The environmental and societal impact of our consumption is becoming increasingly evident, from deforestation and biodiversity loss to ocean pollution and greenhouse gas emissions. This is leading to a rising demand for sustainable products and transparent supply chains. Today, 46% of consumers expect brands to lead in sustainability. Companies are responding by investing in sustainability measurement and monitoring, positioning themselves to anticipate market trends and derive value. These efforts also help mitigate regulatory compliance costs. Arcadis partners with companies to stay ahead of market developments and legislation, fulfilling their sustainability commitments, regardless of where they are on their journey.
How product sustainability can drive business success
A sustainable product portfolio strategy is crucial for maintaining a company's social license to operate and ensuring long-term viability. To stay competitive, companies must provide reliable data on their products' carbon footprints, including both direct (scope 1) and indirect emissions (scope 2 and scope 3).
Calculating scope 3 emissions can be challenging due to the inclusion of emissions from the supply chain and product use or end of life. In such scenarios, developing a product carbon footprint strategy, starting with a clear definition of the goal and scope as well as data requirements, assessing data availability and quality, and setting-up data governance is key.
In countries with mandatory due diligence, companies must assess human rights, and environmental and social risks in their supply chains. Defining a product portfolio strategy based on impact assessments at the product category level ensures compliance with these requirements and is critical for securing the company's license to operate.
In the mid-term, companies need to increase the circularity of their products, minimize waste, and promote the sustainable use of natural resources through reuse, repair, remanufacture, and recycling. Initiatives such as Europe's Circular Economy Action Plan, European Ecodesign for Sustainable Products Regulation and France's AGEC law are driving regulatory changes to rethink the entire material life cycle. But what do these mean for your company, and what are the key considerations you should stay ahead of?
Product sustainability beyond just marketing
The number of advertisements related to product sustainability has exploded globally, responding to the growing demand from consumers. However, some of these advertisements can be deceptive, prompting several authorities to take action against such practices.
Product sustainability goes certainly beyond the marketing claims; it must be integrated into your research and development (R&D), manufacturing and distribution operations. Companies need their R&D and operational teams to provide all necessary elements to substantiate any green claims made about a product. Additionally, they must meet eco-design and circularity requirements to bring a product to market.
Both products and packaging are subject to regulations such as the Ecodesign for Sustainable Products Regulation (ESPR) and the Packaging and Packaging Waste Regulation (PPWR). Companies are expected to design, manufacture, and distribute products with consideration for their environmental impact throughout their lifecycle, including beyond their own operations. More traceability of impacts is also required through labelling, moving towards a digital passport.
Our regulatory advisory teams support companies in the construction, chemicals, pharmaceuticals, consumer goods, and cosmetics industries to better understand the legal framework for green claims and the trends in eco-design and circularity requirements for their operations.
Incorporating sustainability and circularity in your organization
Despite the growing focus on ESG performance monitoring and reporting, driven by investors and regulations such as the Sustainable Finance Disclosure Regulation (SFRD), EU Taxonomy, and Corporate Sustainability Reporting Directive (CSRD), a disconnect remains between organizational ESG performance management and product portfolio sustainability management.
Establishing governance that bridges this gap and enables a demonstrable sustainability transition at all operational levels remains a significant challenge for many companies. Setting sustainability targets, performance monitoring, and reporting at the organizational level is no longer sufficient, as indicated by the market and regulatory trends mentioned above. Customers down the value chain now require product-level reporting to facilitate their own sustainability monitoring and reporting.
Understanding the sustainability governance of our clients and identifying potential bottlenecks to propose a way forward is an intrinsic part of Arcadis’ product sustainability strategy solutions.
Simplifying the challenges of sustainability and circularity reporting
For many companies, product sustainability and circularity assessment and reporting remain highly challenging. One major challenge is the lack of harmonized reporting standards and the unclear regulatory requirements. Selecting the appropriate impact assessment and reporting methodology can quickly become overwhelming.
Another significant challenge is the complexity of data collection and management for product-level sustainability assessment. This complexity arises from various factors, including governance issues, data management systems, and the absence of data along the value chain.
Arcadis supports clients in selecting relevant datasets and impact assessment methodologies based on the company’s needs, strategic objectives, and expected regulatory requirements. In our Product Carbon Footprint (PCF) and Lifecycle Assessment (LCA) projects for the chemical and pharmaceutical industries, we play a key role in mapping data requirements and structuring a data strategy.
We closely follow ongoing initiatives, such as the definition of Product Category Rules (PCR) and the development of the Safe and Sustainable by Design (SSbD) framework. Our combined knowledge of chemical safety and product sustainability provides us with the insights needed to anticipate potential challenges and help clients find the best path forward.
While circularity assessment methodologies exist, they require harmonization and cross-sector data collection. Collaboration across industries and stakeholders is crucial, as is reviewing legislation that hinders the transport or reuse/recycling of materials considered waste rather than secondary resources. Assessing the regulatory context for circularity, addressing end-of-waste challenges, and engaging with stakeholders are key components in co-creating an effective circular business model.
Unlocking the benefits of investing in product (portfolio) sustainability assessment
Product-level sustainability assessments address the interdependencies of companies across the value chain and promote sustainable practices from cradle to grave (or ideally, cradle to cradle). They offer companies the following opportunities:
- Understanding supply chain impacts: engage stakeholders proactively to address environmental and social issues, securing a social license to operate and ensuring regulatory compliance for long-term business viability and continuity.
- Informing strategic decisions: use value chain environmental performance (hotspot analysis) to inform strategic decisions and mitigate supply chain risks by prioritizing suppliers.
- Enhancing competitiveness: gain a competitive edge in a market where downstream customers recognize their suppliers’ impact on their own environmental performance.
- Supporting eco-friendly design: drive circularity in operations and business practices by supporting eco-friendly product design and development.
Product sustainability lies at the intersection of corporate sustainability and product compliance, supporting a necessary shift towards a positive future. At Arcadis, we partner with clients to navigate the complexities of evolving regulatory, financial and stakeholder landscapes, and define actionable roadmaps.
Contact Arcadis Product Sustainability team for support and guidance.
