EU Green Claims Directive against greenwashing: implications for companies

’Packaging made from recycled plastic’, ‘ocean-friendly sunscreen’, ‘carbon-offset shipping’, or ‘our company has slashed its carbon footprint 20% since 2015’. Consumers are confronted with an enormous number of claims about the green merits of products and services. But in the absence of specific EU standards, how can they be sure these claims are reliable?

The European Commission (EC) highlighted in a 2020 report that more than half of these kinds of environmental claims are vague or potentially misleading, and 40% are unsubstantiated, i.e. have no evidence to support them. The Commission's legislative initiative on green claims aims to address this issue and respond to concerns and doubts about greenwashing. 

What is the Green Claims Directive?

On 22 March 2023, the EC put forward a proposal for a regulation on environmental claims. The Directive on substantiation and communication of explicit environmental claims, or Green Claims Directive, aims to substantiate environmental claims to avoid misinformation and protect European consumers from so-called ‘greenwashing’.

This proposed Directive seeks to make marketing more transparent by regulating unfounded claims by retailers that may mislead consumers. The regulation requires companies to substantiate their claims about the environmental aspects of their products or the performance of their organizations using ‘robust, science-based and verifiable methods’.

Only legitimate eco-labels

The EC proposal will also regulate sustainability labels, both public and private. There are currently about 230 different active eco-labels in Europe and about 100 private green energy labels. This creates confusion and mistrust among consumers. The Green Claims legislative initiative aims to stop their proliferation, which also leads to unfair competition in the market, to the disadvantage of truly sustainable companies.

From now on, only eco-labels based on certification schemes approved or established by public authorities will be allowed in the EU. Thus, the regulation covers all voluntary claims about the environmental impact, aspect or performance of a product or service. However, it won’t apply to labels already covered by existing European standards, such as the Ecolabel or organic food logo, since current laws already ensure that they are reliable.

Green Claims Directive: a summary of obligations for companies

Companies will no longer be able to market their products or services using unsubstantiated claims of reduced, neutral or positive environmental impact. The proposed directive will require the manufacturer to substantiate the environmental claims that it voluntarily makes when marketing its product. It will have to meet a number of requirements relating to assessment, for example, adopting a life-cycle approach, from the raw materials used to manufacture a product to the end of its useful life.

Although no single method for assessment would be determined, compliance with these requirements would have to be verified by an accredited third party. The proposal would also establish obligations on how to communicate such environmental claims and introduce new rules on environmental labelling schemes.

Unmasking greenwashing and empowering consumers

The proposed Directive on eco-claims complements the March 2022 Directive on empowering consumers in the green transition. It will provide more specific rules on such environmental claims and develop more detailed conditions for their use, as well as a general ban on misleading advertising.

The ‘Green Claims Directive’ is intended to work alongside the new law passed by the European Parliament that will improve labelling and prevent unfounded claims about the durability of goods, as well as inciting consumers to replace consumables sooner than strictly necessary (printer ink cartridges, for example) or presenting products as repairable when they are not. This will also contribute to sustainable consumption and promote the circular economy.

Biljana Borzan said at a press conference that the new regulation ‘will change the everyday lives of all Europeans’. The MEP argued that this law, which will come into force in about two years, will combat premature obsolescence. ‘People will be able to choose products that are more durable, repairable and sustainable thanks to reliable labels and advertisements’, she added. Retailers can no longer say ‘plastic bottles are good because the company planted trees somewhere’.

For consumers to make more sustainable and eco-friendly purchasing decisions, they need reliable information. In the future, European companies will no longer be able to use generic environmental labels such as ‘eco’, ‘biodegradable’ or ‘climate neutral’ for their products without proof. It will no longer be enough to look green; it will have to be proven with robust, verified data. The law was finally approved by the European Council in February 2024.