The Green Claims Directive (European Commission)

Our key takeaway: Consumers have the power to change the world! But hang on, do they? According to a study conducted by the European Commission, a considerable share of environmental claims (53.3%) provide vague, misleading or unfounded information about products’ environmental characteristics across the EU and across a wide range of products. In addition, 40% of claims were unsubstantiated. When it comes to eco-labels, there are 232 active ecolabels in the EU, and almost half of these labels’ verification was either weak or not carried out at all! In short, greenwashing is everywhere. Time for legislation to empower consumers to play an active role in the green transition? The European Commission thinks so. Its new Green Claims Directive delves into new proposed rules for companies. Companies will need to substantiate their environmental claims - for instance, that the claim relies on widely recognised scientific evidence and that the benefits are significant from a life-cycle perspective. When it comes to carbon, companies will need to separate GHG offsets from GHG emissions, and describe how their offsets are of high integrity and accounted for correctly to reflect the claimed impact on climate. Oh and there is now a high bar on eco-labels: no new public labelling schemes will be allowed, unless the EU develops it. No private labelling schemes will be allowed, unless they provide added value. Time for companies to dig into the work underpinning their green claims.

The European Commission has put forward its Green Claims Directive, also titled ‘Proposal for a Directive of the European Parliament and of the Council on substantiation and communication of explicit environmental claims’ (March 2023):

• Empowering consumers for the green transition: The European Commission makes clear that the objective of the directive is to support the European Green Deal, in which “the Commission committed to ensure that consumers are empowered to make better informed choices and play an active role in the ecological transition.” The EU is committed “to tackle false environmental claims by ensuring that buyers receive reliable, comparable and verifiable information to enable them to make more sustainable decisions and to reduce the risk of ‘green washing’.” However, there are a number of barriers to consumers’ ability to play an active and effective role: the proposal speaks about how “misleading practices, such as greenwashing and lack of transparency and credibility of environmental labels, occur at various stages of the consumption journey: during the advertising stage, the purchasing stage or during the use of the products.” A 2020 study conducted by the European Commission looking at a sample of 150 environmental claims for a wide range of products found “that a considerable share of environmental claims (53.3%) provide vague, misleading or unfounded information about products’ environmental characteristics across the EU and across a wide range of product categories.” Further, “40% of claims were unsubstantiated.” Another study conducted by the Commission found that of 232 active ecolabels in the EU, “almost half of the labels’ verification was either weak or not carried out.”
  

• Substantiation of explicit environmental claims: EU Member States will be tasked with ensuring that companies carry out an assessment to substantiate explicit environmental claims. Rather than relying on one methodology (the Product Environmental Footprint (PEF) has been discussed), the directive sets out criteria for the substantiation. For instance, the assessment would need to rely on widely recognised scientific evidence; would need to show that the benefits are significant from a life-cycle perspective; and that it covers all environmental aspects or environmental impacts which are significant to assessing the environmental performance. The assessment would need to demonstrate that the claim is seeking to tackle “significant harm in relation to environmental impacts on climate change, resource consumption and circularity, sustainable use and protection of water and marine resources, pollution, biodiversity, animal welfare and ecosystems.” And when it comes to greenhouse gas emissions: “separate any greenhouse gas emissions offsets used from greenhouse gas emissions as additional environmental information, specify whether those offsets relate to emission reductions or removals, and describe how the offsets relied upon are of high integrity and accounted for correctly to reflect the claimed impact on climate.” In addition to substantiation, there are a number of considerations for how companies can communicate about their environmental claims. For instance, “[w]here the explicit environmental claim is related to future environmental performance of a product or trader it shall include a time-bound commitment for improvements inside own operations and value chains.” Penalties include fines, confiscation of revenues and temporary exclusion from public procurement processes and public funding.
  

• Environmental labels: When it comes to environmental labels (of which there are 232 across the EU), “[o]nly environmental labels awarded under environmental labelling schemes established under Union law may present a rating or score of a product or trader based on an aggregated indicator of environmental impacts of a product or trader.” In short, no new public labelling schemes will be allowed, unless the EU develops it. No private labelling schemes will be allowed, unless “those schemes provide added value in terms of their environmental ambition.”