New greenwashing rules in the EU

On 20 February 2024, final approval was given to the Green Claims Directive (‘Directive on substantiation and communication of explicit environmental claims’) by the Council of the EU. This Directive aims to tackle false, confusing or misleading environmental claims. Companies will be required to substantiate their environmental claims and communicate them clearly to consumers. Below, we discuss what will change and explain how you can prepare for the Green Claims Directive.

How does the EU want to tackle greenwashing?

As we have recently described in our blog on sustainability agreements, EU authorities keep on supporting sustainable businesses with pro-environmental regulatory solutions. At the same time, more and more EU consumers also want to participate in the fight for a green future by making informed consumption decisions. Nevertheless, greenwashing actions of unfair traders can easily jeopardize their efforts. In 2020, the European Commission mapped around 230 active ecolabels in the EU, among which 53% were vague, misleading or unfounded. Therefore, under the Green Claims Directive, Member States will have to ensure that companies substantiate green claims about their products through detailed environmental impact assessment and proper communication to consumers.

In consequence, companies using environmental claims will be required to, in particular:

1. specify if the claim concerns the whole product or part of it;
2. base claims on widely recognised scientific evidence;
3. take all the significant environmental aspects and impacts into account to assess the environmental performance of the product, including a life-cycle perspective;
4. demonstrate that the claim is not equivalent to binding legal requirements and that the product subject to the claim performs significantly better than in common practice;
5. check that a positive achievement has no ecologically harmful side effect; and
6. if applicable, report greenhouse gas reductions in a transparent way.

In addition, companies which employ comparative environmental claims, i.e. claims that imply that a product has a better environmental performance than other products, will also have to conduct further environmental assessment and substantiate these claims:

1. using equivalent information and data that is sourced in an equivalent manner;
2. covering the same stages along the value chain;
3. covering the same environmental impacts, aspects or performances; and
4. using the same assumptions.

All the information mentioned above will have to be made available to consumers together with a claim in a physical form (like a label) or in the form of a weblink, QR code or equivalent.

Specific rules on environmental labelling schemes

Apart from these general rules, the Green Claims Directive also regulates environmental labelling schemes (i.e. certification schemes that certify that a product, a process or a company complies with the requirements for a specific environmental label). Such schemes will have to guarantee that:

1. information about their ownership, decision-making bodies, objectives, as well as requirements and procedures to monitor compliance, are transparent, accessible free of charge, easy to understand and sufficiently detailed;
2. the conditions for joining the scheme are proportionate to the size and turnover of the companies, so small and medium enterprises are not effectively excluded;
3. the scheme requirements have been developed by experts that can ensure their scientific robustness and have been submitted for consultation to a heterogeneous group of stakeholders that has reviewed them and ensured their relevance from a societal perspective;
4. a complaint and dispute resolution mechanism is in place; and
5. the scheme sets out procedures for dealing with non-compliance and foresees the withdrawal or suspension of the environmental label in case of persistent non-compliance.

So-called ‘self-certified’ environmental labels which are not based on a compliant certification scheme will be prohibited. At the same time, the Green Claims Directive limits the proliferation of new labelling schemes by imposing a direct ban on setting up new publicly owned environmental labelling schemes. National or regional environmental labelling schemes already established may continue to award environmental labels on the Union market, provided they meet the requirements of the Green Claims Directive. Public environmental labelling schemes from third countries will need the European Commission’s approval before entering the Union market to ensure that these labels provide added value compared to EU schemes.

As for new private environmental labelling schemes, they will have to be approved by Member States considering their added value compared to existing schemes. Last but not least, score labels based on an aggregated indicator representing cumulative ecological impacts, such as ‘Nutri-Score’, will be banned unless they are recognized as an environmental labelling scheme.

Enforcement of Green Claims Directive

The European Commission will publish the list of officially recognised environmental labels permitted for use on the EU market, whereas the Member States will have to establish procedures to ensure regular checks of the environmental labelling schemes compliance, as well as substantiation and communication of environmental claims. Member States will also have to lay down a system of penalties applicable in case of infringements. Lastly, consumers will be influential in the enforcement, since they will be empowered to take collective action against traders in breach of the Green Claims Directive.

Next steps

Now that the Green Claims Directive has been adopted, it will be published in the Official Journal of the European Union and will enter into force twenty days later. Then, Member States should transpose the Green Claims Directive into national legislation within 24 months. Environmental claims and eco-labels will therefore have to comply at least by early 2026, but perhaps sooner for certain (faster) Member States.

How to prepare for the Green Claims Directive?

Depending on implementation in the respective EU Member States, the Green Claims Directive will bring new risks of non-compliance, which include in each case substantial fines and perhaps also confiscation of revenues gained from non-compliant activity, and temporary exclusion from public procurement processes and access to public funding.

Last year, the ACM already updated its Guidelines regarding Sustainability claims. These can serve as an initial guideline for sustainability claims you use or intend to use. What else can you do?

1. Evaluate your green claims from the perspective of the new rules;
2. Develop substantiation processes for your green claims ;
3. Consider cooperation with authorized labelling schemes;
4. Engage with suppliers and examine your supply chains from the environmental perspective;
5. Set up compliance systems to regularly monitor and review your green claims;
6. Consider participation in industry associations to share best practices and learn from others;
7. Educate your marketing and product development teams.

Should you need any further tips on how to get your business prepared, we would be happy to help. Do not hesitate to contact us either by e-mail or phone.