By Mark Seavy 

As new sustainability regulations are adopted globally, the brand licensing industry is drafting additional clauses in licensing agreements.  

And while efforts around some requirements have been slowed or been curbed in the U.S. in the first months of President Trump’s administration, many regulations governing clean air, federal sustainability programs, and extended producer responsibility (EPR) laws remain in full force and were discussed by licensing industry attorneys during a recent webinar hosted by Licensing International. 

Chief among them are EPRs, which make suppliers like licensees responsible for their goods—including collection, recycling, and disposal. The goal is to shift management of the programs away from municipalities and taxpayers to those companies that create waste while also promoting a circular economy, sustainable product designs, and reducing environmental impact. In the U.S., EPRs are part of 130 laws across 34 U.S. states and address 20 product categories, including batteries, electronics, textiles, packaging, paint, carpets, and mattresses. EPRs have also been adopted globally.  

California’s Proposition 65, for example, which was first passed in 1986, bars the use of more than 800 chemicals in manufacturing that are known to cause cancer or birth defects.  

And digital product passports (DPP), which first came into force in Europe in July 2024, will be implemented for batteries starting in 2026 and extend to all categories in the region, including textiles and electronics, by 2030. The DPP lists information about a product’s lifecycle, including its origin, materials, environmental impact, and disposal instructions. 

“The issue is how much do licensors know about each of the obligations that their licensees incur, because it goes beyond sustainability,” said Pamela Deese, Partner at the ArentFox Schiff law firm. “It’s a question of how parameters around compliance are created [in contracts] and embrace sustainability if that is part of your organization’s strategy. And that is because licensees don’t always have an option, because regulations require it.”  

And while regulations vary depending on the territory, consumers around the world have been vocal about their support for sustainable practices. In fact, research discussed during the webinar showed that 80% of consumers reported they are willing to pay more, though that number can differ by age, with Millennials (78%) more willing to spend on sustainability than Gen X (65%). A much smaller percentage consistently open their wallets, however. Millennials led the way in their willingness to buy products with eco-friendly packaging (58%), followed by Gen X (52%), and Baby Boomers (48%).  

Many consumers are willing to pay a 5-10% premium for sustainability, but that number shrinks during economic downturns. Sales of products marked as sustainable grew 2.7 times faster than those that were not, according to New York University’s Stern’s Center for Sustainable Business. 

“To what extent are consumers prioritizing sustainability in their purchasing and how much should a company invest in positioning itself in a sustainable-friendly way and how will that resonate with consumers and affect our bottom line?” said Arianna Marks Rosenblum, Deputy General Counsel at Beanstalk. “There is a promotional and marketing element to a sustainability effort to put forth this is a priority for a brand and whether that will resonate with consumers and perhaps grow sales.” 

Among the companies that are emphasizing sustainability are Patagonia, Allbirds, The Body Shop, Google, and Microsoft, some of which are aiming to be carbon neutral (no net release of carbon dioxide to the atmosphere, largely through planting trees) by 2030.  

And among the top toy suppliers, the cost of producing sustainable products is decreasing as more companies like Jazwares and Lego adopt sustainable components. Basic Toys, for example, has adopted recycled materials for its licensed Care Bears products and experienced strong sales. To encourage sustainability, companies can add questions to license applications regarding sustainability plans or make them part of an annual review. 

“This gives licensors an opportunity to decide how up front they want to be with their licensees about sustainability goals,” said Marks Rosenblum. “If this is at the forefront of your mission and licensing program, it makes sense to have this up front and personal in the licensing application. It lets licensees know it is important, and the company will be tracking it over time.”