INTRODUCTION Contributed by: Rod Freeman, Cooley LLP
– being replicated in some other countries, and promoted by the OECD. The Circular Economy Measures designed to promote the circular economy, and sustainable production generally, remain a prominent feature of regulatory reform, touching every aspect of the product life cycle, from design, through to manufacture, market - ing, repair and end-of-life. Manufacturers and others in the supply chain are having to grapple with new rules relating to “right to repair”, recy - clability, built-in obsolescence, and expanded responsibilities through the product life cycle, alongside reforms to product safety and liability laws attempting to deal with issues associated with circular economy activities. This increasing regulation leads to greater liabil - ity exposure for companies, as failure to meet new expectations can lead to regulatory action and consumer claims. Environmental Social Governance (ESG) Changing the Landscape A number of new sustainability and ESG meas - ures focus on themes of “transparency” and “traceability”, requiring companies to increase due diligence throughout their products’ life cycle – from inception and manufacture through to consumption and disposal. Companies also face a growing need to communicate the envi - ronmental and human rights impacts of their products and business models via public dis - closures or privately to customs officials and regulators in certain jurisdictions. Increasing regulation in this area is another factor impacting liability exposure. Companies may increasingly be held responsible for both the environmental and human rights impacts of their business models and how these are com -
municated – through regulatory action or claims brought by consumers, NGOs or other impacted stakeholders. The Move Towards Digital Compliance Requirements for product information and cus - toms procedures are becoming increasingly dig - itised. One example is the EU’s new framework for Digital Product Passports (DPP) to electroni - cally register, process and share certain product- related information amongst supply chain busi - nesses, authorities and consumers. This is to be complemented by a new IT system to screen DPPs at the border and a proposed overhaul of the EU customs regime, all aiming to make enforcement more targeted and effective. Companies are also increasingly using digital solutions and AI applications as part of their internal processes. Associated risks need to be understood and mitigated to reduce potential liability, especially around high-impact deci - sions. Continued Drive for Increased Enforcement Enforcement of product safety rules continues to be sporadic and inconsistent across the world. However, there remains a clear overall trend towards increased enforcement. Policymakers and regulators continue to look at more effective ways to enforce laws and regula - tions, taking a number of different approaches. Some have been increasing the use of the exist - ing levers that they have available, while others have been focused on ensuring regulators have better resources – in terms of funding, powers and the information available. New tools such as AI are being used, for example, to scrub large data pools, such as consumer complaints, with an increasing level of sophistication.
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