it is to repair a product. These findings are also confirmed by the results of the Open Public Consultation carried out for this initiative. Based on these findings, the initiative considers the provision of information on the environmental characteristics of products, addressing in particular the provision of information about durability (“how long will a product last before it needs to be replaced or repaired?”, “will it break/become obsolete earlier than expected or than what has been communicated by the trader?”) and reparability (“can consumers know whether a product can easily be repaired?”). More durable and more reparable products can not only lead to savings for consumers in that consumers will have to spend less money on replacement products, but can also bring environmental benefits, in that less pollution and waste are emitted if products are repaired and/or last longer. These two parameters are identified as highly relevant to help consumers assess a product’s environmental sustainability, and are equally relevant from a consumer’s economic perspective, . This initiative also addresses certain misleading commercial practices which prevent consumers from making sustainable consumption choices. These practices include early (or premature) obsolescence. This occurs when a product fails prematurely or lasts for a shorter period of time than consumers can reasonably expect. Another misleading commercial practice considered by this initiative is that of ‘greenwashing’, which occurs when a trader attempts to present an environmentally responsible public image in a way that is unfounded or misleading. This often takes the form of making unclear or not well-substantiated environmental claims. This initiative addresses such practices as they relate to key aspects of environmental sustainability and can under certain conditions already be addressed under existing consumer law. As per its mandate under CEAP, this initiative also seeks to improve the transparency and credibility of sustainability labels and digital information tools: in this respect, and only when it comes to the options aimed at addressing this problem, as mentioned above and further specified in Section 5, this initiative uses a broader concept of sustainability that also includes social and ethical aspects, given that sustainability labels available on the market also cover such a wider range of sustainability attributes.

Other environmental sustainability and circularity aspects are explicitly not covered in this IA as they are already regulated elsewhere or may not be fit to be regulated in a horizontal consumer law instrument. For example, information on the energy efficiency of goods is not considered in this IA as it is already regulated by the mandatory EU Energy Label. Recycling aspects are also already covered by product design and packaging rules or waste legislation. Moreover, multiple other sector specific initiatives are being prepared and undertaken in the context of the Circular Economy Action Plan, such as in areas like plastics, textiles, buildings or food. Notwithstanding this, some of the problems addressed in this initiative in fact relate to all aspects of environmental sustainability. Insofar as this initiative addresses misleading environmental claims, it addresses claims relating to all aspects of environmental sustainability, including, for example, recycling aspects. Similarly, in addressing unreliable sustainability labels and digital information tools, this initiative addresses labels and tools relating to all aspects of sustainability, including all aspects of environmental sustainability. Interaction with existing legislation and upcoming initiatives As lex generalis, this initiative will provide for general consumer protection rules that will be complemented by other EU-level technical or sector-specific instruments (lex specialis), when they provide for more detailed rules. This applies to existing rules (for example: ecolabels, eco-design measures, food labelling legislation) or upcoming initiatives. There will thus be no change to the current relationship between environmental and product policy legislation and consumer law instruments. As further demonstrated in Section 5, this initiative is self-standing and developed in full coherence with the upcoming Green Claims Initiative and the Sustainable Products Initiative (adopted together with this initiative), both also announced in CEAP. While these initiatives are linked in their purpose to enhance sustainable production and consumption, they do so by focusing on different market participants, at different stages of the value chain. They also have differing product scopes and introduce different types of requirements. Indeed, this initiative will focus on the demand side, and more particularly at enhancing the environmental sustainability information provided to consumers at the point of the sale and at better protecting consumers from practices that could mislead them and thus interfere with the integrity of their transactional decisions, luring them away from sustainable consumption choices. To do so, it will focus on the obligations of traders towards consumers. The objective of the Green Claims initiative will be to introduce certain requirements in relation to environmental claims on products and organisations. The initiative would establish methodological requirements on how environmental claims are communicated and substantiated. The main objective of the Sustainable Products Initiative (SPI) is to introduce sustainability requirements for products placed on the market, thus targeting manufacturers. The SPI will create a framework that allows the setting of both minimum requirements and information requirements for specific product or groups of products. The initiative should expand the scope of the Ecodesign Directive to a wider range of products, and to new types of requirements to better cover the life cycle of products, circularity and possibly social aspects. Information requirements set through SPI can help consumers distinguish the relevant products based on their sustainability performance (the information required will depend on the product and can range from the origin of materials to environmental performance, durability, reparability, chemicals of concern, handling at the end of life etc.). The SPI also aims to establish a digital product passport which would give access to such information along the value chain, with differentiated access to consumers, businesses and compliance authorities. The initiative examined in this IA would similarly contribute to the aim of allowing product differentiation by intervening at the point of sale and facilitating consumer access to relevant information, i.e. as regards to the durability or reparability of products. In this respect, the SPI will act as a lex specialis vis-à-vis horizontal consumer law information requirements by providing further information on the product or group of products in question in accordance with the specific requirements of the SPI. For further details on the interaction between the initiative subject to this Impact Assessment and other EU initiatives currently under preparation, please see Annex 7. In addition, as regards food products, this consumer law initiative is completed by actions announced in the Farm to Fork Strategy . In particular, the Commission announced that it will make a legislative proposal for a sustainable food system and will examine ways to create a sustainable food labelling framework that covers, in synergy with other relevant initiatives, the nutritional, climate, environmental and social aspects of food products. As lex specialis, such a labelling framework would thus further specify the rules set out under general consumer law (and therefore those flowing from this initiative). Additional regulatory and non-regulatory initiatives will also be developed to address specific groups of goods and services, such as ICT, electronics, textile, packaging or telecommunications, again, under the lex specialis logic. Finally, this initiative in conjunction with other initiatives in preparation, will also contribute to the right to repair as announced in the New Consumer Agenda, by giving consumers certain horizontal rights regarding access to information on reparability or by better protecting consumers against early obsolescence practices (including a lack of reparability). Results of previous evaluations In 2017, the EU Consumer and Marketing Law and the Consumer Rights Directive underwent a Fitness Check and evaluation, respectively. The findings from this exercise pointed primarily to the need to improve awareness, enforcement of the rules and redress opportunities to make the best of the existing legislation and highlighted a limited range of necessary changes due to digitalisation. Given the focus on enforcement and digitalisation, there were no specific conclusions in relation to the contribution of the consumer acquis to sustainable consumption, an issue which in fact gained further political prominence a number of years later with the announcement of the European Green Deal. Nevertheless, whenever possible and relevant, this Impact Assessment draws on the findings and conclusions collected in this exercise. 2.Problem definition In spite of consumers’ willingness to contribute to a greener and more circular economy in their everyday lives, their effective and active role in this green transition is hampered by a lack of reliable information at the point of sale to make environmentally sustainable consumption choices (Problem 1) and by misleading commercial practices related to the sustainability of products (Problem 2). As mentioned in Section 1 above, this Impact Assessment will address primarily the lack of reliable information related to products’ durability and reparability, as well as misleading practices related to the sustainability of products. A further justification for the selection of these particular aspects of reliable information and these particular misleading practices is provided below. These problems are the consequences of two types of drivers. On the market side, there is a lack of incentives to provide reliable environmental sustainability information and not to engage in certain practices. In addition, the regulatory framework fails to specify which information consumers should be provided with as regards these sustainability dimensions and does not address effectively certain misleading practices running counter to the aims of the green transition, making difficult effective enforcement. In turn, Problem 1 and Problem 2 translate into consequences for consumers (detriment, lack of trust), businesses (uneven playing field, compliance costs) and the environment (non-realised benefits that a more sustainable consumption would bring). An overview as well as a more detailed analysis of the various stakeholder consultations conducted to measure the extent of the problems identified in this Impact Assessment can be found in Annex 2. 2.1.Problem 1: Consumers lack reliable information at the point of sale to make environmentally sustainable consumption choices When comparing products and making purchase decisions, evidence suggests that consumers often lack reliable information at the point of sale on products’ environmental sustainability. This includes information about the environmental characteristics of products, their durability/lifespan and their reparability. Detailed evidence identifying the lack of reliable information on these particular aspects as particularly problematic is presented below.

2.1.1.Lack of reliable information on the environmental characteristics of products (Sub-problem 1.1) According to the consumer survey conducted for this Impact Assessment, half of the respondents say they look actively for information about the environmental characteristics of products, such as their environmental impacts or performance, greenhouse gas emissions, water use etc. However a large number of them find that the existing information is simply insufficient. 2.1.2.Lack of reliable information on the lifespan of goods (Sub-problem 1.2) Evidence shows that information on the “expected lifespan” of goods (i.e. years of life, hours of use, number of cycles etc.) is hardly ever made available to consumers. For instance, the mystery shopping exercise carried out as part of the Study supporting this Impact Assessment showed that in more than 95 % of cases, information relating to the goods’ expected lifespan was not available. This is confirmed by observations from consumers and stakeholders, including manufacturers and retailers, surveyed for this Impact Assessment. Information about the “guaranteed lifespan” is naturally only available when a commercial guarantee is offered by the trader (corresponding to the number of years covered by the commercial guarantee). Moreover, research shows that while consumer products are regularly offered with a commercial guarantee (in 66% of the mystery shops at least one commercial guarantee was offered, 38% of which were included in the price of the product), the information on such commercial guarantees, and the way that consumers are being charged, is often unclear, imprecise or incomplete making it difficult for consumers to compare between products and to distinguish this commercial guarantee from the (compulsory) legal guarantee. As regards information on the availability of software updates, the mystery shopping exercise carried out for this Impact Assessment showed that in only 1.25% of cases the product contained an indication that software updates and/or upgrades were ensured and in only one case information about the period of the commitment of the software updates was provided given (i.e. 12 months). Under the Sale of Goods Directive, applicable as of 2022, a seller will have to supply the consumer with software updates for a period of time which the consumer might reasonably expect so as to ensure that the product remains in conformity. Nevertheless, the provision of information at the point of sale on the length of time during which a particular seller decides to provide software updates will not be required. 2.1.3.Lack of reliable information about products’ reparability (Sub-problem 1.3) Information on products’ reparability, such as reparability scoring, on the availability of repair services, spare parts or repair manuals of goods, is not widely available to consumers at the point of sale. For example, over 80% of the respondents pointed out that it is difficult to find information on how easy it is to repair a product. This is also corroborated by the results of the mystery shopping exercise carried out in the context of this Impact Assessment: information about reparability aspects such as availability of spare parts in general, period of time of availability of spare parts or certified repair services was available only in 19% of cases. Contrary to this, representatives from the industry and businesses surveyed for this Impact Assessment mostly indicated that they believed information on reparability is widely available. 2.2.Problem 2: Consumers face misleading commercial practices related to the sustainability of products Consumers are too often confronted with misleading commercial practices preventing them from taking sustainability into account in their purchases. Such practices occur at various stages of the consumption journey: during the advertising stage, the purchasing stage or during the use of the products. The following main categories of such practices have been identified in the consultations for this Impact Assessment as particularly problematic: -Early obsolescence; -Greenwashing; -Non-transparent and non-credible sustainability labels, and digital information tools (e.g. mobile applications comparing the sustainability performance of selected products). These practices have also been singled out by consumer protection authorities, for instance, in the course of the Fitness Check of EU Consumer and Marketing Law (2017) or by Consumer Protection Cooperation (CPC) authorities who have highlighted difficulties to carry out enforcement actions on these issues (see Section 2.3 on drivers). Further evidence justifying the selection of these practices as particularly problematic is presented below. 2.2.1.Consumers are sold products that do not last as long as they could or consumers expect (“early obsolescence”) (Sub-problem 2.1) Early obsolescence refers to instances where a product cannot be used for the expected purpose and breaks earlier than expected Within early obsolescence, “planned obsolescence” refers specifically to a commercial policy involving deliberately planning or designing a product with a limited useful life so that it will become obsolete or non-functional after a certain period of time. Faster obsolescence of products is a growing concern for consumers. In their reply to the Open Public Consultation to support this IA, 76% of respondents (and 89% of citizens) mentioned they had experienced an unexpected failure of products in the past 3 years. ICT products (47%), small household appliances (20%), clothing and footwear (19%), other electronics (18%), large household appliances (16%) and software programmes (15%) were the most often cited product categories for which unexpected failure had been experienced. Available studies suggest that certain consumer goods are not designed to last long and/or have a shorter lifetime than would have been expected for such products in the past,. For example, an EU funded project, identified that a significant share of goods tend to fail right after the end of the minimum legal guarantee period (between second and third year) based on consumer reports in seven Member States. Similarly, a 2015 German Study concluded that the percentage of large household appliances replaced by consumers within five years due to technical defects more than doubled, from 3.5% in 2004 to 8.3% in 2012. Several other studies carried out,, present evidence that the lifespan of some goods is becoming shorter, with technical failures being the main reason for product replacement. Interestingly, while issues related to the failure of goods may vary depending on the characteristics of the goods, interim findings of the above mentioned EU funded project conclude that “a limited number of problem types account for four out of five failures, most of which refer to a specific part of a product, many of which appear to be shared across product categories (e.g. batteries, printed circuit boards and LCD screens)” .

Another study shows that in the case of smartphones and tablets, a large proportion of the devices are being replaced after two years mostly because of a few but frequent problems: (1) the battery had stopped working and could not be replaced by the user; (2) the screen had cracked and could not be replaced by the user; or (3) the manufacturer was no longer willing or able to support the software. Recently, national consumer organisations have also received more than 25 000 complaints concerning two components of a gaming console (i.e. its two controllers) which was failing prematurely and made difficult to repair or replace, rendering the console obsolete (well before the lifespan of 7 to 10 years advertised by its manufacturer) and in spite of the manufacturer being aware of the problem. Early obsolescence can thus also be linked to a limited but frequent set of practices, such as whether a component that is broken can be replaced by consumers and/or whether they are prevented/hampered in doing so by the trader, whether traders are taking sufficient and quick remedial actions when they become aware of a frequent default in one of their products etc. On top of these cases of early obsolescence, there have also been a number high-profile cases of planned obsolescence, such as software updates having an impact on the performance of phones and accelerating their replacement, although consumers were not informed thereof.It is important to note, however, that a number of manufacturers/retailers argue that planned obsolescence does not exist as a practice and that shorter lifespans are impacted by consumer behaviour such as poor maintenance and increased use. 2.2.2.Consumers are faced with the practice of making unclear or not well-substantiated environmental claims (‘greenwashing’) (Sub-problem 2.2) Environmental (“green”) claims are defined as: the practice of suggesting or otherwise creating the impression (in a commercial communication, marketing or advertising) that a good or a service has a positive or no impact on the environment or is less damaging to the environment than competing goods or services. Green claims can be explicit (for instance, highlight the savings in greenhouse gas emissions due to a change of packaging), general (statements such as “green” product, “good for the environment” etc.) or even implicit (e.g. use of the colour green, certain images etc.). Whether a green claim can be said to have been made would therefore often require a concrete assessment on a case-by-case basis. A green claim can be made using a label or otherwise. Therefore, the options considered to combat certain types of misleading green claims, whether in this initiative or in the forthcoming complementary Green Claims Initiative, would apply to labels insofar as those labels make a green claim of the type in question. A further specific problem relating to sustainability labels will be addressed in section 2.2.3 below. A recent Commission study on environmental claims found that 80% of webshops, webpages and advertisements surveyed contained green claims. 45% of the total were implicit claims (imagery and colours suggesting environmental benefit), 35% were explicit claims (logos, labels and textual claims) and 21% were vague, general claims. Such a high prevalence was also identified in the mystery shopping carried out for this Impact Assessment. The aforementioned study assessed 150 environmental claims and found that a considerable share (53.3%) of them provide vague, misleading or unfounded information on products’ environmental characteristics across the EU and in a wide range of product groups (both in advertisement as well as on the product). These results have also been confirmed by the outcome of a recent “sweep” carried out by the Consumer Protection Cooperation authorities. Out of the 344 sustainability claims assessed throughout November 2020, authorities had at least a reasonable doubt that the claim may be false or deceptive in almost half of the cases (42%), and therefore that these could potentially amount to an unfair commercial practice under the UCPD. CPC authorities considered that in more than half of the cases (57.5%), the trader did not provide sufficient elements allowing for a judgement about the claim’s accuracy. In many cases, authorities had difficulties identifying whether the claim covered the whole product or only one of its components (50%), whether it referred to the company or only certain products (36%) and which stage of the product’s lifecycle it covered (75%). 37% of the claims included vague statements (such as “green”, “nature’s friend”) likely to deceive consumers. Most stakeholders consulted for this Impact Assessment agreed that greenwashing is a problem, with the noticeable exception of industry representatives. The results of the stakeholder consultations on the potential future use of the Product Environmental Footprint (PEF) and Organisation Environmental Footprint (OEF) methods show that 56% of respondents have already encountered misleading green claims. 2.2.3.Consumers are faced with the use of sustainability labels and digital information tools that are not always transparent and credible (Sub-problem 2.3) Sustainability labels are considered in this Impact Assessment as any voluntary “trust mark, quality mark or equivalent” that aims to set apart and promote a product, a process or a business with reference to environmental, social or ethical aspects. These labels are developed by a wide array of bodies, organisations, legal or private entities (including public bodies, industry associations, for-profit as well as non-profit organisations, individually or in partnership). They can usually be found directly on products and in communication materials. Ecolabels are those sustainability labels which aim to set apart and promote a product, a process or a business with reference to environmental aspects in particular. Digital information tools, in the context of this Impact Assessment, are software tools which have as their primary purpose to provide information to consumers on the sustainability of products with respect to environmental, social or ethical aspects. Both sustainability labels and digital information tools are used to promote products to consumers which are more sustainable, by providing information on their performance with respect to environmental as well as social and ethical aspects. Numerous voluntary labels have as a stated objective to guide consumers towards more sustainable choices. There were around 230 ecolabels active in Europe in 2020 of which 48% cover some social attributes. 901 labelling schemes have been identified across Europe in the food area, and there have been 100 private green energy labels mapped in the EU. However, many labels are subject to different levels of robustness, supervision and transparency , which may raise questions about their reliability. Sustainability labels can be distinguished according to their governance model: those that are run by third party certification schemes, whose role is to ensure that companies wishing to use the labels will abide by a set of specific criteria (these certification schemes can be public, private, or non-profit); and those based on “self-declarations” not verified by any third party. Consumers appear not to be aware of such distinction. This proliferation of labels combined with their varied governance models implies that producers and retailers can apply a variety of strategies in opting for a specific sustainability label. Very often, this also translates into companies displaying various labels to vouch for the sustainability of their products. Interestingly, during the consultation conducted for this Impact Assessment, industry representatives were more likely to identify the proliferation of sustainability labels as a problem compared to consumers and their representatives. The analysis carried out in preparation for this Impact Assessment shows shortcomings as to the transparency of labels. For 27% of the labels examined, the standards/criteria which the label is meant to guarantee were not available online. 16% of labels did not disclose their conformity assessment method. The type of managing authority and the result of the assessment were also often not disclosed. Only 17% of labels indicated providing for a dispute settlement or appeal mechanism with regards to the accuracy of the information certified by the label. In addition, other evidence points to the problem of credibility of labels. For instance, only 35% of the labels analysed for this Impact Assessment required specific metrics or data to substantiate their compliance with the criteria. A previous analysis showed a higher level of compliance with a set of principles by labels relying on a certification scheme compared to those based on “self-declaration”. However, some shortcomings have also been identified in relation to certification schemes. Some of those that have been examined have no or limited information on their supervisory structure, on how their requirements are developed or on how certification and inspections actually occur. According to the stakeholder consultations, the “proliferation of non-transparent online information tools that are providing information/comparisons on the sustainability performance of products” was identified as an obstacle to enhanced consumer participation in the circular economy by 11% of consumers. It therefore does not seem to be considered as equally important a problem as labels. This could, however, change in the future, as such digital information tools are likely to become more and more important in influencing consumers’ behaviour due to the increased digitalisation of society. 2.3.What are the problem drivers? The drivers behind these problems have been identified as market failure, as well as an insufficiently adapted regulatory framework. The impact of these drivers on each of the problems and sub-problems identified is presented in Figure 1 below. It also outlines the consequences of each of the sub-problems for consumers, for the market and the environment, which are presented in more detail in Annex 12, as well as the specific and general objectives of the initiative, which are discussed further in Section 4.

Figure 1.Problem tree As can be seen from this problem tree, in relation to Problem 1 specifically (Consumers lack reliable information at the point of sale to make environmentally sustainable consumption choices), one driver is that there are insufficient incentives for companies to provide consumers with reliable information on the environmental characteristics, lifespans, and reparability of their products unless the expected benefits in terms of increased demand outweigh the costs of providing that information. A second driver is that under existing EU instruments, making information on products’ environmental sustainability available is voluntary and/or limited to certain product categories and/or features,. In absence of common rules, this leads to different levels of protection of consumer rights among Member States when certain Member States would start regulating while others not. The EU’s general consumer protection rules (namely the Unfair Commercial Practices Directive 2005/29/EC - UCPD and the Consumer Rights Directive 2011/83/EU - CRD) generally require traders to provide consumers with information that they need in order to make an informed, independent transactional decision. These rules, however, do not specifically require the provision of reliable information about products’ environmental characteristics, lifespan or reparability. In relation to Problem 2 (Consumers face misleading commercial practices related to the sustainability of products), one driver is that manufacturers and sellers have economic incentives to manufacture and sell goods with lifespans that are shorter than they could realistically be able to achieve, so that they can reduce their costs or sell new or replacement goods to consumers . Furthermore, concerning greenwashing, the increased interest of consumers in environmentally sustainable products provides an incentive to market products as environmentally friendly to gain a competitive advantage (or at least not to put oneself at a disadvantage). A second driver is the lack of precision of the EU consumer legal framework, making it difficult for national authorities to address the aforementioned issues effectively. The consumer legal framework also does not allow Member States to adopt stricter consumer protection rules given its full-harmonisation character. The UCPD, for instance, does not provide specific rules on environmental claims. The general provisions of the UCPD also apply where traders present environmental claims in ways that are unfair to consumers. However, in the absence of more specific provisions, its principle-based approach requires a case-by-case assessment from enforcers including of the negative impact of the misleading practice on the integrity of the consumers’ transactional decision. 2.4.How will the problems evolve without intervention? Without the intervention of this initiative, the evolution of the problems and their drivers will depend on the interaction between various forces, including: -the evolution of the interest of consumers in sustainable products; -the trends regarding private incentives to provide information on the environmental characteristics, durability and reparability of products and incentives to fight greenwashing, early obsolescence and unreliable or non-transparent sustainability labels and information tools; -national initiatives and EU-level related initiatives that attempt to address the identified problems. The potential impact on the evolution of the problem of two EU initiatives in particular currently under preparation (the upcoming Green Claims Initiative and the Sustainable Products Initiative adopted together with this initiative) discussed in Section 5 below when analysing the baseline from which the options considered are to be assessed. Member States are likely to continue to unilaterally adopt options to provide consumers with environmental sustainability information and to address more directly the problematic practices identified in this Impact Assessment (see Annex 6). For instance, France’s Circular Economy Law, introduced in 2020, obliges producers, importers, distributors or any other person placing electrical and electronic products on the market to provide the reparability index of their product to sellers of their products or any other person requesting it. The aim is to inform consumers about the ability to repair five groups of products (televisions, smartphones, laptops, lawnmowers and washing machine). To take an example of a legislative proposal currently under consideration, in July 2020, Italy tabled a proposal which would define and ban the practice of planned obsolescence and introduce criminal sanctions for the producer or distributor of goods who mislead the consumers on a number of issues including planned obsolescence. The interest of consumers in sustainable products is expected to increase. With this increase it is expected that the incentives of companies to provide consumers with information on the sustainability of their products will also increase and so will the share of products with information on their environmental characteristics. This will, on the one hand, reduce the extent of problem 1.1 (lack of reliable information on environmental characteristics of products), but this could potentially increase the incentives to adopt greenwashing practices and to develop or use sustainability labels that are not fully transparent and credible and so exacerbate problems 2.2 and 2.3. Digitalisation is also likely to lead to an increase of “sustainability apps” aimed at comparing products based on their sustainability parameters. The number of sustainability labels may stagnate given their already high number, but the number of one-brand sustainability labels may still increase. This will lead to an increase of the extent and consequences of the problem, including an increased mistrust of consumers on sustainability labels and a reduction of their effectiveness in shifting consumption towards more sustainable products. The increase in the market share of sustainable products will compensate for the total increase in consumption and is expected to lead to a reduction of the overall environmental footprint of private consumption. However, the effective reduction of environmental impacts will depend on whether the information regarding the sustainability of the product is reliable or not. Without further regulatory intervention at national or EU level, this reduction may actually be limited because, as mentioned above, the incentives for companies to practice greenwashing could increase as demand for sustainable products rises. Because of these opposite forces, only a limited reduction of environmental impacts is expected. 3.Why should the EU act? 3.1.Legal basis The EU exercises a shared competence with Member States in the area of consumer policy. As stipulated in Article 169 of the Treaty on the Functioning of the European Union (TFEU), the EU shall contribute, inter alia, to protecting the economic interests of consumers as well as to promoting their right to information and education in order to safeguard their interests. Possible legislative action to be taken in relation to the problems analysed in this IA would be based on Article 114 TFEU, which requires the Commission to take as a base a high level of consumer protection in the context of the completion of the internal market, in conjunction with Article 169 TFEU. In addition to pursuing internal market and consumer protection objectives, the proposal will also pursue a high level of environmental protection, by unlocking opportunities for the circular, clean and green economy. However, internal market and consumer protection objectives are predominant and the environmental benefits are complementary. Therefore it is appropriate to use Article 114 TFEU and Article 169 TFEU as the legal basis. 3.2.Subsidiarity: Necessity of EU action The problems analysed in this impact assessment are widespread and have a Union-wide character with the same drivers across the EU. All European consumers lack the necessary information to make more sustainable choices and are faced with the same problematic practices. As the problems identified affect all European consumers, only action taken at EU level will be effective. Other factors which make EU action necessary are the volume of B2C cross-border trade in the EU, as well as the fact that Member States are starting to address the problems identified in this impact assessment unilaterally. In the absence of EU-level action, these national initiatives, while bringing certain benefits to consumers and the environment at the national level, could further intensify and lead to a fragmentation of the Single Market, bringing in turn legal uncertainty and raising compliance costs. Indeed, the size and intensity of cross-border trade are high enough to make such economic activity in the Single Market extremely vulnerable to inconsistent or even merely divergent policy choices by Member States.

The UCPD provides, in principle, fully harmonised rules regarding unfair commercial practices harming consumers' economic interests. The CRD provides fully harmonised rules concerning pre-contractual information requirements in distance and off-premises sales. Therefore, depending on circumstances, new legislative action at national level within the scope of these Directives could go against the fully harmonised acquis that is already in place. Widespread infringements of consumer rights have now been legally defined by the revised CPC Regulation, which provides a powerful procedural framework for cooperation between national enforcers in this respect. But, to be fully effective, enforcement across the EU must also be grounded in a common and uniform substantive law framework. In other words, to be fully effective, the EU consumer acquis must more clearly define which greenwashing and obsolescence practices should be considered as unfair. Feedback of stakeholders on the Inception Impact Assessment shows a particularly strong support for EU action capable of bringing about a common approach to the provision of sustainability information to consumers and to limit the proliferation of labels and misleading green claims on the Single Market, for instance. 3.3.Subsidiarity: Added value of EU action The 2017 Fitness Check of the Consumer and Marketing Law as well as the evaluation of the Consumer Rights Directive confirmed that the horizontal EU consumer and marketing law acquis has contributed towards a high level of consumer protection across the EU. It has also ensured a better functioning internal market and helped to reduce costs for businesses offering goods and services cross-border. As this initiative aims at completing this acquis to address problems that have become more acute with the green transition, and to render its enforcement more effective, it is also expected to achieve the same added-value. EU action can ensure that consumers have the same environmental sustainability information across the Single Market which will help them to make informed purchasing choices, thus reducing the risk of a legal fragmentation of the Single Market and the consequences that this would entail for cross-border trade and consumer protection. This initiative would also alleviate the difficulties faced by national authorities in enforcing the existing principle-based provisions of the UCPD in such complex areas as misleading green claims and obsolescence practices. By specifying further when and how such practices would qualify as unfair, it would increase the effectiveness of consumer protection within the EU. By building in a targeted way on the EU consumer law acquis, this initiative will also rely on the full spectrum of enforcement mechanisms, as strengthened under the Better enforcement and modernisation Directive, the Representative Actions Directive and the revised CPC Regulation. This initiative will cover only the aspects that Member States cannot achieve on their own and where the administrative burden and costs are commensurate with the specific and general objectives to be achieved. Proportionality will be carefully designed in terms of scope and intensity and using qualitative and quantitative assessment criteria to ensure that the options considered will cover all relevant stakeholders, but will be tailored to the needs they must address. None of the options analysed in this impact assessment goes beyond what is necessary to achieve the objectives set in the following section. 4.Objectives: What is to be achieved? 4.1.General objectives The general objectives of the policy options discussed in this Impact Assessment flow from the Treaties, the Charter of Fundamental Rights and the commitments taken by the EU to tackle climate and environmental-related challenges: -Ensure a smooth functioning of the Single Market, for the benefit of both consumers and traders (Article 114 TFEU, 169 TFEU). -Foster the role of consumption in achieving the EU’s climate goals and protecting the environment; 4.2.Specific objectives The specific objectives are to: -Enable informed purchasing decisions by consumers to foster sustainable consumption. This addresses Problem 1. -Eliminate practices that mislead consumers away from sustainable consumption choices. This addresses Problem 2. -Ensure a better and coherent application of the EU legal framework thanks to clearer and more enforceable rules. This addresses both problems. Coherent application of EU rules is indeed necessary to ensure effective consumer protection and a level-playing field for businesses within the Single Market.

To allow for a more granular assessment of the effectiveness of the various options to be presented in Section 5 in meeting these three specific objectives, these objectives will be further broken down into 6 criteria, as shown in Annex 9. Each option’s impacts will be measured against (1) the quality of consumer decision making, (2) circularity and sustainable consumption, (3) consumer protection, (4) consumer trust, (5) level playing field and (6) the application of the EU legal framework. 5.What are the available policy options? 5.1.What is the baseline from which options are assessed? The baseline (Option 0 as presented in the MCA in Annex 9) does not involve the introduction of any new regulatory measures under consumer policy at EU level.

As regards Problem 1 (Consumers lack reliable information at the point of sale to make environmentally sustainable consumption choices), the extent of the problem and its consequences is expected to remain constant for most of the EU27 countries and to improve for some products in a few Member States that are/will try to address the problem with national legislation, as identified in Annex 6. The Consumer Rights Directive requires traders to provide consumers with information on, among others, the main characteristics of the goods or services. It includes specific information requirements about the existence of the legal guarantee of conformity, as well as additional commercial guarantees when provided on a voluntary basis. While the Sale of Goods Directive promotes durability of products through the legal guarantee, it only provides rights to the consumers during the minimum two-year legal guarantee period. The incentives to provide commercial guarantees included in the product price and with longer duration are not expected to change. Regarding the provision of software updates, while the application of national transposition rules of the Sale of Goods Directive from 2022 will help to ensure that consumers are supplied with software updates so that a product remains in conformity for a period of time which the consumer might reasonably expect, the comparability of product at the point of sale based on the availability of software updates will not be addressed, and is therefore expected to remain an issue. The incentives to provide information to consumers on expected/estimated lifespan are also not expected to change significantly for most products. While important new reparability requirements under Ecodesign came into force in March 2021 for a number of product categories (including more information in user manuals) , they will not address specifically the information that consumers are provided by traders on products’ reparability at the point of sale, and certainly not for all products categories. As regards Problem 2 (Consumers face misleading commercial practices related to the sustainability of products), the risk of an increase in the share of products employing these practices is expected to grow, as the environmental sustainability of products is an aspect being valued by an increasing number of consumers. The general provisions of the Unfair Commercial Practices Directive on misleading practices can be used to apply also to planned obsolescence cases when they negatively affect consumers on the basis of a case-by-case assessment. There are no specific provisions in this area in the Directive or in its Annex I (blacklist) which sets out practices regarded as unfair under all circumstances. The lack of more specific rules and the need for case-by-case assessment of the effects of the practice on the consumers makes it difficult to enforce the UCPD in this area. Some minor changes are expected to the extent of this problem due to new legal actions at the national level under existing European consumer legal framework. The general provisions of the Unfair Commercial Practices Directive apply also to greenwashing practices when those are misleading and negatively affect consumers on the basis of a case-by-case assessment. There are no specific provisions in this area in the Directive or in its Annex I (blacklist) which sets out practices regarded as unfair in all circumstances. The recent CPC screening of websites for ‘greenwashing’ , confirmed that there is a need for strengthening the legal framework to facilitate enforcement in this area. In the short term, the European Commission will further develop the guidance on the application of the UCPD to support Member States in this area. Some Member States are increasing efforts to stop these practices and may launch further enforcement cases. However, these will not help to address the drivers identified in section 2.3. The number of digital information tools (e.g. apps) to compare the sustainability performance of products may grow in a more and more digitalised world. When considering the baseline from which the options to be presented below are assessed, however, it is important to highlight at this stage two other EU-level initiatives under preparation which, while failing to adequately address the sub-problems identified in this report, will nonetheless complement the preferred policy options presented, namely the upcoming Green Claims Initiative and the Sustainable Products Initiative (adopted together with this initiative). These two initiatives and the one subject to this Impact Assessment are prepared in parallel and in close coordination to ensure their complementarity. However, notwithstanding this close coordination, the three initiatives are nonetheless separate, and while the policy options of the Green Claims Initiative and the Sustainable Products Initiative have been taken into account in the policy options (in relation to “information at the point of sale” and “misleading practices”) assessed in this Impact Assessment, it cannot be guaranteed that each of these other initiatives will be adopted and will become EU law, which is pending the upcoming ordinary legislative procedure. The baseline for this initiative (Option 0 as presented in the MCA in Annex 9), as well as the impacts of the policy options (presented in Section 6) against this baseline, were therefore calculated without taking into account any potential overlap of the impacts of these initiatives. To the extent that the options considered in this Impact Assessment overlap with the preferred policy options of these initiatives, this has been taken into account in a qualitative way in the description of the options presented in Section 5.2 below for each of the 6 sub-problems individually. The SPI could set requirements for information to be provided in relation to specific products or groups of products with the exact requirements depending on the characteristics of the relevant product(s). One possibility would be to have a machine readable symbol such as a QR code that links to a digital product passport attached to the product. The exact timeline for the implementation of any product specific information requirements under the SPI is not foreseeable, due to the fact that these would be introduced progressively through subsequent product measures. Complementary to the initiative subject to this Impact Assessment, a self-regulatory initiative has been announced in the New Consumer Agenda, which was launched in January 2021. The voluntary EU Green Consumption Pledge requires participating companies to take actions in support of sustainable consumption beyond what is required by law. It calls upon businesses in various sectors of the economy to undertake concrete, public and verifiable commitments, on a voluntary basis, to reduce their overall carbon footprint, to produce and market more sustainable products and to redouble their efforts towards raising the awareness of consumers about the impact of their consumption choices. So far, 11 companies have come forward (including two SMEs), as part of the pilot phase: they represent various sectors in the manufacturing and retail world, but also financial services and energy supply. The pilot phase of the Green Consumption Pledge will be completed by 2022, including an evaluation of the functioning of the Pledge. 5.2.Description of the policy options The policy options were established by the Commission in close cooperation with all relevant groups of stakeholders. Stakeholder opinion on possible options was sought at various stages of the development of the Impact Assessment. As a follow-up to these consultations and progress made in the development of the Impact Assessment, the main options included in the Inception Impact Assessment have been further developed and refined. Rather than focusing on the legal technique – which was the main differentiating factor in the three options outlined in the IIA – the options outlined in this Impact Assessment focus on policy solutions for each of the individual sub-problems identified. Such an approach also allows to ensure complementarity with the ongoing work on the Green Claims and SPI initiatives referenced in section 5.1. This complementarity is further outlined below in the description of the baseline from which each of the options presented are assessed. For a number of sub-problems identified, options were discarded at an early stage and are not presented in the tables below. These discarded options are presented in Annex 11. Regarding the product scope analysed for Problem 1 (Consumers lack reliable information at the point of sale to make environmentally sustainable consumption choices), four different potential product scopes were considered. These were narrow product scope (i.e. all goods with digital content), medium product scope (i.e. all energy-using goods), wide product scope (i.e. all goods with assembled parts that move relative to one another, e.g., most furniture, some suitcases, some non-energy using toys, bicycles, etc.), and very wide product scope (i.e. all consumer goods except consumables and fast moving ones, e.g. cloths, pans, bed linen). Evidence regarding the existence of the problem of limited durability and reparability, consumer expectations concerning the durability and reparability of goods (beyond the legal guarantee period), and consumer interest in receiving information on these aspects, is mostly available for the medium product scope (i.e. energy-using products); for the remaining types of products far less evidence is available. Furthermore, the availability of evidence can be considered a proxy for the size of the problem (and of the expected benefits if addressed) for the various product groups as it is reasonable to expect that research tends to focus on the most relevant problems/product categories. For this reason, while the available evidence allows for robust conclusions on the benefits of possible measures (to address sub-problem 1.2 and sub-problem 1.3) for the medium product scope, it is insufficient to soundly confirm them for a wider product scope. A detailed analysis of this assessment can be found in Annex 13. Concerning option 1.3.E in particular, no product scope was defined as this option is designed to apply wherever the information in question is made available by the manufacturer or required to be made available under applicable EU or national law, regardless of the product in question. As regards Problem 2 (Consumers face misleading commercial practices related to the sustainability of products), no specific product scope was analysed, as these practices and the options considered to address them apply regardless of product type. In order to facilitate decision-making as regards the preferred combination of policy options, the options considered to address each of the individual sub-problems under Problem 1 and Problem 2 are structured in a way that their impacts can be easily compared, and that one preferred policy option can therefore be chosen to address each sub-problem. This allows, for each sub-problem, the option with the most positive impact to be chosen as the preferred policy option. The considerations regarding the delineation of the particular policy options for each individual sub-problem is further specified below for each sub-problem in turn.

5.2.1.Problem 1: Consumers lack reliable information at the point of sale to make environmentally sustainable consumption choices 5.2.1.1. Sub-problem 1.1: Lack of reliable information about products’ environmental characteristics For this sub-problem, a number of options have been discarded at an early stage, as their added value could not be demonstrated if taken via a horizontal consumer law instrument. These options are the following: an obligation to inform on product’s environmental characteristics for all consumer products (goods and services), an obligation to warn on products with high negative impacts on the environment, an obligation to warn when there is “no proof” of good environmental performance of the product, and an obligation to inform on one single key environmental characteristic, i.e. related to climate change. Further details of these options and the reasons for discarding them is provided in Annex 11. In general, environmental characteristics of products are always specific to product groups. Depending on the product group, the relevant information on environmental characteristics to be provided at the point of sale differs significantly. For these reasons, it was concluded that a horizontal consumer law instrument would not be the appropriate place to introduce such requirements. Furthermore, the extent of this sub-problem as described in section 2.1.1 is expected to reduce significantly due to measures taken under the upcoming Green Claims Initiative and the SPI initiative. The Green Claims Initiative aims to provide a common framework for those companies wishing to provide information on the environmental characteristics of their products. In the future, the SPI initiative, future eco-design information requirements and mandatory EU labelling schemes (e.g. EU energy label) will address this problem by requiring mandatory information on certain environmental characteristics be provided for various product categories. As a result no options will be selected to address this particular sub-problem as part of this Impact Assessment. 5.2.1.2. Sub-problem 1.2: Lack of reliable information about products’ lifespan What are the options considered in order to address this sub-problem? While the three options presented below to address this sub-problem are not mutually exclusive, they are not considered in combination as this would entail significant duplication of impacts. The purpose of the division into three distinct policy options is to calculate the impacts of the options as accurately as possible, and thus to facilitate a decision regarding the preferred policy option. Description of the option Product scope Addressees Nature of intervention Option 1.2.A: Obligation to inform consumers about the expected lifespan of goods Inform consumers at the point of sale about the expected/estimated lifespan/durability of goods, in number of years, number of working cycles, other metrics inherent to the good or by means of a “durability index”.When no EU harmonised standards exist for the specific good’s category to determine the expected durability for the good in question (as is already the case for e.g. light bulbs) or until they become available (e.g. to be developed under the future SPI or Ecodesign requirements), producers would be free to decide on the exact method to assess the expected lifespan of the goods. Medium product scope (i.e. all energy-using goods) Sellers, based on the information provided by manufacturers (including information about the methodology/assumptions used by manufacturers). Amending the Consumer Rights Directive Option 1.2.B: Obligation to inform consumers of the existence (or absence) of a producer’s commercial guarantee of durability Inform consumers at the point of sale of the existence or absence of a producer’s commercial guarantee of durability – and of its length - for the entire good and for a duration of at least two years. This commercial guarantee would serve as a proxy for consumers to identify which products are expected to have a longer lifespan. Medium product scope (i.e. all energy-using goods) Sellers, based on the information provided by the manufacturers. Sellers will inform consumers about the existence or absence, while the guarantor will be the manufacturer. Amending the Consumer Rights Directive Option 1.2.C: Option 1.2.B + Obligation to inform consumers on the period of time during which free software updates will be provided In addition to Option 1.2.B, inform consumers at the point of sale about a minimum period of time (in number of years) during which the producer commits to provide free software updates, including security updates, for goods with digital elements as well as digital content and digital services to keep them in conformity, if this period is longer than the period of the producer’s commercial guarantee of durability. For option 1.2.B, medium product scope (i.e. all energy-using goods). For software updates, only for goods with digital elements) and digital content/service. Sellers, based on the information provided by the manufacturers. Amending the Consumer Rights Directive



How do these options interact with the other initiatives in preparation?

Under the Sustainable Products Initiative, specific information requirements on the expected/estimated durability for specific product categories may become available, when considered feasible and appropriate, subject to future Impact Assessments of delegated acts (under the framework legislation) and further technical work (see sub-option 4a in the Impact Assessment for the Sustainable Products Initiative). This information could furthermore be made available to consumers in the form of a Digital Product Passport (see sub-option 4b of the Impact Assessment for the Sustainable Products Initiative). As such measures would not specifically require the information to be presented in a clear and legible way at the point of sale, and would be implemented gradually and by product category, the extent of the problem and its consequences is expected to remain unchanged for many products. 5.2.1.3. Sub-problem 1.3: Lack of reliable information about products’ reparability What are the options considered in order to address this sub-problem? The structure followed by the presentation of the options for this sub-problem is as follows: Options 1.3.A, 1.3.B., 1.3.C and 1.3.D are all complementary, while option 1.3.E entails a combination of 1.3.A, 1.3.B, 1.3.C and 1.3.D with slight modifications. The purpose of the division into five distinct policy options is to calculate the impacts of the options as accurately as possible, and thus to facilitate a decision regarding the preferred policy option. Description of the option Product scope Addressees Nature of intervention Option 1.3.A: Provision of updated, user-friendly repair and user manuals Provide consumers with a user-friendly repair and user manual at the point of sale (paper or digital version). In case the seller did not receive the manual, the consumer would be informed in a prominent way that this manual is not available. Medium product scope (i.e. all energy-using goods) Sellers, but the manual is to be developed and provided by manufacturers. Amending the Consumer Rights Directive Option 1.3.B: Provision of information about how long and which spare parts are available Inform consumers at the point of sale about the spare parts that the manufacturer will make available and for how long they will remain available. In case the seller did not receive the information, the consumer would be informed in a prominent way that this commitment is not available. Medium product scope (i.e. all energy-using goods) Sellers, but the information is to be provided to the seller by manufacturers. Amending the Consumer Rights Directive Option 1.3.C: Provision of information on availability of repair services Inform consumers at the point of sale of the availability of repair services. The seller would be free to decide whether it will refer to either manufacturers’ authorised repairers or independent repairers or to both. In case no repair services are available, the consumer would be informed in a prominent way that such services are not available. Medium product scope (i.e. all energy-using goods) Sellers Amending the Consumer Rights Directive Option 1.3.D: Reparability Scoring Index Provide consumers, at the point of sale, with a repair scoring index, showing how reparable a product is (for example, with 3 to 5 classes). Until precise measurement and calculation methods are provided for specific product categories under EU legislation such as Ecodesign or SPI, manufacturers would be required to apply the general method developed by the Joint Research Centre. Medium product scope (i.e. all energy-using goods) Sellers, but the assessment to establish the scoring would be carried out by the manufacturer Amending the Consumer Rights Directive Option 1.3.E: Provision of Repair Scoring Index, or other relevant repair information on a where applicable/available basis Provide consumers, at the point of sale, with a repair scoring index, showing how reparable a product is (for example, with 3 to 5 classes), whenever this is available or required for that product in accordance with EU or national applicable laws. When no such repair scoring index is required or available, provide consumers at the point of sale with other relevant repair information when made available by the manufacturer, such as information about the availability of spare parts, including a procedure for ordering them, information about the availability of repair services, or the availability of a repair manual. Open product scope (i.e. product scope is not defined) Sellers, based on the information to be provided by the manufacturers. Amending the Consumer Rights Directive



How do these options interact with the other initiatives in preparation?

Under the Sustainable Products Initiative, specific information requirements on specific product categories may become available, when considered feasible and appropriate, subject to future Impact Assessments of delegated acts (under the framework legislation) and further standardisation work (see sub-option 4a of the Impact Assessment for the Sustainable Products Initiative). This information could furthermore be made available to consumers in the form of a Digital Product Passport (see sub-option 4b of the Impact Assessment for the Sustainable Products Initiative). As such measures would not specifically require the information to be presented in a clear and legible way at the point of sale, and would be implemented gradually and by product category, the extent of the problem and its consequences is expected to remain unchanged for most products. 5.2.2.Problem 2: Consumers face misleading commercial practices related to the sustainability of products 5.2.2.1. Sub-problem 2.1: Consumers are sold products that do not last as long as they could and consumers expect What are the options considered in order to address this sub-problem? While the two options presented below to address this sub-problem are not mutually exclusive, they are not considered in combination as this would entail significant duplication of impacts. The purpose of the division into two distinct policy options is to calculate the impacts of the options as accurately as possible, and thus to facilitate a decision regarding the preferred policy option. Description of the option Product scope Addressees Nature of intervention Option 2.1.A: Collection of evidence on early failures of products identified by authorised entities In all EU 27 countries, a collection by third party “authorised entities” (such as consumer organisations, market monitoring bodies, nominated by Member States) of evidence (results of independent testing, based on consumer complaints etc.) on certain aspects of the product’s design that could cause an early failure of the product, thus reducing its lifespan. The authorised entities would be asked to make this information available to the public via appropriate communication channels (e.g. website etc.). Fully horizontal product scope but due to its nature would only be applicable to specific cases involving durable consumer goods Authorised entities collecting this evidence, nominated by Member States. New provisions in a separate instrument Option 2.1.B: Ban of certain identified practices associated with early obsolescence Ban of specifically identified early obsolescence practices such as providing software updates resulting in slowing down goods with digital elements or digital content/service without clearly informing the consumer thereof; not providing software updates which are needed for the proper functioning of the device (in accordance with legal requirements); marketing of goods without disclosing the fact that these goods have been designed with a view to limit their durability; marketing of goods without disclosing the fact that they do not allow disassembly or repair (in accordance with legal requirements) such as not allowing the battery or the screen to be replaced by the usermarketing of goods that are designed in a way to induce the consumer into replacing their consumables earlier than for technical or other valid reasons is necessary, or to prevent the use of consumables provided by alternative producers without informing the consumer thereof. Fully horizontal product scope but due to its nature would only be applicable to specific cases involving durable consumer goods Traders that are engaged in these practices towards consumers, including manufacturers Amending Unfair Commercial Practices Directive

How do these option interact with other initiatives in preparation?

Some changes are expected regarding the extent of the problem and its consequences thanks to the improvements concerning the durability of some products (or some of the product components) and their reparability as a consequence of the Sustainable Products Initiative, when considered feasible and appropriate, subject to future Impact Assessments of delegated acts and further technical work (see sub-option 3a in the Impact Assessment for the Sustainable Products Initiative). As such measures would be implemented gradually and by product category, the extent of the problem and its consequences is expected to remain unchanged for most products. Options discarded at an early stage

Further to the options considered above, for this sub-problem the following options were discarded at an early stage as their added value could not be demonstrated: a general ban of planned/intentional/deliberate obsolescence, and setting minimum lifetimes per product category. Additional details of the content of these discarded options and the reasons for discarding them is provided in Annex 11. 5.2.2.2. Sub-problem 2.2: Consumers are faced with the practice of making unclear or not well-substantiated green claims (“Greenwashing”) What are the options considered in order to address this sub-problem? The options 2.2.A and 2.2B presented below to address this sub-problem are complementary. Option 2.2.C entails a combination of options 2.2A and 2.2.B. The purpose of the division into three distinct options is to calculate the impacts of the options as accurately as possible, and thus to facilitate a decision regarding the preferred policy option. Description of option Product scope Addressees Nature of intervention Option 2.2.A: Ban of general /vague environmental claims Ban of general/vague environmental claims (e.g., “eco-friendly”, “green”, “good for the environment”, “friend of nature”, etc.) unless the product or trader obtained recognised excellent environmental performance in accordance with applicable EU laws. All products presenting a general/vague environmental claim. Any trader engaged in such practices Amending Unfair Commercial Practices Directive Option 2.2.B: Prohibition of environmental claims that do not fulfil a minimum set of criteria Providing specific criteria for assessing the misleading nature of all environmental claims, such as: being based on robust, independent, verifiable and generally recognised evidence which takes into account the latest scientific findings; being clear and unambiguous regarding which aspect(s) of the product or its life cycle the claim refers to; relates to aspects that are significant in terms of the product’s environmental impact; benefit claimed does not result in an undue transfer of impacts on other environmental aspects; not advertising benefits that are legally required; wording, imagery and overall product presentation (i.e. layout, choice of colours, images, pictures, sounds, symbols or labels), being a truthful and accurate representation of the scale of the environmental benefit, and not overstating the benefit achieved; related to environmental achievements instead of aspirations of future environmental performance (future aspirations can be still expressed under certain conditions); if a trader uses environmental statements in its company name, product name etc., and the name is used for marketing purposes, such marketing is subject to the same documentation requirements as those which apply to all environmental claims; establishing a link to the additional information on which the substantiation of the claim is based (e.g. method used, whether third party verification is being carried out etc.). All products presenting any environmental claim. Any trader engaged in such practices Amending Unfair Commercial Practices Directive Option 2.2.C: Option 2.2A + 2.2B Combination of both options above. Combination of both options above. Any trader engaged in such practices Amending Unfair Commercial Practices Directive How do the options interact with other initiatives in preparation

The problem will be jointly addressed with the upcoming Green Claims Initiative which will help to regulate the market for environmental claims on products and organisations when made both by businesses towards consumers and by businesses towards other businesses. This initiative would establish methodological requirements on how environmental claims are communicated and substantiated. Options discarded at an early stage

Further to the options considered above, for this sub-problem the following option was discarded at an early stage, as its added value could not be demonstrated: a pre-approval of environmental claims via an EU body. Additional details of the content of this option and the reason for discarding it is provided in Annex 11. 5.2.2.3. Sub-problem 2.3: Consumers are faced with the use of sustainability labels and digital information tools that are not always transparent and credible What are the options considered in order to address this sub-problem? The three options presented below are mutually exclusive. Description of option Product scope Addressees Nature of intervention Option 2.3.A: Development of principles promoting the transparency and credibility of sustainability labels and digital information tools for voluntary uptake Development via a multi-stakeholder dialogue of a set of principles to promote the credibility and transparency of sustainability labels and digital information tools towards consumers. The organisations running the labels or information tools could decide on a voluntary basis to comply with the principles. All products bearing/presenting a sustainability label, digital information tools designed to compare the sustainability of products Organisations running sustainability labels or digital information tools designed to compare the sustainability of products Development of best practice guidelines Option 2.3.B: Prohibition of sustainability labels and digital information tools not meeting minimum transparency and credibility requirements Providing specific criteria regarding the transparency and credibility to assess the fairness of voluntary sustainability labels and digital information tools that are used in marketing towards consumers. Based on the existing provisions of the Unfair Commercial Practices Directive, this option would cover “any trust mark, quality mark or equivalent”that aims to set apart and promote a product, a process or a business with reference to environmental, social or ethical aspects. It would also cover all digital information tools designed to compare the sustainability of products. These criteria would comprise the following aspects, such as: transparency on the identity of the organisation running the label/information tool, its objectives and its functioning (e.g. decision making bodies; underlying requirements, underlying methods used, procedures for monitoring compliance); non-discriminatory accessibility to industry participants; involvement of both experts and broader group of stakeholder to validate scientific robustness as well as the social and practical relevance of requirements; existence of a compliance monitoring, to be carried out by an independent third party; existence of a complaint and dispute resolution mechanisms; existence of procedures to deal with non-compliance. All products bearing/presenting a sustainability label as marketing tool towards consumers, digital information tools for consumers to compare the sustainability of products All traders that use such sustainability labels for marketing products. Organisations running the sustainability labels or digital information tools for consumers designed to compare the sustainability of products. Amending Unfair Commercial Practices Directive Option 2.3.C: Pre-approval of sustainability labels and digital information tools via an EU body The approval of sustainability labels and digital information tools for use on the EU market would be subject to an ex-ante conformity assessment to be performed by an EU body. Approval would require conformity with the minimum requirements outlined in option 2.3.B. All products bearing/presenting a sustainability label, digital information tools designed to compare the sustainability of products Organisations running sustainability labels or digital information tools designed to compare the sustainability of products New legal provision How do these options interact with other initiatives in preparation?

Under the Green Claims Initiative several policy options in relation to possible requirements for environmental claims, including ecolabels are being considered. . As lex generalis, this initiative will provide for general consumer protection rules that will be complemented by other EU-level technical or sector-specific instruments (lex specialis), when they provide for more detailed rules. The Green Claims Initiative is such a lex specialis technical instrument. 6.What are the impacts of the policy options and how do they compare? The 16 impacts against which the policy options are assessed have been selected in line with the Better Regulation Guidelines and guided by the problem tree in Figure 1. The assessment is predominantly qualitative and complemented, when and where possible, by a quantitative assessment, which relies on estimates gathered from the literature review, stakeholder consultations and modelling work. The process for selecting the impacts and the methodology underpinning the quantitative assessment is explained in Annex 4. The appraisal period of 2025-2040 was selected as it was estimated that the measures would come into force in 2025. The standard appraisal period in which to measure the impacts of such policy measures is 15 years, in line with the Better Regulation guidelines. All monetised costs and benefits of each measure considered in the assessment are incremental to those of the baseline, which is therefore assigned EUR 0 for these impact categories. As many of the impacts are not monetisable, it was decided to conduct a multi-criteria analysis (MCA) complemented by a (partial) Cost-Benefit Analysis. The MCA includes three high-level assessment criteria: Effectiveness, Efficiency and Coherence. Each of the identified 16 impacts is a sub-criterion of one of those three high-level criteria. Detailed analyses presenting the results of the assessment of each policy option per sub-criteria can be found in Annex 8. To carry out the MCA, weights have been assigned to the criteria/sub-criteria. Furthermore, a sensitivity analysis was carried out using various weight combinations, including a default scenario and a worst case scenario. The full results of the MCA, sensitivity analysis and partial CBA can be found in Annex 9, including additional details on the methodology used. For ease of reading, the following sub-sections summarise the results of the assessment and presents them per stakeholder groups affected. The table below recaps the 16 impacts against which the options were assessed and link them with the three-high level assessment criteria they fall under as well as the stakeholders they concern directly. The values presented for monetised consumer welfare, climate change and costs are the average of those of the scenarios analysed for each measure in the preparatory study. Effectiveness Efficiency Coherence Sub-criteria Stakeholders affected Sub-criteria Stakeholders affected Sub-criteria Stakeholders affected Quality of consumer decision making Consumers Monetisable consumer welfare Consumers Coherence Application of the legal framework and coherence Circularity and sustainable consumption Environment Barriers to cross-border trade Businesses Consumer protection Consumers Climate change Environment Consumer trust in the market Consumers Other environmental impacts Environment Level-playing field Businesses Administrative burden Businesses Application of the legal framework Application of the legal framework and coherence Substantive compliance costs Businesses Indirect costs Businesses SME growth Businesses Costs to public bodies Public administration

As explained in section 5.1 above, when considering the baseline for this initiative, as well as when calculating the impacts of the options presented below against this baseline, the impacts of two other EU-level initiatives under preparation, the upcoming Green Claims Initiative and the Sustainable Products Initiative, have not been taken into account in a quantitative way, as it cannot be guaranteed that each of these other initiatives will be adopted and will become EU law, which is pending the upcoming ordinary legislative procedure. It cannot therefore be excluded that, pending the implementation of some of the measures considered in these other initiatives currently being prepared in parallel, the impacts calculated below might be subject to change. However, to the extent that the options considered in this Impact Assessment overlap with the preferred policy options of these two other initiatives, this has been taken into account in a qualitative way in the description of the options presented in Section 5.1 above, as well as in the discussion of the proportionality of the preferred options in Section 7 below. 6.1.Problem 1: Consumers lack reliable information at the point of sale to make environmentally sustainable consumption choices 6.1.1.Sub-Problem 1.2: Lack of reliable information about products’ lifespan Option 1.2.A: Obligation to inform consumers about the expected lifespan of goods Option 1.2.B: Obligation to inform consumers of the existence (or absence) of a producer’s commercial guarantee for durability Option 1.2.C: Option 1.2.B + Obligation to inform consumers on the period of time during which free software updates will be provided Impacts of the policy options Impacts on consumers: As explained in Annex 12, consumers are interested in having information about the lifespan/durability of products and are even willing to pay for it. However, the obligation to inform consumers about the expected lifespan of goods, as considered in option 1.2.A will not improve the quality of decision-making for consumers. This is because the reliability of the information provided under this option (and the comparability it would allow between products) will depend on the methodology used by companies to assess such an expected lifetime, which are likely to vary depending on the companies, therefore leading to diverging assessments within a given product category. It is also technically very challenging to estimate the lifespan of products, and the methods, indicators and techniques used will vary significantly from product category to product category. Depending on the level of effectiveness of the option in contributing to consumers purchasing alternatives that last one year longer than in the baseline, the monetisable consumer welfare is estimated to be around EUR 850 - 1 110 million for the period 2025-2040 if the information is reliable (or EUR 57 – 74 million per year). It could, however, become negative if each company decides on its own methodology. The availability of a commercial guarantee of durability signals that the respective product is of high-quality and expected to last longer. The provision of information about the existence and length of the commercial guarantee of durability as considered in option 1.2.B would avoid the technical challenge posed by the previous option of needing to assess the expected lifespan of a product, while serving as an excellent proxy for consumers to identify which products are expected to have a longer lifespan. This would avoid the technical and methodological challenges posed by the previous option of needing to assess the expected lifespan of a product. Simulations carried out for the purpose of this Impact Assessment show that, in the medium term, the share of products covered by commercial guarantees and the duration of the commercial guarantees will increase as a result of the option. The option is estimated to bring an increase of monetisable consumer welfare of EUR 1 775 – 2 465 million for the period 2025-2040 (or EUR 118 – 164 million per year). Option 1.2.C, namely option 1.2.B plus the obligation to inform consumers on the period of time during which free software updates will be provided, would (in addition to the impacts described for option 1.2.B) allow consumers to identify which products offer better conditions in terms of availability of software updates and therefore improve their decision-making process. This would be complementary to the seller’s obligations under the Sale of Goods Directive to supply the consumer with software updates for a period of time which the consumer might reasonably expect so as to ensure that the product remains in conformity. Under this option, consumers will experience a “gain”, which according to the partial calculations carried out by the supporting study is likely to be around EUR 2 355 – 3 555 million for the period 2025-2040 (or EUR 157 – 237 million per year). To address possible information overload, this information on software updates should be only provided in absence of a commercial guarantee of durability (which will cover software updates), unless the software updates are provided for a longer time than the commercial guarantee of durability. Impacts on businesses: Option 1.2.A will have a significant administrative burden on businesses, related to the production of new data to be able to provide information on the expected lifespan of products and, to a lesser extent, the tagging of the product. Business organisations have pointed to the high cost of this obligation during the consultation phase. While the obligation is on the seller, it is assumed that the seller will request this information from manufacturers. These extra costs are estimated to amount to EUR 2 435 – 2 680 million for the period 2025-2040 (or EUR 162 – 179 million per year). Option 1.2.B will impose relatively high one-off administrative burdens on businesses, primarily sellers, mostly related to adapting systems, procedures and existing data (e.g. updating websites) and to replacing price tags in physical shops (e.g. on shelves). However, it will have low recurrent administrative burdens as the activities necessary to provide the information would have been carried out in a business-as-usual scenario. These extra costs are estimated to be between EUR 890 – 1 065 million for the period 2025-2040 (or EUR 59 – 71 million per year) and would fall largely on sellers, as they are mainly linked to the display of the required information. These costs are expected to be compensated by an increase in the price of products offering a commercial guarantee (as consumers are willing to pay for longer commercial guarantees) and possibly by an increase in demand of those same products. This option will systematically increase transparency regarding the commercial guarantee offered for goods and penalise companies that do not offer or offer less attractive commercial guarantees, so contributing to a level playing field. Option 1.2.C is expected to have some further positive impact on a level-playing field as it will increase transparency about commitments regarding software update and allow consumers to compare products based on these commitments. However, the option will have costs for manufacturers as they need to decide on the period during which they will provide software updates, and communicate them to sellers. Sellers will then have costs to ensure that consumers receive this information at the point of sale. These extra costs are estimated to be between EUR 990 – 1 170 million for the period 2025-2040 (or EUR 66 – 78 million per year). Impacts on public administrations: Enforcement costs for option 1.2.A are estimated to be between EUR 86 - 96 million for the period 2025-2040 (or EUR 5.7 – 6.4 million per year). These costs will be generated by the time and expertise needed to check the information provided by businesses, which will be particularly challenging and time-consuming in the absence of