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Report from
the UK
Milan furniture fair takes sustainability focus to another
level
After several years of disruption during and in the aftermath
of the COVID pandemic, this year the Milan Salone del Mobile furniture
fair returned to its traditional April slot for the first time since
2019. Although visitor numbers were still down on pre-pandemic figures
of around 400,000 in 2018 and 2019, at 307,418 they were 15% more than
in 2022.
During the pandemic, overseas visitors to the fair fell dramatically.
However, the continuing influence of the show in the global furniture
sector was once again apparent from the numbers this year. Fully 65% of
visitors came from 180 countries outside Italy.
There were 2000 exhibiting brands of which 34% came from 37 different
countries. There were 550 young designers exhibiting at the show from 31
countries. Also present were 28 design schools and universities from 18
countries.
Over 5,400 accredited journalists attended, 47% of whom came from
abroad. China formed the largest contingent of visitors to the show
after Italy, followed by Germany, France, the United States, and Spain.
Visitors from Brazil and India were prominent amongst tropical furniture
supplying countries.
One lasting effect of the pandemic has been to encourage an even bigger
focus on the show’s digital presence to further expand its influence on
global furniture design trends. The international design community
responded enthusiastically to the show’s social media which reached 30
million users, notched up 6 million video views, and around 80 million
page impressions.
There were around a million visitors to the show’s website site and more
than 7 million page views. The show’s mobile app registered more than
350,000 sessions during the fair and enabled more than 750,000 scans
through the matchmaking service supporting the visitor experience and
promoting effective interface with the exhibitors.
Sustainable furniture design has been a key theme of past Milan shows.
However, the extent to which this theme pervaded the show was taken to
another level this year.
Reuse, regeneration, circularity, sustainable materials, and innovative
energy saving and efficient production methods were at the very heart of
the event. This extended not only to the products and processes on
display, but also to the exhibition stands.
As the event organisers observed “Goodbye to monumental stands with a
short life cycle. The new installations are lightweight, modular and
reusable, made from wood and recycled cardboard”. The heightened focus
on sustainability at the Milan show reflects the considerable policy and
public concern for climate change that now pervades society nearly
everywhere.
In Europe, the need for furniture designers, manufacturers and traders
to adapt has been given added impetus by a whole raft of new regulations
now passing through the EU law-making process as part of the European
Green Deal (see sections on new EU regulations below).
While the organisers of the Salone del Mobile and many exhibitors were
keen to emphasise the sustainability message, some commentators were
more cynical.
An article in the London Times conceded that “this was the year that
designers acknowledged that flying to Milan and launching annual
collections was not optimal, environment-wise”.
The article went on to suggest that “Milan’s annual design week was
beamed to us from the future but, this being Milan, it was more of an
arty, cinematic sci-fi future than one where design experts had fathomed
how to house, feed and furnish the world with zero carbon emissions”.
Nevertheless, some exhibitors communicated powerful messages about the
challenges and opportunities to furniture manufacturers and their
suppliers of tackling environmental issues head on. This was true of the
‘Wood You Believe?’ installation for the Italian wood panels company
Gruppo Saviola by designers Carlo Ratti Associati (CRA) and Italo Rota.
The exhibit transformed four tons of post-consumer wooden objects into a
structure that questions how design can act to reduce waste and at the
same time be inspired by it. “The use-and-dispose consumption pattern is
one of the main underlying causes of the environmental problems we are
facing now,” says Carlo Ratti, “Wood You Believe? taps into an enormous
pool of resources that have always been available to us.”
Passing into the structure, visitors enter a space constructed out of
more than one hundred panels from the Gruppo Saviola ‘pannello ecologico’
technology. Made of fully recycled wood, these panels are digitally
treated to display a wide range of textured finishes that complement
different designs. Gruppo Saviola manages the whole process from the
collection of waste wood, to recycling, and transformation into a new
and functional product.
Other exhibitors were willing and able to spell out a strategic vision
for furniture companies to move towards more sustainable practices. In
an interview with the Salone show organisers, Anna Pellizzari, Executive
Director of Materially, a company that helps other companies innovate
their products starting from materials, summarised the various
strategies now being adopted by Italian companies.
Materially is a partner of FLA-PLUS, a project led by the Italian wood
furniture industry association FederlegnoArredo (https://fla-plus.it) to
develop and implement a strategic plan on sustainability to support and
respond pragmatically to the needs of manufacturing companies.
Ms. Pellizzari noted that “with respect to sustainability, one of the
central points of the wood-furniture sector – in my opinion already very
virtuous because of the type of materials it uses – is the durability of
the product.
The Italian supply chain in particular is focused on durable products
that the consumer can use for a very long time, so contributing
positively to reducing the environmental impact of an object”.
Ms. Pellizzari went on to identify three approaches to circularity that
can be adopted by furniture and wood product manufacturers:
1. Design for disassembling, “a principle that, from the early stages,
guides the design of objects that are easily dismantled: eliminating
glues and adhesives, using joints and adopting all the solutions that
allow easy replacement and repair of the components, so lengthening the
product’s lifespan. This also simplifies end-of-life disassembly, which
facilitates recycling”.
2. ‘Systemic’ design involving detailed measurement of the company’s
environmental impacts, developing actions dealing with the production
process as a whole and identifying hotspots of environmental harm and
tailored mitigation measures. These might include the use of renewable
energies, increasing energy efficiency of processes, the elimination of
pollutants, and much else.
3. The approach centered on recycling and closing the circle of the
material. According to Ms. Pellizzari this “is a supply chain approach
encompassing the whole world of recycled panels, and includes the main
Italian players in the sector.
These absorb the waste from the wood supply chain and recycle it to make
panels to be reintroduced into the production cycle”.
World furniture trade stagnated in 2022
The latest issue of the World Furniture magazine (freely
available at www.worldfurnitureonline.com/magazine/) from CSIL, the
Italian furniture research organisation, provides a lot of information
on recent trends in the global furniture sector and links to more
detailed reports (available for a fee). Highlights include:
CSIL’s update on the world furniture outlook which notes that “after
the 2020 stall, 2021 was a year of very strong growth [for global
furniture trade], reaching US$ 189 billion. The uncertainties caused by
the war in Ukraine, the supply chain constraints, logistics problems,
and strong inflationary pressures, together with the devaluation of
major currencies in relation to the US$, are countervailing factors that
resulted in a stagnation in 2022”.
CSIL’s ‘World Furniture Outlook’ report identifies the leading
importers of furniture in 2022 as the United States, Germany, the United
Kingdom, France and Netherlands (a trading hub) which together accounted
for about one half of total imports. Preliminary CSIL data for 2022 show
a substantial increase in imports into the US and virtual stagnation for
European countries (in current US$) (see chart right).
CSIL’s ‘World Furniture Outlook’ report notes that China, the main
furniture producing and exporting country, alone accounted for more than
one third of world furniture production and of exports in 2022, followed
at a distance by Vietnam, Poland, Italy and Germany.
After a major increase in 2021, China’s exports decreased in 2022 (see
chart below) mostly as a consequence of continuing production
difficulties caused by COVID. China’s struggling real estate sector also
contributed an economic slowdown in the country last year, impacting on
Chinese furniture production and consumption and on global supply chains
and trade.
CSIL’s ‘World Furniture Outlook’ report suggests that global prospects
will result in a declining consumer confidence and in the weakening of
furniture demand during 2023. For the world as a whole (100 countries),
CSIL forecast furniture consumption to decrease slightly in real terms
in 2023 but that growth should resume in 2024.
An article by Mindaugas Morkunas, Regional Sales Head of the German
company Henkel on “current trends in the European furniture supply chain
and the influences behind them” observes that “currently, the furniture
industry is still exposed to significant uncertainty” and that “having
recently travelled around multiple furniture factories, I have seen
manufacturers in countries like Poland and Sweden suffering from
decreased demand. The decrease is drastic…. Some major manufacturers
admit having never faced such a fall. The numbers vary, but I have
personally been told that certain orders have been reduced by 43%, 50%
or even 73%”.
Mr Morkunas notes that companies are adapting to the changed market
situation by: a “focus on product improvement….to maximize lean
manufacturing.
This means minimizing unnecessary expenses while retaining product
quality”; “energy saving” since “highly increased energy prices are
forcing manufacturers to look for ways to save on energy….popular
methods include performing professional audits on energy consumption,
using state aid, regular unit maintenance, and so on”; and “changes in
people management….Many employees are being laid off or sent on holiday
for a week or even a month.
It comes as no surprise that the furniture industry has faced multiple
protests from dissatisfied employees”.
CSIL’s latest report on the “200 largest furniture companies
worldwide” shows that this group of companies has turnover of nearly USD
120 billion related specifically to the furniture sector. Concentration
in the global furniture sector continues to increase year-on-year, the
top 200 accounting for more than 20% of world furniture production in
2022. The Top 200 have headquarters in 30 countries, with companies in
Asia and the Pacific accounting for nearly 40% of Top 200 turnover and
European and Americas companies accounting for 30% each.
According to CSIL, since the start of the pandemic in 2020, the Top
200 have consistently outperformed the global furniture sector as a
whole driven by larger financial capabilities that allowed leading
companies to quickly re-align business strategies, implement new sales
channels (e.g. online), and reposition their supply chain. Large Asian
manufacturers have grown particularly rapidly over the last five years.
European players have also shown promising results, particularly in 2021
(surpassing the pre-pandemic level). North American manufacturers
experienced significant development in 2019 and stabilized in 2021.
CSIL note that the strategies of the Top 200 have evolved in recent
years with a growing focus on “delocalization”, that is expanding
activities outside the companies headquarters country to reduce
logistical and transport costs and the time-to-market. About half of the
Top 200 companies now have manufacturing activities outside their
headquarters country. Companies specializing in outdoor furniture have
been particularly prone to delocalize production (80% of the companies
selected opened manufacturing plants abroad), followed by companies
specializing in office furniture and upholstered furniture
manufacturing.
CSIL latest report on ecommerce in the global furniture sector has
grown rapidly in recent years and in 2022 the global value of furniture
sold online was worth about USD 96 billion, representing about 11% of
the worldwide furniture consumption at enduser prices. While global
consumption of furniture decreased on average by 3% each year between
2019 and 2022, e-commerce consumption increased by 18% on average each
year during the same period.
Most of the growth was concentraded in 2020 and 2021, while in 2022 the
trend was broadly flat.
CSIL note that the market for online furniture is a highly competitive
and rapidly changing one. An overarching trend is a move by retailers
towards an “omnichannel strategy”. Consumers “expect a seamless
experience that is joined up between physical stores, online, or phone,
and where they can switch among channels easily”. This has re-written
the rules of traditional retailing. According to CSIL “a retailer’s
success no longer depends on its ability to provide many products. It no
longer depends on offering promotions. And the number of stores is less
relevant now….brick-and-mortar retailers are establishing a strong
online presence. But, at the same time, we are seeing e-commerce
platforms moving towards brick-and-mortar”.
CSIL’s free magazine and all CSIL reports can be purchased online and
downloaded from:
www.worldfurnitureonline.com
Raft of EU Green Deal measures set to impact on furniture sector
A raft of EU regulatory measures designed to reduce carbon
emissions and other environmental impacts are set to have a significant
impact on Europe’s furniture sector.
The high political priority attached to such measures as the EU
Deforestation Regulation (EUDR), the Ecodesign for Sustainable Products
Regulation (ESPR), and the EU-single use Plastics Directive is due to
EU-wide commitment to the European Green Deal. This aims to make the
EU's climate, energy, transport and taxation policies fit for reducing
net greenhouse gas emissions by at least 55% by 2030 and to achieve zero
net emissions by 2050.
A large proportion of the EU’s long-term budget and NextGenerationEU,
the temporary instrument designed to boost the post-COVID recovery,
which together form the largest stimulus package ever financed in
Europe, are tied to Green Deal initiatives.
One measure now starting to impact on the wood products sector,
including furniture, is designed to directly raise funds for the Green
Deal.
Since January 1st, 2021, every EU member state has had to pay a plastic
tax of 80 cents per kilogram of non-recycled plastic waste. Due to that,
some EU countries are now introducing their own plastic taxes which
impose new requirements on all product suppliers to provide data on the
quantity of plastic packaging with each consignment before it can be
placed on the market.
The EUDR, reported on in the previous Tropical Timber Market Report, was
passed by the European Parliament in a vote on 19 April and looks set to
have a particularly immediate effect on the trade in wood fruniture.
The text now just needs to be formally endorsed by the European Council,
expected in May. It will then be published in the EU Official Journal
and enter into force 20 days later. The requirements are estimated to be
enforced for large operators from 18 months after the law enters into
force (i.e. from around December 2014) and twelve months later (i.e.
from around December 2015) for SMEs.
The EUDR will likely have a major impact on supply of some materials to
the furniture sector - including wood, textiles and leather. It will
also impact significantly on manufacturers of wood furniture both inside
and outside the EU.
Under the terms of EUDR, both importers and exporters of wood furniture
in the EU – together with large operators even if only engaged in
internal EU trade - will be obliged to gather and provide geolocation
data for all the harvest sites from which all wood components have been
derived with each individual consignment before it can be placed on, or
exported from, the EU market.
This applies to all wood furniture including items such as wood seating
not formerly covered by EUTR. The same applies to wood-based textile
fibres and to leathers derived from cattle contained in furniture
products.
The geolocation requirement will apply irrespective of risk of illegal
harvest, deforestation, or forest degradation in the region of supply.
Furthermore, if regulated material components of furniture products
derive from harvest sites in any country or region except those
identified by the EC as “low risk”, these operators will be obliged to
undertake due diligence to identify and mitigate these risks.
Ecodesign for Sustainable Products Regulation (ESPR)
In the absence of other factors, a far-reaching regulation such
as EUDR would likely lead more manufacturers to switch away from wood
and increase their use of other materials such as plastics and metals.
However, this tendency should be offset by the ESPR which aims,
according to the EC, to “make sustainable products the norm in the EU by
increasing their durability, reusability, repairability, recyclability
and energy efficiency”. Wood products are inherently well adapted to
delivering against most of these goals.
Presented as a proposal by the European Commission on 30th March 2022,
the ESPR is currently working its way through the legislative process
and, if adopted by the EU, will set out a general framework imposing
ecodesign requirements on products intended for sale on EU markets. The
proposal builds on the existing Ecodesign Directive which currently only
covers energy-related products.
The process towards passage of the ESPR is currently some way behind the
EUDR. The Commission’s proposal for the ESPR was discussed by the
European Parliament’s Environment Committee on 12 January 2023 when MEPs
tabled 628 amendments. The vote in the committee is now expected on 5
June 2023. Beyond that the law will need to be agreed by both the full
Parliament and the European Council.
The ESPR proposal establishes a framework to set ecodesign requirements
for specific product groups to significantly improve their circularity,
energy performance and other environmental sustainability aspects. It
will enable the setting of performance and information requirements for
almost all categories of physical goods placed on the EU market
including furniture.
Any organisation placing goods for sale on the European market, whether or
not they are based within Europe, will be required to comply with the
requirements of the regulation. Furniture products, alongside various
other product groups such as iron, steel, aluminium, textiles, and
cement have been identified as priority products for the establishment
of eco-design requirements.
The ESPR framework will allow for the setting of a wide range of
requirements, including on
product durability, reusability, upgradability and reparability;
presence of substances that inhibit circularity;
energy and resource efficiency;
recycled content;
remanufacturing and recycling;
carbon and environmental footprints;
information requirements, including a Digital Product Passport.
The new “Digital Product Passport” will provide information about
products’ environmental sustainability. It should help consumers and
businesses make informed choices when purchasing products, facilitate
repairs and recycling and improve transparency about products’ life
cycle impacts on the environment. The product passport should also help
public authorities to better perform checks and controls.
The specific requirements to be imposed on different product groups are
not yet clear. The EU’s approach has been to start with a big picture
proposal for a framework and a process — via which the Commission
(“working in close cooperation with all those concerned”) will gradually
set out requirements for each product or group of products, developing
specific stipulations down the line.
This approach also suggests there could end up being a degree of
variability in ESPR requirements across different types of products, as
various trade-offs (perhaps product longevity vs energy efficiency of
manufacture, say) are weighed up and variously assessed in each specific
product context.
EU taxes on plastic packaging
While there is still some way to go before the ESPR
requirements will be imposed in the EU market, the EU’s decision to
require all EU Member States to make a national contribution to the EU
budget in support of the Green Deal based on the amount of plastic
packaging waste that is not recycled within their territory, is already
being felt in some countries.
The mechanisms by which Member States raise the money to pay this
EU-wide levy are not harmonised. Each Member State designs its own
regulation to capture the underlying taxes and contributions from market
players and industries.
Spain has moved faster than other EU countries to implement specific
legislation to implement a tax at national level to fund the EU levy.
Starting on 1 January this year, Spain began enforcement of a new tax
(referred to as IEPNR) on “non-reusable plastic packaging”. The tax
applies throughout Spain, including Ceuta, Melilla, and the Canary
Islands, and taxes both the import and manufacture of non-reusable
plastic in the country.
The definition of "packaging" taxed under the Spanish law includes not
only that used directly for selling products but also packaging required
in transport. Items such as plastic straps around packs of lumber or
shrink wrapped plastics to protect veneer, flooring and furniture are
therefore subject to the tax. The IEPNR applies the rate of €0.45 per
kilogram of plastic in packaging.
Recycled plastics are not subject to the tax. However, to avoid paying
the tax, the importer must demonstrate that plastics are certified by an
ISO 17065 accredited Certification Body as containing only recycled
material in accordance with UNE EN 15343:2008. This is the European
standard for “plastics recycling traceability and assessment of
conformity and recycled content”.
At present, there is no clear information on how widely this standard is
applied by plastic packaging suppliers, but it is understood to be not
widespread. In practice therefore, as things stand, most Spanish
importers are likely to be obliged to pay the tax.
While Spanish manufacturers and traders operating in the EU single
market have to self-assess and pay the tax in the same periods (monthly
or quarterly) as their VAT self-assessment, Spanish importers are
required to settle the tax through the Single Administrative Document
(SAD) used for customs declarations. The taxable amount of non-recycled
plastic in kg (to two decimal places) is required to be entered into box
47 of the SAD.
Further details on customs formalities for importing goods subject to
the tax are provided by the Spanish government at:
https://sede.agenciatributaria.gob.es/Sede/en_gb/impuestos-especiales-medioambientales/impuesto-especial-sobre-envases-plastico-reutilizables/formalidades-aduaneras-impuesto.html
Some other EU Member States are expected soon to adopt a similar
approach. In fact Italy planned to introduce a very similar tax - known
as MACSI - from 1st January 2023, but a decision was taken in November
last year to suspend application until further notice.
While the tax was not imposed, since the start of this year all
suppliers placing packaged product on the Italian market must indicate
material type using an alphanumeric code (which is defined in EC
Decision 97/129/EC). The code may be provided on the packaging itself
or, if this is not possible, it should be available via the website or
similar documentation of the supplier.
Elsewhere, Poland, Germany, and Sweden have already announced that they
will implement new plastic-related legislation soon. Other EU countries
may adopt a different approach, for example by imposing so-called
“extended producer responsibility” (EPR) fees and obligations on
manufacturing companies, or developing new deposit-return systems. Some
EU countries may go so far as to completely ban single-use plastics.
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