Sustainability Legislation in 2026: Key EU Regulatory Updates

The Circular Economy Act (CEA), expected in Q4 2026 as part of the Clean Industrial Deal, supports the sustainability legislation program aiming to accelerate the transition towards a resilient circular economy for materials. The initiative focuses on supporting reuse, repair, recycling, and the development of a functioning EU internal market for secondary materials and waste.

Public consultation launched in August 2025 identified two main policy priorities for the European and UK sustainability legislation: addressing the growing challenge of e-waste and strengthening the market for secondary raw materials.

Material-intensive sectors such as electronics, construction, chemicals, packaging, and textiles may need to adapt to stricter product traceability requirements across product life cycles, new circularity performance metrics, and additional reporting obligations linked to material recovery and resource efficiency.

The CEA complements the Eco-design for Sustainable Products Regulation (ESPR). While ESPR introduces product-level eco-design and information requirements, the CEA is intended to provide a broader framework supporting secondary material flows and sustainability-related information exchange across supply chains.

The ESPR represents a central pillar of the EU’s circular economy strategy, introducing binding eco-design and transparency requirements for products placed on the EU market.

The first ESPR Delegated Act is expected in 2026 and will address iron and steel as intermediate products. Companies will have 18 months to comply after publication. Although initially limited in scope, it is expected to establish the structure and approach for future product-specific requirements across sectors.

Future delegated acts may introduce requirements related to:

• incorporation of recycled material;
  
• disclosure of substances of concern;
  
• measurement and disclosure of environmental impacts such as carbon, water, and environmental footprint;
  
• product design enabling repair, durability, and disassembly and Digital Product Passports (DPPs).

Compliance with ESPR will require disclosure of sustainability-related information to consumers and stakeholders. Companies must therefore also consider, where relevant and once applicable, the Empowering Consumers for the Green Transition Directive and the Green Claims Directive, which require environmental claims to be transparent, substantiated, and, where appropriate, independently verified.

The Empowering Consumers for the Green Transition Directive aims to reduce greenwashing and improve transparency of sustainability claims. It entered into force in March 2024, with Member States required to transpose it by March 2026. Obligations will apply from September 2026.

The Directive applies broadly to companies marketing or selling products or services to EU consumers and affects brand owners, distributors, retailers, and internal sustainability and marketing functions.

The Directive restricts several types of environmental claims, including:

• Unsubstantiated climate-related claims without measurable targets, implementation plans and independent verification(e.g. “climate neutral”, “net zero”)
  
• Vague or generic green claims without product-specific lifecycle evidence(e.g. “eco-friendly,” “green,” “climate friendly,”)
  
• Misleading comparisons that are not based on transparent, objective methods and robust data (including proper use of LCA methodologies)
  
• Claims referring only to part of a product but presented as applying to the whole product(e.g.“recycled” packaging but not the product itself)
  
• Offset-based claims that rely solely on carbon offsetting outside the value chain (e.g.“Net zero product – emissions fully offset”)
  
• Unreliable sustainability labels not based on recognised certification schemes (e.g.“Planet Approved”,“Green Choice Certified”)
  
• Presenting legal compliance as a differentiating sustainability feature(e.g. “Meets EU environmental regulations”)
  

To prepare, companies should review existing environmental claims, verify supporting data and methodologies, strengthen internal governance for sustainability communications, and prepare for harmonised labelling and consumer information requirements.

The Repair Directive strengthens consumer repair rights by introducing repair obligations for manufacturers and extending product lifetimes.

The Directive builds on existing ESPR reparability requirements and applies to products already covered by those provisions, including but not limited to household appliances, electronic displays, servers and data storage equipment, mobile and cordless phones, tablets, selected energy-related products, and products incorporating light transport batteries.

Key measures include:

• manufacturer obligation to repair certain products upon request;
  
• extension of the legal guarantee period by 12 months following repair; and
  
• creation of EU-wide and national repair platforms, expected to be operational by July 2027.
  

Unlike ESPR, the Directive requires national transposition, allowing Member States to introduce additional repair-support measures.

The PPWR establishes harmonised EU rules to reduce packaging waste, improve recyclability, and increase recycled material use. Adopted in December 2024, it applies directly across Member States, with requirements progressively entering into force from 2026 onward.

Key provisions include:

• Restricted substances (Article 5)
  From August 2026, food-contact packaging must not contain PFAS above regulatory limits.
  
• Recyclability requirements (Article 6)
  Manufacturers must assess and grade packaging recyclability. From 2030, only packaging rated A, B, or C may be marketed. The Commission will define recyclability performance methodologies and link Extended Producer Responsibility (EPR) fees to recyclability performance.
  
• Recycled content (Article 7)
  Mandatory minimum levels of post-consumer recycled content will apply. Verification methodologies, including rules for recycled plastics from third countries, are expected by the end of 2026.
  
• Biobased plastics (Article 8)
  The Commission will assess sustainability criteria and targets for biobased plastics by 2028.
  
• Compostable packaging (Article 9)
  New or updated EU standards for industrial and home compostable packaging are expected by 2026.
  
• Packaging minimisation and reuse (Articles 10–11)
  Packaging volume and weight must be minimised, and future delegated acts will define reuse performance thresholds.
  
• Harmonised labelling (Article 12)
  Common EU disposal labels will be introduced.
  

Manufacturers hold primary compliance responsibility, including conformity assessment, technical documentation, and EU declarations of conformity. Importers and distributors may be treated as manufacturers if they rebrand or modify packaging.

Testing or verification conducted by accredited conformity assessment bodies provides presumption of compliance under Article 36.

Green Public Procurement integrates environmental criteria into public purchasing, representing approximately €2 trillion annually across the EU.

Although EU Directive 2014/24/EU establishes the framework, implementation remainslargely national.

To illustrate how GPP works in practice, we look at Italy and France, two countries that have made environmental criteria a central part of their public procurement processes.

Italy was the first country in Europe to make the inclusion of environmental sustainability criteria mandatory in public procurement for goods and services. The Minimum Environmental Criteria (CAM) set out environmental requirements designed to identify the products, services, or projects with the best life-cycle environmental performance.

On 15 November 2025, Italy published the new CAM for the construction sector. These rules will apply from 1 February 2026, including contracts that have already been awarded but whose project plans have not yet been formally approved.

Franceis applying its mandatory green public procurement rules starting in 2026, under its National Plan for Sustainable Procurement (PNAD 2022–2025), particularly targeting the construction sector, and the Climate and Resilience Law.

Compliance can be demonstrated through environmental labels, environmental product declarations, certification schemes, and accredited testing reports.

CBAM aims to prevent carbon leakage by ensuring imported goods face carbon costs equivalent to those applied to EU producers under the EU Emissions Trading System.

From January 2026, CBAM applies to cement, aluminium, fertilisers, iron and steel, hydrogen, and electricity.

EU importers, or their indirect customs representatives, importing more than 50 tonnes of CBAM-covered goods in 2026 must apply for authorisation by March 2026.

Authorised importers must submit annual CBAM declarations, with the first due in September 2027. Emissions must be calculated using a hierarchy prioritising primary producer data, followed by regional or default emission values.

The EU Taxonomy defines environmentally sustainable economic activities supporting sustainable finance.

A Delegated Act published in January 2026 simplifies reporting requirements while maintaining framework integrity. The updated rules apply from financial year 2026, with transitional flexibility for 2025 reporting.

Key simplifications include:

• introduction of a 10% financial materiality threshold for turnover, CapEx, and OpExindicators;
  
• reduction in reporting datapoints (from 78 to 28 for non-financial companies); and
  
• simplified Do No Significant Harm criteria focusing on substances classified as SVHC by the European Chemicals Agency.

The CSRD significantly expands sustainability reporting obligations, replacing the Non-Financial Reporting Directive.

Following Omnibus I amendments, 2026 marks the first data-collection year for:

• EU companies with more than 1,000 employees and €450 million turnover;
  
• non-EU companies generating more than €450 million EU turnover; and
  
• EU subsidiaries or branches exceeding €200 million turnover.
  

These companies are expected to publish their first CSRD-compliant reports in 2027.

Reporting must follow European Sustainability Reporting Standards (ESRS), requiring disclosure of Scope 1, Scope 2, and material Scope 3 emissions, climate targets, and verified environmental data. CSRD significantly increases expectations for data quality, governance, and third-party assurance.