At the same time, as sustainability becomes a growing business imperative, enterprises and consumers alike must begin to consider their actions to foster greater product circularity and ensure the marketplace is moving towards a more circular and sustainable era.

Now more than ever, particularly amidst the EU’s Ecodesign for Sustainable Products Regulation (ESPR) and the recent Energy Labelling Working Plan announcement, businesses that sell into the EU marketplace need to start implementing processes to tackle sustainability firsthand.

Why do SMEs need to act now? The EU’s ESPR and Working Plan announcement

For small and medium-sized enterprises, the EU’s ESPR isn’t just an environmental regulation with no immediate impact – but rather a game-changer that will imminently shape how companies selling in the EU marketplace (irrelevant of where they’re based) design, source, and sell products on the market.

The ESPR stands as part of the EU’s broader Circular Economy Action (CEAP) plan and was introduced last July in the hope of making “sustainable products the new norm in the EU.”

In simple terms, the regulation aims to support businesses in creating products that last longer, use less energy, are easier to recycle, and contain fewer harmful substances. It is set to apply to select product groups, including those in the electronics, furniture, and textiles sectors, and will apply to all businesses that place products within these groups on the EU marketplace – regardless of where they were produced. This process will include the mandating of Digital Product Passports (DPPs) for certain goods that fit within the specified product categories.

The urgency for this has increased with the publication of the ESPR’s first official Working Plan in April 2025. This plan outlines which sectors will be targeted first, and the timeline for detailed product requirements, also known as the delegated acts, alongside the new horizontal measures like mandatory repairability for electronics and higher recycled content in products. For certain industries, compliance deadlines could arrive as early as 2026.

For SMEs in particular, understanding product obligations now will save costly last-minute changes later. Moreover, by acting strategically and considering compliance now, companies can gain a competitive advantage, especially as sustainability becomes a key buying factor for customers and supply chain partners.

In short, the countdown has started. The ESPR isn’t just about meeting regulations; it’s about positioning your business for resilience and growth in an increasingly circular economy.

The impact of DPPs in unlocking trust and product insight

To unpack DPPs, a key component of the compliance exercise, they largely act as a digital record of a physical product, securely keeping track of information across a product’s lifecycle. This can include anything from the material used in its production, the environmental impact of its production, a record of its authenticity, and guidance for end-of-life handling. In most circumstances, this data will be accessible via a data carrier like a QR code or barcode affixed to a product and accessible by scanning with a device such as a smartphone.

DPPs will play a large role in the ESPR reaching its circularity goals by providing transparency into the lifecycle of a product. Through implementing such tools, the EU Commission aims to encourage all those in contact with a product to be more conscious of its sustainability attributes and inspire circular thinking.

For small and medium-sized enterprises, DPPs offer a powerful way to strengthen both sustainability and customer relationships. With clear, accessible information about a product’s origins, materials, and end-of-life options, SMEs can give customers the confidence to choose more sustainable options, and help them dispose of products responsibly when the time comes.

DPPs aren’t just a compliance tool; they can directly boost brand trust and loyalty. By making sustainability credentials transparent and verifiable, SMEs can demonstrate a genuine commitment to eco-friendly practices and avoid accusations of greenwashing.

Beyond providing proof to sustainability claims, DPPs can store a verified history of repairs and authenticity checks, which can be invaluable for facilitating take-back or resale schemes. This opens up opportunities for SMEs to recover products, refurbish them, and resell, extending their lifecycle and contributing to the circular economy, while creating new revenue streams in the process.

First steps for SMEs – getting to know your data

With the ESPR’s first Working Plan having been published, details concerning the list of products that the EU will prioritise are now available. As part of this, and the horizontal requirements’ focus on product repairability and recyclability, businesses across the board must begin considering their DPP compliance journey now to ensure their products meet sustainability standards.

Kicking off a business’s ESPR compliance journey can prove particularly daunting for businesses at the start of their compliance effort, particularly amidst all the regulation updates and uncertainty.

As an initial course of action, businesses should assign an employee or a team to be at the helm of their upcoming regulatory efforts. By ensuring one team member is keeping an awareness of the EU legislation, businesses can remain updated on specific industry requirements coming down the pipeline. As part of this, businesses can reach out to a DPP advisor to gain a better understanding of the mandate’s industry-specific impact and begin carving out a coherent compliance strategy accordingly.

To start getting ahead of the ESPR, knowing internal company data will prove essential. By mapping out where essential product and supply chain information is stored, both within your business and amongst your suppliers, and identifying which partners are best positioned to help in the compliance route, implementing DPPs will be a considerably more seamless process.

Once this groundwork is done, running a small-scale pilot will enable companies to consider if the DPP solution they have chosen integrates with the companies’ specifics coherently. This allows businesses to test the system works in practice, iron out any operational challenges, and gather the insights needed to understand the true scope, cost, and timeline of a full rollout.

By taking these early steps, SMEs will be better prepared to move quickly when the EU’s delegated acts are announced – turning a compliance requirement into a chance to innovate, strengthen sustainability credentials, and unlock new growth opportunities.

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