In its drive toward greater sustainability and ecological sovereignty, the EU’s ambitious Eco-Design for Sustainable Products Regulation (ESPR) builds on the framework of the European Green Deal, seeking to establish stringent new mandates for environmental design and labeling. In order to maintain access to the massive European market, all companies that want to do business in the EU must adopt the Product Environmental Footprint (PEF) method to assess a range of systemic impacts, well beyond the traditional gold standard of carbon footprint. What should C-suite executives in tech keep in mind for the next year (and well beyond into the future):
Looking ahead – IoT, sustainability regulation and tech brands
Staying ahead of sustainability regulations pose an achievable challenge for product manufacturers, especially technology companies. The tech sector already demonstrates its appreciation for “systemic solutions” through the innovation that it brings to AI and IoT. One of the fastest growing tech sectors, the Internet of Things is projected to grow to more than $650 billion by 2026. Its impact on modern consumers’ lives is inextricably interwoven with its environmental impact, both in design and application.
IoT continues to penetrate a growing diversity of industries, from agriculture to transportation to healthcare, through a growing network of interconnected devices. In the consumer market, its ubiquity was seen at CES 2024, where leading manufacturers trumpeted their latest smart home wares integrating IoT, Wi-Fi and AI: from appliances like washers, driers, refrigerators and ovens that can be controlled via smartphone, to automated whole-house products like security systems, lighting, heating and air conditioning, to AI-powered robot assistants that can learn, adapt and fulfill the needs of their human masters.
While IoT technology is being used to improve product sustainability and promote more eco-friendly manufacturing, new home devices by their inherent design are having a positive effect on the environment. They help consumers save energy, reduce water use and decrease waste. The limited-memory embedded software of IoT devices themselves consume far less power than other electronics while reducing energy use through system optimization, many using low-power or alternate energy sources to earn the label “Green IoT.”
Looking ahead, innovation and tech for the health of our planet
Nudged toward adopting a circular economy model, which brings sustainability to the beginning of the design stage instead of post-use recycling, U.S. companies must take a long view on the EU’s environmental labeling and design regulations by navigating a more responsible, viable and, ultimately, profitable path:
- Adjusting to Regulatory Changes: Tech firms, naturally disposed toward innovation, will need to understand and adapt to the complexities of ESPR, incorporating the systemic PEF method into product development, design, manufacturing and delivery. This will require adjustments in how companies assess their product lifecycle impacts, including sourcing, production and disposal, to ensure compliance with strict EU eco-standards. Among the initial changes must be broader corporate responsibility beyond carbon emissions – or more accurately, greenhouse gas emissions – which include methane, nitrous oxide and other gasses. These represent only a fraction of human-caused effects on the planet, which span fine particle emissions, resource depletion and ecosystem degradation. Measurement tools already exist, helping to facilitate the transition.
- Achieving Strategic Advantage: Companies that extend their environmental focus beyond carbon emissions can gain a competitive edge, attracting a wider base of eco-conscious consumers and aligning with global sustainability trends.
- Investing in Innovation: The lifeblood of technology is innovation. A shift towards the PEF standard drives U.S. and other companies to invest in sustainable new methods, exploring new materials, technologies and processes that reduce environmental impact. This push towards eco-design not only aligns with modern regulatory requirements, but also goads the industry towards more sustainable practices, contributing to the shared global effort against environmental defilement and climate change.
Like the cultural revolution shepherded by AI, IoT and other bold new tech, the environmental transformation led by the European Union has the public on its side. A 2023 joint study from McKinsey and NielsenIQ reveals the benefits of embracing more sustainable practices, pointing to enhanced sales growth for consumer products perceived to be environmentally and socially responsible. While Europe has shown its vision and tenacity to safeguard the planet we share, U.S. technology companies can help lead the way.