EU Batteries Regulation, Digital Product Passport, Transition 5.0 and Forced Labour: Key ESG Developments to Know

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Sustainability Pills - november 2026

The ESG newsletter “Sustainability Pills” is available, curated by Andersen’s ESG Sustainable Innovation Service Line, led by Partner Francesca Capoferri.

The November 2026 edition explores six regulatory developments and European initiatives in the field of sustainability, focusing in particular on their implications for businesses, production processes and supply chains.

EU Batteries Regulation: Key Deadlines for 2027

Regulation (EU) 2023/1542 introduces new requirements to make batteries more sustainable, safe and circular, covering their entire life cycle.

The main deadlines include:

  • 18 February 2027: introduction of a QR code linked to the digital battery passport for specific categories of batteries;
  • 18 August 2027: obligation to adopt due diligence policies on critical raw materials, including cobalt, natural graphite, lithium and nickel;
  • 31 December 2027: achievement of specific targets for the recovery of raw materials through recycling.

Affected businesses will need to assess whether they fall within the scope of the Regulation, map their supply chains and strengthen supplier engagement, integrating the new requirements into their existing ESG management and reporting systems.

Digital Product Passport: Towards Greater Product Traceability

The Digital Product Passport (DPP), introduced under the Ecodesign for Sustainable Products Regulation (ESPR), is a digital tool designed to collect and make accessible information on product composition, origin, environmental impacts, repairability and end-of-life management.

Its introduction will take place progressively through delegated acts specific to each product category. The first European working plan identifies the following priority sectors:

  • iron and steel;
  • textiles and clothing;
  • tyres;
  • aluminium;
  • furniture and mattresses.

For businesses, particularly those operating in the manufacturing and textile sectors, it is essential to establish systems for collecting and managing product data, ensuring the availability of reliable information throughout the supply chain.

New Transition 5.0 Plan: Eligible Investments

The New Transition 5.0 Plan introduces an enhanced depreciation allowance, effective from 1 January 2026 to 30 September 2028, replacing the previous Transition 4.0 and 5.0 tax credits.

The main categories of eligible investments include:

  • the purchase of new tangible and intangible capital goods interconnected with production management systems or supply networks;
  • investments in renewable energy generation systems for self-consumption, including energy storage systems.

The measure represents an opportunity for businesses seeking to invest in digitalisation, automation and energy efficiency, fostering the integration of technological innovation and the sustainable transition.

Zero-Emission Buildings: The European Roadmap

Directive (EU) 2024/1275 on the energy performance of buildings (EPBD) strengthens the European pathway towards a zero-emission building stock by 2050, introducing new energy efficiency and decarbonisation targets.

The main developments include:

  • a reduction in the average primary energy consumption of non-residential buildings of at least 16% by 2030 and 20–22% by 2035, compared with 2020 levels;
  • all new buildings becoming zero-emission buildings from 2030, with an earlier deadline of 2028 for publicly owned buildings;
  • the gradual phase-out of fossil fuel-powered boilers by 2040;
  • wider deployment of photovoltaic systems, solar thermal technologies and smart energy consumption monitoring systems.

Businesses that own or use buildings are required to assess the energy performance of their property portfolios and plan potential renovation works and investments.

Industrial Emissions Directive 2.0: New Environmental Standards

Directive (EU) 2024/1785 (IED 2.0) strengthens the European framework for the prevention and reduction of industrial pollution, introducing new requirements for businesses subject to an Integrated Environmental Permit (AIA).

The main developments include:

  • stricter emission limit values based on Best Available Techniques (BAT);
  • the introduction of environmental performance requirements relating to water and resource use and waste management;
  • the adoption of Environmental Management Systems (EMS) incorporating performance objectives and indicators;
  • stronger inspections and enforcement measures in response to breaches of environmental requirements.

Affected businesses should assess the adequacy of their existing permits, monitor emission levels and plan any necessary technological and organisational adjustments.

Forced Labour Regulation: New Requirements Across the Supply Chain

The European Forced Labour Regulation (EUFLR) prohibits the placing and making available on the EU market, as well as the export, of products made wholly or partly using forced labour. The Regulation will apply from 14 December 2027 and will affect all businesses placing products on the European market, regardless of their size or sector.

The main implications include:

  • identifying products, suppliers and geographical areas most exposed to forced labour risks;
  • strengthening supply chain control and monitoring systems;
  • establishing preventive and corrective measures, as well as reporting mechanisms;
  • the possibility of product withdrawals from the market, import or export bans and the disposal of goods in the event of a violation.

The Regulation broadens the scope of attention to human rights throughout the supply chain and complements the Corporate Sustainability Due Diligence Directive (CSDDD), while differing from the latter in terms of scope and applicable obligations.