An avalanche of regulation means new obligations for businesses. Naturally, businesses fear the inhibitive effects of burdensome red tape on their operations. But decarbonisation shouldn’t equate to deindustrialisation. Today, technologies exist that can make businesses operate more sustainably while driving growth. By connecting the physical to the digital, Avery Dennison’s digital identification technologies make compliance with sustainability rules a profit driver.
The European Commission unveiled its landmark European Green Deal to position the EU as a global leader in climate governance.
A slew of measures followed, including the ‘Fit for 55’ package of legislative proposals to align EU energy and climate legislation with the 55% emissions reduction target on 1990 levels by 2030; the Circular Economy Action Plan, to promote sustainable use of resources; the Biodiversity Strategy for 2030, seeking to mainstream biodiversity across all policy areas; and a ‘Farm to Fork’ strategy for sustainable food.
In response, business leaders in Europe are increasingly voicing their concerns about the additional regulatory burdens of Europe’s Green Deal agenda, and their impacts on Europe’s competitiveness.
Foreign Direct Investments (FDIs) are shifting away from Europe: From 23% of global FDI in 2011 down to 10% in 2021. (ERT report, 2023)
With European industry pinpointing green measures as responsible for raising the cost of fossil energy inputs in the EU significantly above other regions, businesses are feeling the impact of the green premium on their pockets.
In a survey of 54 European CEOs, 84% said that Europe’s competitiveness was weakening. 56% saw a complex or incoherent regulatory environment as a key factor that will impact on European competitiveness.
In response, the European business community has signed up to the Antwerp Declaration, a petition that calls on EU policymakers to focus on making the EU an attractive place to invest. It has earned over 1000 signatories from companies representing 25 sectors of the European economy.
Europe’s expensive energy
The cost of emitting CO2 in the EU added €10 to every megawatt-hour (MWh) of electricity generated from gas and €25 for every MWh of electricity generated from coal.
(ERT report, 2024)
But going green doesn’t have to be bad news for businesses in Europe. The macroeconomic case speaks for itself.
At company level too, there is a clear business case for transitioning to circular business models. In today’s economy, manufacturing companies spend about 40% on materials – so closing the loop can increase profitability and shelter companies from price fluctuations. Additionally, $163 billion worth of inventory is discarded every year. Without proper inventory efficiency, companies overproduce and waste resources manufacturing products that they never sell.
Industrial manufacturing is not the only activity where business can reduce costs and increase profitability by pursuing circularity. In the apparel sector, smart labelling solutions can give producers real-time, item-level inventory accuracy and visibility. Combined with data analytics powered by AI, capacity utilization can be improved and on-demand models adopted to save waste.
Macroeconomic case for circularity
Full application of circularity across the EU economy could lead to up to 0.5% increase in GDP by 2030.
Adoption of the circular economy is estimated to create around 700,000 new jobs.
(Cambridge Econometrics, Trinomics, and ICF, Impacts of circular economy policies on the labour market, 2018)
Building a circular mattress industry through connected products
Aquinos Group is one of Europe’s largest mattress manufacturers and is the first in its sector to implement the Digital Product Passport through the use of digital ID technology.
As connected products, all mattresses will have a ‘digital twin’, providing every actor across the supply chain with information about the origins and materials used in the product.
This will lead to unprecedented improvements to circularity. RFID tags on mattresses will be scanned at recycling centers to help with the efficient and effective separation of materials so they can be reused. Additionally, consumers will have easy access to detailed product information to make better informed and more sustainable decisions.
(Avery Dennison, Press Release, 2024)
Taking a business model from linear to circular need not mean throwing out the playbook and starting again. Complying with the EU’s circularity measures could be as simple as switching your labels from analog to smart. With Avery Dennison’s DPPaaS offer, we can help businesses prepare for incoming reporting obligations. Whether this involves correctly sorting and treating the product at the end of its life, in accordance with the DPP, or improving traceability and tracking of product throughout the supply-chain footprint of their products upstream.
Read on to learn how your business can reap the benefits of connecting the power of digital with the physical via digital identification technologies.
Europe is facing a challenge to decarbonise its economy by 2050. EU regulators have mandated that businesses must act more sustainably. Avery Dennison is well-positioned to help drive this circular revolution. Europe can make sustainable business practices the profitable choice by leveraging Avery Dennison resources and the company’s materials science and digital identification technologies.
The EU has mandated that certain products must carry a ‘digital product passport’, containing key information about carbon footprint and end-of-life management. Avery Dennison has digital identification technologies that connect physical goods to the digital world, allowing businesses to comply with EU legislation—and adopt circular practices.
Avery Dennison is proactively developing technologies that will enable the EU’s Green Transition and turn compliance with sustainability legislation into a competitive advantage. Our digital solutions and products such as the DPP as a service (DPPaaS), provide brands with the tools required to gain full visibility over their supply chains.
The dawn of a new legislative cycle in 2024-2029 will bring a new vision for the future. The 2024-2029 legislative cycle will come with a new priority: competitiveness. A winning EU Industrial Strategy will combine European Union (EU) competitiveness with circular business models.