Protecting the environment is on the agenda for most businesses and consumers. We are seeing an increasing number of promotions linked to creating a positive environmental impact. With more brands trying to shine a light on their environmental footprint, there has been an uptake in misleading, unfounded or vague green claims.

Research (here) by the European Commission found that around 75% of products in the EU market carry an implicit or explicit green claim, but more than half of these claims are vague or misleading, and half of the 230 ecolabels in the EU have no/weak verification procedures. If you have seen the Netflix show Seaspiracy, you probably know all about the controversy surrounding whether the dolphin-safe tuna labels are really dolphin safe.

On March 22nd, 2023, the European Commission proposed the Green Claims Directive (the “Directive”) to tackle greenwashing and to prevent businesses from misleading customers about the environmental characteristics of their products or services.

In brief, the Commission’s proposals are:

• Claims must be substantiated with scientific evidence that is widely recognised, identifying the relevant environmental impacts and any trade-offs between them.
• If products or organisations are compared with other products and organisations, these comparisons must be fair and based on equivalent information and data.
• Claims or labels that use aggregate scoring of the product’s overall environmental impact on, for example, biodiversity, climate, water consumption, soil, etc, shall not be permitted unless set in EU rules.
• Environmental labelling schemes should be solid and reliable.
• Environmental labels must be transparent, verified by a third party, and regularly reviewed.

Enforcement of the Directive will take place at the member state level and penalties are likely to range from fines to confiscation of revenues and temporary exclusion from public procurement and public funding.

What are the ramifications of these proposals?

If adopted, the Directive will have a big impact on businesses making green claims on products or services they sell to the EU. Having a set of common criteria on how companies should substantiate green claims means that companies across the EU will be able to compete on a level playing field. For consumers, having access to reliable comparable and verifiable information on products means they will be better informed when making purchasing decisions. So, on the surface, it seems to be a win-win for everyone – the environment, businesses and consumers!

Next steps:

The Commission’s proposals will pass to the European Parliament and Council for consideration. This process will likely take around 18 months so that businesses and stakeholders can participate in a public consultation.

We will keep you updated as to how the proposed Directive develops and on any impacts it may have on current industry practices, so stay tuned!