The EU is rewriting the rules of global trade through its sustainability agenda. What began as a domestic effort to green Europe’s economy is now shaping how businesses worldwide will have to operate. Measures such as the Ecodesign for Sustainable Products Regulation (ESPR) will have major consequences not only for European companies but also for their global suppliers.
For EU businesses, compliance means aligning their own operations while ensuring supply chains can deliver the data and materials required. For non-EU businesses, continued access to the EU market will depend on adapting to standards developed outside their domestic frameworks. In both cases, early preparation can transform compliance from a risk into a competitive advantage.
This is the second article in our series on supply chain compliance for EU and non-EU suppliers. In our first piece, we looked at the impacts of sustainability due diligence laws. Here, we focus on product-related measures – the ESPR, the Digital Product Passport (DPP), and ecomodulation – and explore how they will affect suppliers and manufacturers at different stages of production.
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The Challenges of Going Green
The EU’s green transition is designed to raise the bar for product sustainability. By requiring all goods placed on the Single Market to meet higher standards, Brussels is effectively exporting its rules worldwide. This creates two very different realities.
EU-based companies benefit from alignment between their domestic systems and EU legislation. They have access to regulatory guidance, structured industry consultations, and, in many cases, support schemes. Non-EU suppliers, by contrast, must adapt to standards developed outside their regulatory environment, often at significant cost and with limited support. Certification, data sharing, and new design requirements can be a heavy lift for businesses already operating on thin margins.
The Commission recognises the global ripple effect of its initiatives, and has pledged to assess international impacts and to engage with partner countries. While this is welcome, it does not remove the urgency for businesses to take immediate action and prepare for what is on the horizon.
The Definition of ‘Manufacturer’ and Production Tiers
When discussing legislation like the ESPR, it’s critical to first understand the term “manufacturer”, as it can be misleading. Legally, it refers to the economic operator i.e. the brand or company marketing a product under its trade name in the EU – even if production is outsourced. In practice, the factories that make fabrics, assemble garments, or process raw materials are categorised as supply chain actors. These actors carry significant obligations, including providing data to brands and authorities, opening facilities for verification, and maintaining documentation to prove compliance.
For EU businesses, this means compliance risk does not stop at the border of their own operations. It is embedded throughout the supply chain, and the ability to demonstrate conformity depends on cooperation across multiple tiers of production.
Understanding The Production Tiers
The definition of the production levels or tiers within a supply chain is not standardised in legislation, but we will provide a general guideline to serve as a basis for our analysis in this article. As an example, within the textile sector, production is often mapped across the following tiers:
- Tier 0: Retail and Distribution – Offices, distribution centres, retail locations
- Tier 1: Finished Product Assembly – Cutting, sewing, packaging
- Tier 2: Material Production – Printing, tanning, weaving
- Tier 3: Raw Material Processing – Spinning, dyeing
- Tier 4: Raw Material Extraction and Production – Agriculture, livestock, forestry
By outlining these tiers, we will illustrate where legislation is expected to touch. For example, durability requirements may be most visible at Tier 1, while chemical disclosures and management will focus heavily on Tier 2. Understanding this structure is essential for businesses planning compliance strategies.
Effects of Product-related Policies on The Global Supply Chain
The EU’s product-related legislation will affect many sectors placing goods on the Single Market. While the exact implications will vary by industry, the direction of travel is clear: manufacturers and suppliers at all tiers will, over time, face stricter requirements on product design, material inputs, and the sharing of verified information.
To illustrate the practical impact, we draw on examples from the textile sector – a supply chain where durability, recycled content, and chemical use are already under close scrutiny. These examples highlight challenges that are equally relevant for other industries adapting to the same obligations.
Ecodesign for Sustainable Products Regulation
The ESPR workplan makes it clear that the EU ambitions go beyond resource efficiency to establish wide-ranging rules on how products are made and marketed. For suppliers, this translates into new obligations not only in design and production, but also in documentation and testing.
Physical Durability
Products will need to meet minimum performance thresholds – for instance, garments may need to withstand a certain number of washes, while electronics may need longer-lasting components. For EU brands, this translates into stricter specifications for their suppliers. Thinking of a global textile supply chain, for example, Tier 1 garment factories may need to adjust production to reinforced trims, stronger finishes, and source higher-performing fabrics. For Tier 2 spinners and weavers, it could require delivering materials that meet more demanding standards. More need for testing and certification are also expected to increase costs, but could create space for differentiation among suppliers who can demonstrate quality and reliability.
Recycled Content
Minimum recycled content levels will be required in a wide range of products, with transparency to consumers becoming mandatory. This will place pressure on suppliers to integrate recycled materials, supported by reliable traceability and certification systems. Post-consumer recycled content tends to be prioritised, making sourcing more complex for all sectors. While compliance will involve additional costs, those who build early capacity, which could mean investing in post-consumer textile recycling, for example, will gain a strategic advantage.
Substances of Concern
Suppliers will need to disclose information on hazardous substances, including where they are located in the product and how they should be handled. This requirement will be most significant in industries with high chemical use, such as textile finishing, electronics manufacturing, and plastics production. In textiles, this is particularly relevant for Tier 2 facilities engaged in finishing processes such as dyeing. Stronger chemicals management protocols will be essential, as will transparent documentation. While compliance may raise costs, it will also stimulate innovation in safer materials and improve trust with customers and regulators.
Digital Product Passport
The Digital Product Passport will serve as a central tool for collecting and sharing sustainability information along the value chain. Brands will be responsible for creating the passports, but suppliers at multiple tiers will need to provide accurate, verifiable data. The extent to which the DPP will impact textile suppliers will depend on the final ESPR provisions and the detailed information requirements are still to be defined. Tier 1 suppliers are the most likely to be directly affected, while the implications for tiers 2, 3, and 4 will vary according to the specific data obligations.
Ecomodulation
Ecomodulation, introduced through the Waste Framework Directive (WFD), will link product sustainability criteria directly to fees under Extended Producer Responsibility (EPR) schemes. An eco-modulation, or ecomodulated fees, offers brands a reduced or higher EPR fee on each product they sell on the EU market. For suppliers, it creates indirect but significant pressure to deliver products that allow their clients to claim the financial incentives. Because many of the criteria are expected to mirror those under the ESPR, preparing for ecodesign requirements is the best way to prepare for ecomodulation as well.
Strategic Steps for EU and Non-EU Players
EU-based organisations and non-EU players will face different challenges under the new framework, but both must adjust quickly to meet the new requirements. The key is to move from simple awareness to concrete action, which is why we outline below the strategic steps we see as most urgent.
- Strengthen internal standards: Although not fully ready yet, start aligning durability testing frameworks, recycled content tracking, and chemicals management with anticipated ESPR eco-design rules.
- Invest in traceability systems: Build the ability to track recycled content and substances of concern across multiple tiers, supported by credible certification.
- Prepare for data exchange: Develop secure systems for collecting and sharing information to support Digital Product Passport requirements.
- Engage suppliers early: Communicate compliance expectations clearly and collaborate to build capacity where gaps exist.
For non-EU suppliers specifically:
While these guidelines apply to all suppliers, we recognise that non-EU suppliers face unique challenges – juggling compliance with both EU regulations and domestic requirements, often with limited visibility into evolving EU rules.
To stay ahead:
- Work with trusted certification bodies to demonstrate compliance and build credibility with EU partners.
- Track EU policy developments proactively to avoid last-minute surprises.
- Position yourself as an early adopter of key requirements to gain a competitive edge and strengthen relationships with EU buyers.
Key Takeaways
EU product legislation is setting a new global benchmark for how goods must be designed, produced, and commercialised. For EU companies, it means managing compliance across complex supply chains; for non-EU businesses, it will decide whether they can access the market at all. The real task now is not to wait for final details, but to prepare based on what is already known. Those who do, will be better positioned to navigate regulatory scrutiny and shifting customer expectations.
As always, our experts will continue to provide in-depth analyses of the developments that matter most for businesses within and beyond the EU’s borders, offering clarity on how EU rules translate into real challenges and opportunities. If you have questions or other specific topics you would like us to examine, feel free to contact us via our online form or at info@ohanapublicaffairs.eu. Your perspectives help enrich the conversation!