The EU Green Claims Directive is a crucial piece of legislation designed to enhance transparency and reliability in environmental claims made by businesses. With increasing consumer demand for sustainable products, the importance of genuine green claims has never been higher. However, the rise in eco-friendly marketing has also led to a surge in "greenwashing"—misleading or unfounded environmental claims. This directive addresses these issues by setting stringent standards for the substantiation, communication, and verification of green claims across the European Union.
This post also covers the basics of the EU Directive on Empowering Consumers for the Green Transition (ECGT), which aims to prevent unfair company tactics from hindering sustainable consumer choices. The ECGT is the "sister directive" of the EU Green Claims Directive and has already been formally adopted by the Council. You can get a quick overview here.
Last updated 25 June 2024
Content
Why are there two Green Claims Directives?
EU Directive on Empowering Consumers for the Green Transition (ECGT)
EU Green Claims Directive (GCD)
Pre-approval, Verification, and Self-Declaration
Why are there two Green Claims Directives?
The European Union has established two directives concerning green claims to address distinct but complementary aspects of environmental transparency and consumer protection.
The EU Directive on Empowering Consumers for the Green Transition (ECGT) focuses on consumer protection by prohibiting misleading environmental claims. In contrast, the EU Green Claims Directive (GCD) emphasizes environmental integrity, setting specific requirements for the use of environmental claims.
The ECGT aims to safeguard consumers against deceptive practices, whereas the GCD ensures that environmental claims meet stringent standards, comparable to the General Data Protection Regulation (GDPR) in terms of enforcement severity.
Together, these directives create a robust framework for ensuring truthful and reliable green claims in the marketplace.
Quick Overview: The EU Directive on Empowering Consumers for the Green Transition (ECGT)
The ECGT is the "sister directive" of the EU Green Claims Directive (GCD).
The Council has now formally adopted the EU Directive on Empowering Consumers for the Green Transition (ECGT), which aims to prevent unfair company tactics from hindering sustainable consumer choices.
This means the EU Directive on Empowering Consumers for the Green Transition (ECGT) must now be integrated into national legislation across the EU.
Key Aspects of the ECGT Directive
- Stricter Requirements for Environmental Advertising: The new directive demands that all environmentally related advertising claims must be scientifically substantiable. This means advertisers need to provide extensive evidence (and verifications) to support their environmental claims.
- Consideration of Social Impacts: In addition to ecological aspects, the social impacts of a product or company are now seen as important criteria. This includes information about working conditions, human rights, equal treatment, social security, ethical commitments, and, for example, animal welfare.
- Introduction of New Per-Se Prohibitions: The directive introduces specific bans on misleading advertising practices. These include unsubstantiated general environmental statements, misleading overall claims, vague future environmental performance, unspecific comparisons, and the use of uncertified sustainability seals.
- Restrictions on CO2-Neutral Advertising: Advertising based on CO2 compensations will be more strictly regulated. Companies will no longer be allowed to advertise "climate-neutral" products if they are solely based on compensation measures, as these are not considered equivalent to actual CO2 savings.
- Information on Durability and Repairability: The new directive requires that consumers be informed about the durability and repairability of products. This includes information on software updates, usage duration and intensity, repairability, availability of spare parts, and the manufacturer's warranty.
Timeline
- After being signed by the President of the European Parliament and the President of the Council, the directive will be published in the Official Journal of the European Union. It will then come into force on the twentieth day after publication.
- Member states have two years to adopt the law after its publication in the Official Journal.
- Therefore, it can be expected that the new directive will be enshrined in national law in 2026.
- Given the length of the (re)launch cycles of new products, companies should start implementing the new requirements now.
Background
The directives follow the 2020 EU consumer agenda and circular economy action plan, aligning with the European Green Deal. A good overview can be found here: https://environment.ec.europa.eu/strategy/circular-economy-action-plan_en
Basics
What is a “green claim”?
According to the EU / European Commission, a “green claim” (or “environmental claim”) is defined as a commercial or marketing claim that suggests or otherwise creates the impression that a product or service is environmentally friendly (i.e., has a positive impact on the environment), or is less damaging or harmful to the environment than competing goods or services, or that it has improved over time.
What is the Green Claims Directive?
The Green Claims Directive aims to stop greenwashing by setting standards for environmental claims. The spark came from a 2020 study showing that 53% of environmental claims in the EU were vague or misleading. If your company makes claims like "T-shirt made of recycled plastic bottles" or "ocean-friendly sunscreen," you'll need to meet minimum standards for backing them up.
This directive doesn't cover claims already under existing EU rules, such as the EU Ecolabel. To make a claim, you'll need independent verification and robust scientific evidence, keeping in mind any trade-offs for a balanced view. See also Scope.
The directive is still awaiting approval but is part of a larger EU effort, including the European Green Deal, to empower consumers and promote a greener economy.
Please note: The EU Directive on Empowering Consumers for the Green Transition (ECGT; the "sister directive" to the EU Green Claims Directive) was adopted by the Council on February 20th. See also the quick overview.
Which green claims fall under the scope of the Green Claims Directive?
The EU Green Claims Directive (GCD) sets out clear guidelines for various types of green claims to ensure transparency and accuracy in environmental marketing. The directive distinguishes between two main types of claims:
- Explicit Green Claims: These are direct and clear statements or assertions made in written form or orally about the environmental benefits of a product or service. Examples include phrases like “100% recycled material” or “carbon-neutral production.”
- Implicit Green Claims: These are indirect suggestions or implications about the environmental benefits of a product or service, often conveyed through images, colors, or vague terms like “eco-friendly” without specific details.
Here are the primary types of explicit green claims covered under the directive:
- Generic Environmental Claims: Broad claims that a product or service is environmentally friendly, such as “eco-friendly,” “green,” or “sustainable.” The directive ensures these claims are backed by substantial evidence to prevent greenwashing.
- Specific Environmental Claims: Claims related to particular environmental benefits or attributes of a product or service, such as “made from recycled materials,” “biodegradable,” or “low carbon footprint.” These claims must be substantiated with precise and relevant data.
- Comparative Environmental Claims: Claims that compare the environmental impact of one product or service to another, such as “50% less plastic than the previous version” or “more energy-efficient than competitor products.” These claims must be fair, clear, and supported by robust evidence.
- Claims About Improvements Over Time: Claims that highlight how a product or service has become more environmentally friendly compared to its past versions, such as “now with reduced emissions” or “improved recycling process.” The directive requires these claims to be transparent and verifiable.
Which green claims or labels are not covered by the GCD?
The EU Green Claims Directive (GCD) specifies certain exclusions and limitations to ensure clarity and avoid overlaps with other regulations. Here are the key exclusions:
Claims Regulated by Other Union Legislation: The directive does not apply to environmental claims, labels, or schemes that are already regulated by other EU laws. For instance, claims related to organic farming, which fall under the Regulation (EU) 2018/848, are excluded.
Financial Services: Environmental claims related to financial services, such as green loans or green home insurance, are not covered by the GCD. These services have separate regulations concerning their environmental claims and certifications.
Mandatory Reporting by Large Companies: Large companies that report sustainability information according to the European sustainability reporting standards are exempt from the GCD when it comes to those specific reports. This ensures no duplication of reporting efforts and maintains consistency in reporting standards.
Certified Organic Products: Claims on products certified as organic under existing EU organic farming regulations are excluded from the directive. This ensures consistency and avoids overlapping regulatory requirements.
Green Claims for Financial Incentives: Offers that involve financial incentives for meeting environmental criteria, such as green loans or discounts for sustainable behaviors, are not regulated by the GCD.
Which businesses are affected by the Green Claims Directive?
If you're a business operating in the EU, the Green Claims Directive likely applies to you, except for some small businesses. You'll need to adhere to guidelines on substantiating and communicating your green claims, and secure a certificate of conformity from an accredited verifier.
Does the Green Claims Directive exclude any sectors, businesses, or product categories?
Yes, the Directive exempts microenterprises with fewer than 10 employees and less than EUR 2 million in annual turnover. They can still get a certificate of conformity if they meet the criteria, but they're not strictly bound by all the directive's provisions.
It also doesn't cover claims on organically certified products, sustainability information in financial services, or reports from businesses following EU sustainability standards. These are still subject to other regulations.
Are businesses from outside the EU that are selling to EU consumers also affected by the Green Claims Directive?
Yes, if you're a non-EU business targeting EU consumers, you'll need to comply with the directive. The aim is to create a global standard for environmental claims, especially for companies interacting with the EU market.
Be aware that new private environmental labels are generally not allowed. If you think your label adds value in terms of environmental goals or scope, you'll need to seek approval from the Commission.
Timeline
When does the Green Claims Directive come into effect at EU and member state level?
Current Status
- Trilogue Negotiations: The Council of the EU has agreed to start talks with the European Parliament and the European Commission to reconcile their positions on the directive.
Next Steps
- Trilogue Negotiations: The Council, Parliament, and Commission will enter trilogue negotiations.
- Provisional Agreement: Reaching a provisional agreement during trilogue negotiations.
- Council Adoption: Formal adoption of the agreed text by the Council of the EU.
- Parliament Approval: A plenary vote by the European Parliament to approve the final text. The last significant plenary vote was on 12 March 2024, adopting the first reading position.
- Publication and Entry into Force: Publication in the Official Journal of the European Union and entry into force 20 days after publication.
- Transposition Period: Member States have 18 months to transpose the directive into their national laws and regulations. They must start enforcing these rules 24 months after the directive’s effective date.
Who oversees the implementation of the Green Claims Directive?
The European Commission takes the lead in overseeing the directive's implementation across Member States. Member States themselves are tasked with establishing verification procedures for environmental claims and designating competent authorities for coordination. Additionally, the Commission is set to evaluate the directive five years after it takes effect.
Criteria & Requirements
What are the key requirements for substantiating environmental claims?
The EU Green Claims Directive mandates that all environmental claims must be substantiated using current, widely recognized scientific evidence. This includes considering the entire lifecycle of the product, from production to disposal, to provide a comprehensive assessment of its environmental impact. Here are the detailed requirements traders must follow:
Scope of Claims: Clearly identify whether the claim pertains to the entire product, part of the product, or specific activities of the trader.
Scientific Evidence: Use widely recognized scientific evidence and accurate information to support the claims.
Lifecycle Perspective: Demonstrate that the environmental impacts subject to the claim are significant from a lifecycle perspective.
Comprehensive Environmental Aspects: Take into account all relevant environmental aspects for the performance assessment.
Legal Compliance: Ensure that the claim is not equivalent to existing legal requirements imposed on products or traders.
Comparison to Common Practices: Provide information on whether the product or trader performs significantly better regarding environmental aspects compared to common practice standards.
Avoiding Significant Harm: Identify if improving one environmental aspect leads to significant harm in other areas, such as climate change or biodiversity.
Greenhouse Gas Emissions Offsets: Separate any greenhouse gas emissions offsets from the actual emissions and provide detailed descriptions of these offsets.
Primary and Secondary Information: Include primary information available on environmental impacts. If primary information is unavailable, relevant secondary information representative of the specific value chain should be used.
Clear Communication: Information supporting the claim must be made accessible to consumers, either directly or through digital means such as QR codes or weblinks.
Comparative Claims: In addition to these, when making a comparative explicit environmental claim, traders must ensure the data and information used for assessing environmental impacts are equivalent and generated or sourced in a similar manner for both the product/trader and the compared entities.
How are carbon credits regulated under the Green Claims Directive?
The provisions dealing with carbon credits in the EU Green Claims Directive are notably stringent and prescriptive, reflecting a broader focus on transparency and accuracy in environmental claims. Here are the key requirements and restrictions businesses need to be aware of:
- Separation of Carbon Credits:
- Traders must distinctly separate carbon credits used for substantiating climate-related claims from greenhouse gas emissions.
- They must specify whether these credits pertain to reductions or removals of carbon emissions. This requirement emphasizes transparency in the use of carbon credits.
- Contribution Claims:
- Any claims involving the purchase of carbon credits that do not relate directly to value chain emissions must be clearly distinguished from claims about improved climate or environmental impacts of the product or trader.
- This ensures that the use of carbon credits is transparent and not misleading to consumers
- Compensation Claims:
- Compensation claims using carbon credits are restricted to the residual emissions of a trader. These are emissions that remain after achieving approximately 90-95% reduction in greenhouse gas emissions.
- The European Commission will adopt a method for defining residual emissions based on an emission reduction pathway compatible with limiting global warming to 1.5°C within a year of the directive's entry into force.
- Verification and Certification:
- Carbon credits used for substantiating environmental claims must be independently verified and certified.
- Only Union-issued credits, certified under the Carbon Removal Certification Framework Regulation (CRCF), will be acceptable for compensating residual emissions. Other units may be permitted in duly justified cases, provided they meet equivalent standards recognized by the Commission.
- Permanent Removals:
- For compensation of residual fossil emissions, only permanent removals as defined under the CRCF will be considered adequate. Permanent removals refer to practices capturing and storing atmospheric or biogenic carbon for several centuries, excluding enhanced hydrocarbon recovery.
- Future Environmental Performance Claims:
- Claims about future environmental performance based on carbon credits must comply with the European Sustainability Reporting Standards (ESRS). These standards provide detailed rules for disclosure around climate targets and ensure rigorous substantiation of such claims.
- Review and Tightening of Rules:
- The directive includes a provision for the European Commission to evaluate its effectiveness within five years, particularly focusing on whether traders are effectively prioritizing emission reductions in their operations and value chains. This review may lead to further tightening of rules related to the use of carbon credits.
A related landmark ruling by the German Federal Court of Justice (BGH) on June 27, 2024 - I ZR 98/23:
The German Federal Court of Justice has ruled that advertising with the term “climate-neutral” is only permissible if it is clearly explained in the advertisement itself what this specifically means. In the case at hand, a gummy and liquorice company was sued for advertising in a trade journal with “Since 2021, [the defendant] has been producing all products climate-neutral,” although the manufacturing process is not CO2-neutral and climate neutrality is achieved through compensation measures. The lower courts had dismissed the lawsuit, but the Federal Court of Justice ruled in favor of the plaintiff, the Central Office for Combatting Unfair Competition.
The Federal Court of Justice emphasized that there is a particularly high need for clarification in environmental advertising. “In advertising that uses an ambiguous environmental term like ‘climate-neutral,’ it must therefore be regularly explained already in the advertisement itself what specific meaning is decisive in order to avoid misleading.” References outside the advertisement are not sufficient, as reduction and compensation of CO2 emissions are not equivalent measures and reduction is a priority.
Key Takeaways
- Clarity in advertising: Ensure that terms like “climate-neutral” are clearly defined in the advertisement.
- Distinguishing measures: Clearly state whether climate neutrality is achieved through reduction or compensation.
- Direct clarification: Provide the necessary information directly in the advertisement, rather than only referring to external sources.
- Avoid misleading information: Make sure your advertising does not use ambiguous terms that could lead to misunderstandings.
What are the Product and Organisation Environmental Footprint (PEF/OEF) methods mentioned in the Green Claims Directive?
The Product Environmental Footprint (PEF) and Organisation Environmental Footprint (OEF) methods mentioned in the Green Claims Directive are standardized tools designed to measure and assess the environmental impacts of products and organizations. These methods utilize life cycle assessment (LCA) approaches to provide a comprehensive evaluation of environmental impacts, from resource extraction to end-of-life disposal. Here’s a detailed explanation:
Life Cycle Assessment (LCA): The PEF and OEF methods employ LCA to quantify the environmental impacts associated with all stages of a product’s life or an organization’s activities. This includes material and energy flows, emissions, and waste generation.
International Standards: These methods are based on internationally recognized standards (such as those of the International Organisation for Standardisation (ISO) 14040 and ISO 14044), ensuring consistency and reliability in how environmental impacts are measured and reported.
Comprehensive Environmental Impact Assessment: The PEF and OEF methods consider various environmental aspects, including greenhouse gas emissions, water use, resource depletion, and other significant impacts. This holistic approach helps companies identify and mitigate their environmental footprint effectively.
Supply Chain Considerations: Both methods take into account the environmental impacts along the entire supply chain, from raw material extraction through manufacturing, distribution, use, and end-of-life stages. This helps businesses understand and reduce impacts not just within their operations but throughout their supply chain.
Is there a mandatory standard methodology for assessing the footprint?
No, there isn't a one-size-fits-all standard methodology for assessing environmental footprints. Initially, the European Commission looked into using EU product and organization environmental footprint methods as a standard. However, it found that these methods don't cover all types of products or all kinds of environmental impacts. Therefore, the Commission opted for a more flexible approach rather than a single, standardized method.
Pre-approval, Verification, and Self-Declaration
How should businesses verify or certify their Green Claims?
Third-Party Verification: Businesses can use independent third-party verifiers who are accredited in accordance with Regulation (EC) No 765/2008 or an environmental verifier as defined in Article 2 No. 20 of Regulation (EC) No. 1221/2009. These verifiers ensure that the environmental claims meet the directive’s requirements.
Certificates of Conformity: After verification, the verifier issues a certificate of conformity, which declares that the environmental claims comply with the directive. This certificate is recognized by authorities across the EU.
ISO 14024 Type I Ecolabelling: Businesses that have been awarded an officially recognized EN ISO 14024 Type I ecolabel are exempted from the verification procedure. This type of ecolabel indicates excellent environmental performance.
Simplified Procedure for Certified Claims: If a business’s green claims are based on another EU act’s substantiation methodology or an existing environmental label, they can use a simplified procedure. They must demonstrate compliance through specific technical documentation.
What is the process for pre-approval and verification of green claims?
The EU Green Claims Directive mandates a rigorous pre-approval and verification process for environmental claims to ensure their credibility and compliance. Here is a detailed breakdown of the process:
Verification Body Requirements:
- Personal Independence: Verifiers must operate independently, free from any personal conflicts of interest that could influence their judgment.
- Financial Independence: The verification body must be financially independent from the entities it evaluates to avoid any potential bias.
- Expertise: Verifiers must possess the necessary expertise in environmental science and assessment methods to accurately evaluate claims.
- Confidentiality: Verifiers are required to maintain strict confidentiality regarding all information reviewed during the verification process.
Scope of Verification:
- Article 3 GCD: Content requirements for environmental claims, ensuring that they are substantiated by robust scientific evidence and reflect significant environmental impacts.
- Article 5 GCD: Communication requirements, specifying how environmental claims should be presented to consumers clearly and transparently.
- Articles 4 and 6 GCD: Additional requirements for comparative environmental claims, ensuring fairness and accuracy in comparisons with other products or traders.
Certificate of Conformity:
- Issuance: Upon successful verification, a certificate of conformity is issued, confirming that the explicit environmental claim meets the directive’s standards.
- Timeline: The Commission is tasked with developing a simplified procedure that may include a presumption of conformity for simpler claims and products.
- Management and Sharing: This certificate is managed by the relevant authorities and shared within the Internal Market Information System (IMI), ensuring recognition across the EU.
Periodic Re-verification:
- Trigger Conditions: Re-verification is required if circumstances arise that could affect the accuracy of the environmental claim.
- Scheduled Re-verification: Mandatory re-verification occurs every five years to ensure ongoing compliance and accuracy of the claims.
Verification Timeline:
- Standard Deadline: MEPs have voted in favor of a 30-day deadline for the verification of environmental claims and labeling schemes, with the possibility of extending this deadline by another 30 days if necessary.
- Simplified Procedure / self-declaration: See next point.
When can a trader use self-declaration?
Traders can use self-declaration for certain types of explicit environmental claims that are deemed less complex. This approach reduces the need for third-party verification and lowers the administrative and financial burden on traders. Here are the conditions under which self-declaration can be used:
Eligible Categories for Self-Declaration
- Exceeds Minimum Requirements: Claims that an environmental characteristic of a product or trader exceeds the minimum requirements set out in other Union acts.
- Certified by Environmental Label: Claims regarding environmental characteristics certified by an environmental label.
- Agricultural Practices: Claims related to interventions supporting agricultural practices beneficial for the climate, environment, and other management commitments under the Common Agricultural Policy Strategic Plan.
- Listed in Implementing Acts: Claims listed in the implementing acts adopted by the Commission, which do not require a full life-cycle analysis and are related to a single environmental characteristic.
Exclusions from Self-Declaration
- Comparative claims
- Climate-related claims
- Claims about future environmental performance
What is “Specific Technical Documentation”?
Specific Technical Documentation (STD) is a critical part of the self-declaration process. It includes all the necessary information that substantiates the environmental claims made by a trader. The STD ensures that the claims are transparent, verifiable, and based on solid evidence.
Contents of Specific Technical Documentation
- Description of the Claim: A detailed explanation of the environmental claim being made.
- Supporting Evidence: Scientific evidence and data supporting the claim.
- Life-Cycle Considerations: Information on how the claim considers the entire life cycle of the product or service.
- Compliance Details: Documentation showing how the claim exceeds minimum requirements or is certified by an environmental label.
- Environmental Impact: Data and analysis demonstrating the specific environmental impact being claimed.
- Verification Summary: A summary of the assessment and verification process, if applicable.
Examples of Claims Using Self-Declaration
- Reduced Energy Consumption: A product claims to use 20% less energy compared to previous models. The STD would include energy usage data, comparison metrics, and compliance with energy efficiency standards.
- Waste Reduction: A company claims its new packaging reduces waste by 30%. The STD would provide data on waste reduction, recycling rates, and material composition.
- Circular Business Models: A business claims its operations follow a circular economy model. The STD would include details on resource use, recycling processes, and waste management practices.
Process for Using Self-Declaration
- Prepare Documentation: Complete the Specific Technical Documentation before making the claim public.
- Submit to Authorities: Provide the STD to the relevant national authorities for review.
- Public Disclosure: Include a summary of the substantiation assessment with the public claim.
- Regular Updates: Ensure the documentation is regularly updated to reflect the latest data and standards.
Key Points to Remember
- Self-declaration simplifies the process for less complex claims.
- Specific Technical Documentation is essential for transparency and verification.
- Regular updates and accurate data are crucial for maintaining compliance.
How should businesses communicate or share Green Claim evidence or verifications with consumers?
Providing Information Together with Claims: Businesses should provide the necessary verification or certification information along with the environmental claim. This can be done physically or digitally using a data carrier or link.
Use of Digital Formats: To make it easier for consumers to access detailed information, businesses are encouraged to use digital formats like web links or QR codes. This information should lead to a website with more comprehensive details.
Information on Packaging and Accompanying Materials: The verification or certification details can be included on the product’s packaging, accompanying product information, a product-specific microsite, or an online selling interface. For oral claims, such as those made via radio or TV, businesses must inform consumers where to find the substantiation information.
Avoiding Duplication of Data Carriers: Businesses should not duplicate data carriers on products. If other EU legislation requires digital product information, the same data carrier should be used for providing environmental claim information.
Summarizing Substantiation Assessments: A clear and easy-to-understand summary of the substantiation assessment should be provided to consumers, indicating the environmental characteristics covered by the claim and including the certificate of conformity and contact information of the verifier.
Compliance Preparation
What steps should businesses take to comply with the directive?
To comply with the EU Green Claims Directive, businesses must establish a robust environmental claims management framework. Here are the key steps:
- Developing an Environmental Claims Management Framework:
- Gathering and Analyzing Data: Collect comprehensive environmental data across the product's lifecycle, including raw materials, production processes, distribution, and disposal. This data should be accurate, verifiable, and up-to-date.
- Conducting Life Cycle Assessments (LCAs): Utilize LCAs to evaluate the environmental impact of products or services comprehensively. LCAs help identify the areas where environmental improvements can be made and substantiate green claims.
- Internal Processes and Controls:
- Updating Communication Guidelines: Ensure that all environmental claims are communicated clearly and transparently. This includes training marketing and communications teams to accurately present environmental data.
- Ensuring Data Integrity and Transparency: Implement processes to maintain the accuracy and transparency of environmental data. Regular audits and updates should be part of the framework to keep the information current.
- External Verification:
- Selecting Accredited Verifiers: Choose independent, accredited third-party verifiers to validate green claims. These verifiers must be financially and personally independent, possess the necessary expertise, and adhere to strict confidentiality.
- Preparing for Verification: Prepare all necessary documentation and data for the verification process. This includes detailed reports on the product lifecycle, evidence supporting environmental claims, and internal audit reports.
How can businesses prepare for external verification?
Preparation for external verification involves several key steps:
- Documentation: Gather all relevant documentation that substantiates the environmental claims, including lifecycle assessment reports, scientific studies, and internal audit results.
- Selection of Verifiers: Identify and engage with accredited verifiers who have the expertise and independence required to assess the claims objectively.
- Internal Reviews: Conduct internal reviews and mock audits to ensure all claims and supporting documents are accurate and ready for the verification process.
- Continuous Monitoring: Implement continuous monitoring processes to ensure that the claims remain accurate and up-to-date, reflecting any changes in product lifecycle or scientific evidence.
What are the common challenges businesses might face and how can they overcome them?
Businesses may face several challenges in complying with the directive, including:
- Financial and Operational Impacts:
- Increased Costs: The costs associated with gathering detailed environmental data, conducting LCAs, and undergoing external verification can be significant. To mitigate these costs, businesses should integrate sustainability efforts into their existing processes and seek cost-sharing opportunities through partnerships and grants.
- Operational Changes: Implementing new processes and controls can be operationally challenging. Businesses should develop a clear implementation plan, involve cross-functional teams, and leverage existing systems where possible.
- Knowledge and Data Gaps:
- Addressing Gaps: Identify any gaps in knowledge or data early in the compliance process. Businesses may need to invest in training and development for staff or hire external experts to fill these gaps.
- Maintaining Compliance Over Time:
- Regular Updates: Ensure that all environmental claims are regularly reviewed and updated to reflect the latest scientific evidence and changes in the product lifecycle. Continuous monitoring and periodic re-verification are crucial for maintaining compliance.
Enforcement
How is the Green Claims Directive enforced?
The enforcement of the Green Claims Directive is detailed in Article 16, titled “Complaint-handling and access to justice.” Under this article, individuals or organizations with a “legitimate interest” can submit substantiated claims to the designated national authorities. Here are the key points:
Complaint Handling: Individuals or organizations with a legitimate interest can file complaints regarding non-compliance with environmental claims. These complaints must be substantiated and directed to the national authorities designated by each Member State.
National Authorities and Coordination Mechanism: Member States are responsible for setting up competent authorities to handle these complaints. Additionally, a coordination mechanism must be established to ensure effective enforcement and consistency across different regions.
Verification Procedures: The Directive requires Member States to establish procedures for verifying the environmental claims made by products or traders in the market, as well as ecolabeling schemes. This includes using company-specific, primary data to support green claims.
What is the complaint process under the Green Claims Directive, from first notice to potential penalties?
- An eligible individual or entity submits complaint to designated authority.
- The competent authority reviews the complaint and assesses the claim's compliance with the Directive.
- If non-compliant, the authority orders corrective action within 30 days.
- Failure to comply results in enforcement measures such as warnings or fines.
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The complainant may have option for legal action at national or EU level.
What are potential penalties for non-compliance with the Green Claims Directive?
Non-compliance with the Green Claims Directive can lead to significant penalties designed to enforce adherence and prevent greenwashing. The penalties include:
Fines: Businesses may face fines up to 4% of their annual turnover in the affected Member States. This is aimed at ensuring that the financial consequences are significant enough to deter non-compliance.
Revenue Seizure: Authorities may seize revenues obtained from transactions related to the non-compliant environmental claims, ensuring that businesses do not profit from misleading information.
Exclusion from Public Procurement and Funding: Non-compliant businesses may be excluded from public procurement processes and access to public funding for up to 12 months. This exclusion acts as a deterrent by impacting potential business opportunities.
How can consumers help to hold businesses accountable under the Green Claims Directive?
To keep businesses in check, consumers can rely on "qualified entities" under the Representative Actions Directive (EU) 2020/1828. These organizations, often consumer groups, can legally challenge companies if there are doubts about the authenticity of their green claims. In essence, you can contribute to accountability by supporting or collaborating with these qualified entities.
Do consumers have any actionable rights and entitlements under the Green Claims Directive?
Consumers don't have actionable rights under the Green Claims Directive. However, they do benefit indirectly. The Directive aims to provide consumers with reliable environmental claims and labels, helping them make informed purchasing decisions. Additionally, the Directive contributes to a more level playing field in the internal market, offering cost-saving opportunities for businesses trading across borders. This, in turn, accelerates the green transition and enhances environmental protection, which ultimately benefits consumers.
Impact
How does the Green Claims Directive aim to reduce greenwashing?
The directive aims to cut down on greenwashing by setting strict verification and substantiation standards for environmental claims. Member States will oversee these processes, relying on independent, accredited verifiers. So, if your company makes a green claim, be prepared to back it up with robust, widely recognized scientific evidence.
If you're comparing your product to others, make sure the comparison is fair and based on similar data. Aggregate scores that lump various environmental impacts together are not allowed unless they align with EU rules.
Regarding labels, EU-level schemes are the gold standard. New public labeling schemes must be at the EU level, and new private schemes need pre-approval and must show they're more ambitious environmentally. All environmental labels need to be transparent, third-party verified, and reviewed regularly.
Does the European Commission see any competitive disadvantages arising from the Green Claims Directive?
No, the European Commission actually sees the directive as a boost for companies genuinely focused on eco-friendly practices. The idea is that a uniform set of rules can enhance your competitive edge, reduce the risk of varying legal standards, and lower costs if your claims are certified. This approach aims to build trust in EU industries, both domestically and internationally.
Regulatory context
What is the political context of the Green Claims Directive?
The directive is part of the European Green Deal, which aims to make the EU climate-neutral by 2050. It's specifically nested within the Circular Economy Action Plan (CEAP), which includes the Initiative on Substantiating Green Claims (ISGC). This initiative works alongside other EU policies focused on empowering consumers, designing sustainable products, and implementing a farm-to-fork strategy. Together, these efforts aim to establish a coherent policy landscape that encourages sustainable goods and services.
The directives follow the 2020 EU consumer agenda and circular economy action plan, aligning with the European Green Deal. A good overview can be found here: https://environment.ec.europa.eu/strategy/circular-economy-action-plan_en
Is there existing national regulation similar to the Green Claims Directive?
Yes, several countries have national laws that align with the new Green Claims Directive. Here's a quick list for reference:
- France: French Environmental Code
- UK: Consumer Protection from Unfair Trading Regulations
- Netherlands: Dutch Sustainability Claims Code
- Sweden: The Swedish Marketing Act
- Denmark: The Danish Marketing Act
- Belgium: The Environmental Advertising Code
- Germany: Act Against Unfair Competition
- Hungary: Acts on Competition and Unfair Commercial Practices against Consumers
- Italy: Italian Consumer Code
- Finland: Finnish Consumer Protection Act
- Poland: Acts on Combating Unfair Competition and Unfair Commercial Practices
- Czech Republic: Czech Consumer Protection Act No. 634/1992
Some countries also offer specialized guidelines on environmental claims, such as Sweden, Denmark, Finland, and Norway with their Guidance from the Consumer Ombudsman, or Hungary's Green Marketing Guidance.
Does the Green Claims Directive extend or replace any previous EU directives?
The Green Claims Directive doesn't replace previous EU directives but rather enhances them. It works alongside the Unfair Commercial Practices Directive (UCPD), which already addresses misleading advertising and sales practices, including green claims.
The European Parliament and the Council are revising the UCPD based on a new proposal called the "Directive on Empowering Consumers for the Green Transition," submitted in March 2022. This proposal aims to make the UCPD more effective against greenwashing by adding a blacklist of unfair practices. The Green Claims Directive complements this by setting out specific rules for verifying and communicating environmental claims before they're marketed.
Criticisms & Updates
Which stakeholders were consulted during the creation of the Green Claims Directive and what was their feedback?
The Commission engaged stakeholders through public and online consultations, as well as workshops. Business associations and large companies called for independent certification and flexible ways to communicate environmental information. Environmental and consumer NGOs recommended leveraging existing tools like type 1 ecolabels. Public authorities and citizens also favored independent, accredited certification.
A 2020 workshop highlighted the need to tackle greenwashing and support a harmonized EU approach, emphasizing the importance of trusted ecolabels like the EU Ecolabel.
What are criticisms about the EU Green Claims Directive?
Critics highlight several concerns about the directive:
Weak Enforcement: Skeptics worry that without robust enforcement by national authorities, the directive won't effectively curb misleading green claims.
Narrow Focus: The directive has come under fire for primarily emphasizing carbon emissions and not adequately addressing other environmental factors like toxicity and recyclability.
Methodology Gaps: Environmental organizations point out the absence of a unified EU methodology for assessing environmental impacts, leaving room for companies to choose methods that paint them in a better light.
Diluted Guidelines: Consumer and environmental advocates argue that industry lobbying has watered down the rules, making them too vague to be effective.
The overall sentiment is that while the directive is a step in the right direction, its success hinges on strong enforcement, a broader focus on environmental factors, and clear, unified methodologies.
What are the key improvements that organisations are suggesting for the new Green Claims Directive?
Various organizations have proposed the following improvements (some of these have since been addressed in the latest drafts):
Ban Carbon Neutrality Claims: Critics advocate for a ban on all claims about carbon or climate neutrality to prevent misleading statements. They suggest carbon credits should only reference separate contributions to climate action.
Limit Future Claims: Proposals suggest restricting future environmental claims to the company level, rather than allowing them for individual products. This aims to focus efforts on overall organizational improvements.
Strengthen Criteria for Future Claims: Recommendations include allowing future-oriented environmental claims only if they meet specific, science-based criteria. These claims should also be verified by an independent system and backed by a realistic implementation plan.
Pre-Approved Schemes: Organizations suggest introducing a list of pre-approved certification schemes and sustainability labels, preferably at the EU level. This would establish a uniform set of ambitious criteria.
International Alignment: Recommendations call for harmonizing EU methods with globally recognized standards and ensuring that national schemes that meet these criteria remain operational.
By considering these suggestions, the directive could address some of the current criticisms and create a more robust framework for environmental claims.
What are the biggest opportunities for businesses seen through the Green Claims Directive?
The Green Claims Directive offers several opportunities for businesses:
Spur Market Opportunities: By encouraging competition around sustainable products, the directive opens new market segments, allowing businesses to diversify and grow.
Enhance Product Quality: The focus on sustainability can lead to improved product performance, benefiting both consumers and manufacturers.
Increase Credibility: The directive provides a framework for businesses to substantiate their environmental claims. This can build trust among consumers and help companies stand out.
Avoid Greenwashing Pitfalls: Businesses can sidestep the reputational risks associated with greenwashing by adhering to the directive's standards.
Level Playing Field: By regulating private environmental labels, the directive makes it easier for businesses to compete fairly, reducing consumer confusion in the process.
Overall, the directive aims to reward genuine sustainability efforts, spur innovation, and drive market growth, while holding businesses accountable for their environmental claims.
Sources & Disclaimer
What sources did we use?
9. Copa - International Federation of Organic Agriculture Movements, 2023
10. Applia - Home Appliance Europe, 2023
Is this legal advice?
No, the content made available does not constitute individualised legal advice. It merely serves as general information. The content is not made available in the context of a contractual legal counsel relationship.
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