On March 22, 2023, a landmark development in the green initiatives landscape unfolded as the European Commission proposed a fresh ‘Green Claims Directive’. A groundbreaking step forward, this directive delineates standardised regulations for evaluating, endorsing, and communicating green claims.
Unveiled alongside the draft directive for the right to repair, these measures are crucial components of the EU’s Circular Economy Action Plan. They form a part of the larger EU Green Deal, an ambitious endeavour to revolutionise consumer behaviour to minimise waste and foster a sustainable economy.
The draft directive will undergo the standard legislative procedure with an estimated 18-month period for discussion and amendment. Businesses are encouraged to closely follow updates to the directive and provide feedback to the European Commission before May 18, 2023.
Dissecting the Draft Directive
The Draft Green Claims Directive primarily confronts two prevalent deceptive commercial practices associated with sustainability – vague or unsubstantiated green claims (greenwashing) and opaque or untrustworthy environmental labelling schemes. To mitigate these issues, the directive sets forth a minimum criterion that a company must satisfy before making green claims and an explicit ban on sustainability labels that fail to meet transparency and credibility standards. The directive applies to all companies active in the EU single market.
Clarifying Green Claims
The Directive applies to any green claims made to consumers about the environmental impact of a company’s products or business. To ensure transparency, it stipulates several key requirements for making green claims:
- Claims should be substantiated by scientific evidence and consider all environmental impacts across a product’s life cycle.
- An independent third party must verify claims, and a certificate of conformity should be obtained.
- The basis of a claim should be explicitly communicated to consumers.
- Claims about future environmental performance should include a time-bound commitment to improvements.
- Businesses making ‘carbon neutral’ or ‘net zero’ claims using offsets must clearly communicate this to consumers.
Enforcement and Consequences
The draft directive necessitates member states to designate one or more authorities to audit green claims and environmental labelling schemes regularly. In case of an infringement, the business must take corrective action within 30 days. Penalties for infringement can include fines and temporary exclusion from public procurement processes and public funding access.
This initiative complements ongoing changes to EU consumer law under the Circular Economy Action Plan. It aligns with the EU’s proposal to ban certain misleading green claims by adding them to ‘blacklisted’ commercial practices.
Comparing EU and UK Regulations
Compared to the UK’s green claims regime, the draft EU directive proposes stricter regulations, requiring businesses to secure independent verification from a third party before making a claim. These regulations give businesses the confidence to withstand a challenge about a claim further down the line.
The harmonisation of green claims regulations in the EU is a boon for businesses selling into the EU, streamlining compliance with regulatory rules. However, given the stricter rules, UK businesses will likely need to align with the EU standard unless they only sell within the UK.
Accurate Reporting Instead of Greenwashing
In the interim, businesses should seize this opportunity to review their existing green claims in light of the proposed rules and make any necessary changes or qualifications. Particularly, the assessment and substantiation used to support green claims should be examined, as this will be one of the major changes and challenges for businesses.
Also, companies should focus more on reporting accurate carbon emissions instead of greenwashing and trying to paint a prettier picture. There is much to be gained there, as many retailers and producers report scope three emissions from their transport operations that are much higher than needed, basing them on statistical averages instead of actual emissions.
