New EU legislation on green claims will bring opportunities to sustainable businesses, although ensuring compliance with the new rules will require preparatory efforts from companies. As stricter and more detailed rules will apply to environmental claims and marketing, to prevent so-called greenwashing, companies with a genuinely sustainable product range will benefit from the new framework. Prohibition of greenwashing brings advantages to both consumers and businesses – and naturally to the environment.
Status of the New EU Acts
Legislative work in the European Union has been hectic lately, as the EU institutions aim to finalise a multitude of legislative processes before the upcoming European parliamentary elections. As part of the European Green Deal and the circular economy action plan, the European Commission published two directive proposals in 2022 and 2023 concerning green claims and greenwashing. The legislative process concerning the first proposal has already been completed, while the process concerning the latter proposal is still ongoing.
The Directive on Empowering Consumers for the Green Transition1 (the “Directive”) entered into force on 26 March 2024. The Member States will have to implement the Directive’s obligations by 2026: the deadline for adopting and publishing national implementing legislation is 27 March 2026, and the national measures must be applied from 27 September 2026.
The Green Claims Directive Proposal2 was published in March 2023 to complement the first directive proposal by providing more specific rules on environmental claims. The legislative process on the proposal will not be completed before the elections, and the outcome of the proposal therefore remains unclear.
From Soft Law to Specific Regulations: Levelling the Playing Field
Ensuring that environmental claims are fair, understandable and reliable will enable businesses to operate on a level playing field: detailed rules on environmental marketing will benefit companies aiming to provide environmentally sustainable products, as greenwashing of their competitors will be explicitly prohibited. This encourages competition and design of sustainable products, thereby reducing negative impacts on the environment.
Several studies show that a considerable share of environmental claims provide vague, misleading or unfounded information about products’ environmental characteristics, and consumers’ trust in green claims is quite low. Nevertheless, consumers want to be better informed on the environmental impacts of their consumption and to make better choices. Already under the current general consumer protection framework, environmental claims are also regulated: businesses must provide truthful information to consumers and refrain from misleading consumers to influence their choices.
The environment-specific regulations have, however, thus far mostly been non-binding, so-called soft law instruments. The national consumer authorities and the European Commission have intervened in greenwashing over the past few years. For instance, in February 2024, Zalando committed to removing misleading sustainability flags and icons displayed next to products offered on its platform. The Finnish Consumer Ombudsman’s several decisions on environmental marketing have been directed at large companies and well-known brands, and as the decisions have often also been reported in the media, they have increased awareness of the current rules and practice.
The new regulations will also impact businesses not operating directly with consumers. Deriving from increased obligations to provide information, B2C companies will need detailed data and even verified evidence regarding their products’ value chain in order to be able to express certain environmental claims. This will most likely also lead to more detailed requirements for their contractors and an eventual review of agreements and codes of conduct. New durability and repairability requirements will affect product design throughout a product’s entire value chain. It is expected that the new rules will in fact create a new standard for all players, from retail to component manufacturers.
General environmental claims, such as environmentally friendly, natural, green and climate neutral, will be prohibited if they are not based on recognised excellent environmental performance.
Directive on Empowering Consumers for the Green Transition
The new Directive on Empowering Consumers for the Green Transition will introduce specific provisions on green claims to the existing consumer legislation framework by amending the Unfair Commercial Practices Directive (UCPD) and the Consumer Rights Directive (CRD). Therefore, the current provisions on sanctions and supervision in the consumer protection legislation will also apply to the new rules.
Environmental and social characteristics and circularity aspects, such as durability, repairability and recyclability, were added to the list of the main characteristics of a product. As a rule, providing false or deceiving information in respect of the main characteristics of a product renders a commercial practice misleading.
Going forward, a commercial practice will be regarded misleading if it involves making an environmental claim related to future environmental performance without clear, objective, publicly available and verifiable commitments. On claims relating to future environmental performance, setting out a detailed and realistic implementation plan that includes measurable and time-bound targets is also required, as well as other relevant elements necessary to support its implementation, such as allocation of resources. The plan must be verified regularly by an independent third-party expert, whose findings are made available to consumers.
Twelve new items were added to the list of specific misleading practices. These practices on the so-called blacklist in Annex I of the UCPD are considered unfair in all circumstances, and are therefore prohibited.
New misleading practices include, inter alia:
- Displaying a sustainability label that is not based on a certification scheme or not established by public authorities.
- Making a generic environmental claim for which the trader is not able to demonstrate recognised excellent environmental performance relevant to the claim.
- Making an environmental claim about the entire product or the trader’s entire business when it concerns only a certain aspect of the product or a specific activity of the trader’s business.
- Claiming, based on the offsetting of greenhouse gas emissions, that a product has a neutral, reduced or positive impact on the environment in terms of greenhouse gas emissions.
The last item, concerning emissions offsetting, was added to the directive by the European Parliament. Such claims will only be allowed when they are based on the actual lifecycle impact of the product in question, and not based on the offsetting of greenhouse gas emissions outside the product’s value chain. The prohibition does not prevent companies from advertising their investments in environmental initiatives, such as carbon credit projects, as long as they provide such information in a way that is not misleading and that complies with the requirements laid down in European Union law.
There are also new requirements regarding durability and repairability of products, which include an obligation to inform consumers on the impairment of the functionality of a product when using consumables, spare parts or accessories that are not provided by the original producer.
Unrelated to environmental claims as such, new obligations on informing consumers about a legal guarantee of conformity and an eventual commercial guarantee will be introduced. A new harmonised label informing about a commercial guarantee, when a separate guarantee is offered, is to be placed on the product, on its packaging, directly in connection with the product on the shelf, or next to a picture of the product in online sale. Consumers must also be reminded of the legal guarantee by means of a harmonised notice.
The European Commission will later on specify the designs and contents of both the harmonised notice concerning a legal guarantee of conformity and the harmonised label concerning commercial guarantees. It has been discussed in Finland whether all new information obligations relating to products will in fact increase consumers’ awareness or whether the cumulative information requirements might even lead to increased indifference towards all information provided in connection with consumer products.
Proposal for Green Claims Directive
The European Parliament voted on the negotiating mandate regarding the Green Claims Directive in plenary in March 2024, and the trilogue negotiations will be initiated by the new Parliament after the European elections. As the opinion of the current Parliament does not bind the new European Parliament, the outcome and contents of the new legislation are uncertain. The proceedings will probably not make progress before autumn 2024.
The proposed Green Claims Directive would establish minimum requirements on the substantiation and communication of voluntary, explicit environmental claims and environmental labelling in business-to-consumer commercial practices. Unlike the other Directive set in consumer legislation framework, the Green Claims Directive would be a new, independent legislative instrument containing elements of both consumer protection and environmental legislation. There would also be separate sanctions for non-compliance: companies could be temporarily excluded from public procurement tenders, lose their revenues, and face fines of at least 4% of their annual turnover.
The Green Claims Directive would establish a verification and pre-approval system for environmental marketing claims, to protect consumers from misleading advertising. The Member States would have to assign verifiers to pre-approve the use of such claims. According to the European Parliament’s position adopted in March 2024, simpler and common types of claims should benefit from easier or faster verification processes. Nevertheless, a novel approach is being proposed for marketing claims, as pre-approval of claims would be required. This would also call for extensive evaluation and improvement of environmental claims governance processes in companies.
There would also be specific requirements for comparative claims and requirements for environmental labelling schemes. Although microenterprises are excluded from the scope of application of the proposal, the requirements would be likely to affect them, too, as part of the value chain of larger enterprises.
How to prepare
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1 Directive (EU) 2024/825 of the European Parliament and of the Council of 28 February 2024 amending Directives 2005/29/EC and 2011/83/EU as regards empowering consumers for the green transition through better protection against unfair practices and through better information.
2 Proposal for a directive of the European Parliament and of the Council on substantiation and communication of explicit environmental claims (Green Claims Directive) COM(2023) 166 final.
