EU Green Claims Directive – against greenwashing, for real environmentally friendly purchasing decisions

On March 22, 2023, the EU Commission presented its proposal for the so-called “Green Claims” Directive (Directive on the substantiation and disclosure of explicit environmental claims). This essentially involves companies having to comprehensibly substantiate and communicate their explicit environmental claims on products and in all advertising measures. The aim is to give consumers more clarity about which products and services are actually environmentally friendly so that they can make sustainable purchasing decisions.

Background to the Green Claims Directive

Consumers are becoming increasingly aware of the ecological impact of their own consumption behavior. However, the same also applies to the number of environmental claims on products and in relation to services. The two are interdependent – green claims are now a significant purchasing argument, so they can represent a competitive advantage. This is problematic, as shown, among other things, by a study conducted by the EU Commission in 2020: 53.3 percent of the green claims examined as part of the study were judged to be vague, misleading or unsubstantiated. And 40 percent of the environmental claims were simply not substantiated. In the course of publishing the Green Deal, the EU Commission had already determined that it would take consistent action against false environmental claims. The Green Claims Directive is now intended to put its money where its mouth is, so to speak.

What are Green Claims?

In a nutshell: Green claims are advertising statements related to the environment and sustainability that refer to products, services or entire companies or organizations.

Goals of the Green Claims Directive

The main objective of the Green Claims Directive is to enable consumers to make informed choices in favor of truly sustainable products, services and companies by providing clearer information about environmental claims. At the same time, the EU regulation aims to further reduce or eliminate greenwashing as far as possible. With the directive, the Commission wants to empower EU member states to impose penalties on companies that make unfounded, i.e. false, green claims about products and/or services.

The most important contents of the Green Claims Directive

The proposed directive stipulates that companies that make voluntary green claims for their products and/or services must comply with certain minimum standards. These relate on the one hand to how the environmental claims are to be substantiated and on the other hand to how they are communicated. Important: It is about explicit advertising claims with direct reference to the topics of environmental protection and sustainability. Here are some examples:

“Packaging made of … % from recycled plastic”
“Shirt made from recycled plastic bottles”
“Climate neutral shipping”

Before companies integrate voluntary environmental claims into their consumer information, they must have these green claims independently verified according to the proposal for the new directive and be able to substantiate them on the basis of scientific findings. It is also crucial to analyze in detail the environmental impacts actually relevant to the product or service being offered, including any potential trade-offs, in order to provide a complete and detailed picture in the end.

Furthermore, the proposed Green Claims Directive includes provisions to ensure relevant communication of environmental claims. For example, it does not allow green claims or eco-labels that make blanket assessments of the environmental impact of the product in question – unless that is the case under EU rules. If products, services or organizations are compared with competitors, the regulation requires that such comparisons be based on equivalent data and information.

In addition, the Green Claims Regulation proposal aims to put a stop to the increasingly uncontrolled proliferation of public and private eco-labels. Currently, there are well over 200 different environmental or sustainability-related labels – no wonder this makes consumers confused and suspicious. To counteract this, the directive proposes the following:

– New public labeling systems will only be approved if they have been developed at the EU level.

– Companies that want to introduce new private schemes must first prove that their environmental targets are more ambitious than those of existing schemes. They also require approval.

In principle, the Green Claims Directive requires that eco-labels – whether public or private – be reliable, transparent and independently verified, as well as regularly re-verified.

And what about the environmental labeling systems that already exist? These may remain in place, but only on condition that they meet the requirements of the Green Claims Regulation.

Under the regulation, companies must provide consumers with easy access to information about explicit environmental impacts, such as via QR code or web link.

Note: All those green claims that fall under existing EU regulations, such as the EU organic logo and the EU eco-label for organic food, are excluded from the directive. The legislation in place in this regard ensures that consumers can rely on these environmental claims. For the same reason, the regulation does not include green claims that cover already decided future EU regulations.

These are the tasks facing the EU member states

Once the Green Claims Directive comes into force, the EU member states will also have their work cut out for them. They will have to designate authorities responsible for implementing the regulation and give them the control and enforcement powers needed to ensure compliance. Furthermore, member states must determine exactly how violations of the Green Claims Directive will be sanctioned, with the regulation setting minimum penalty requirements (such as a minimum of four percent of companies’ annual sales).

Worth knowing: Under the Green Claims Regulation, EU member states are also required to introduce appropriate measures to help small and medium-sized enterprises (SMEs) implement the regulations – for example, by providing financial or organizational and technical assistance.

Wie es mit der Green-Claims-Richtlinie weitergeht

In accordance with the ordinary legislative procedure, the EU Parliament and the EU Council must examine and evaluate – i.e. approve or reject – the proposal for the Green Claims Directive submitted by the EU Commission on March 22, 2023. It can be assumed that the regulation will be approved. Once the directive comes into force, the EU member states must introduce the laws and regulations to comply with the regulation within 18 months.

Incidentally, Germany has so far had the “Law against Unfair Competition” (UWG). This protects competitors and consumers from unfair distortion of competition, such as can be produced by misleading advertising. If a company uses green claims to win over consumers who consume sustainably, but in reality does not live up to the environmental promises made, this is nothing other than distortion of competition. Greenwashing of this kind is now being uncovered with increasing frequency. For example, the Mainz-based family company Werner & Metz is actively fighting greenwashing. It gets to the bottom of the environmental claims made by competitors and does not shy away from pressing charges if there is a strong suspicion of greenwashing.

Conclusion

With the Green Claims Directive, there will soon be a legal regulation that specifically addresses greenwashing, applies EU-wide, and more reliably protects the environment itself in addition to consumers and companies that actually want to act sustainably.