With its proposal for a new Green Claims Directive, the European Commission wants to combat misleading greenwashing by companies. Stricter requirements aim to make environmental claims in advertising more reliable and enable consumers to consume more sustainably. The new requirements are planned to be enforced by corresponding sanctions. Companies should already prepare themselves for the coming changes.

The Commission targets Greenwashing 

On March 22nd, 2023, the European Commission presented its proposal for a regulation for environmental advertising claims. The draft of the “Green Claims Directive” had already been expected last year but was postponed several times. The initiative is part of the Action Plan for the Circular Economy, one of the components of the European "Green Deal".[1] Back in March 2022, the Commission had already presented a draft directive "to empower consumers for environmental change", which is set to adapt the Unfair Commercial Practices Directive. With its new initiative, the Commission specifically targets greenwashing and seeks to prevent companies from presenting themselves and their products as more environmentally friendly than they actually are. Stricter and uniform requirements shall enable consumers to always trust the reliability of environmental claims in advertising in the future. At the same time, the Commission hopes to create a competitive advantage for companies that make serious efforts to make their products environmentally friendly.

Requirements for the substantiation and communication of Green Claims 

 

The draft lays down uniform minimum requirements for environmental claims in advertising. The Directive defines an environmental claim as any statement or representation indicating that a product or company has a positive or no impact on the environment or is less harmful to the environment than others – for example, advertising for “sustainable”, “environmentally friendly” or “CO2 neutral” products. Not covered are environmental claims that are already regulated by more specific EU legislation such as the EU Energy Efficiency Label. Only micro-enterprises with fewer than 10 employees and an annual turnover of less than 2 million euros are exempt from the requirements.

Substantiation and verification of Green Claims

The proposed Directive lays down specific criteria which companies must meet before making such claims in advertising. In the future, environmental claims must be substantiated on the basis of scientific findings and verified in advance by independent, accredited bodies. The evidence required will depend on the type of claim. The relevant environmental impacts must be determined in each individual case. In contrast to earlier considerations, the Commission is not committing itself to a single methodology.

Requirements for the presentation

The draft also aims to ensure that environmental claims are communicated clearly and understandably. For example, in the widely discussed advertising of “climate-neutral” products, companies must provide transparent information on the extent to which the claimed climate neutrality is based on compensation measures. Environmental claims that refer to the entire environmental impact of a product in a generalised manner are not to be permissible. The information about the product or the company relevant to the environmental claim must be provided together with it in physical form or by means of a link or QR code.

Rules for environmental labels

In addition, the Commission is addressing the flood of eco-labels that are now used in the EU. New private eco-labels must be approved in advance and should only be allowed if they pursue more ambitious environmental goals than the existing labels. In general, all eco-labels must be verified by third parties and regularly inspected.

Companies face strict sanctions 

According to the draft Directive, member states shall not only introduce appropriate procedures to verify and enforce the requirements. Rather, they shall also establish "effective, proportionate and dissuasive" sanctions to be applied in case of violations of the Directive's provisions. For example, consumer organisations shall be able to bring representative actions (which have to be introduced in the member states by 25 June 2023) for violations of the Green Claims Directive in order to protect the collective interests of consumers. In addition, companies which advertise with misleading environmental claims face potentially heavy fines. According to the draft, member states shall ensure that when imposing sanctions, the highest fine is at least 4% of the annual turnover of the company concerned.

What happens next?

 

The Commission's proposal will now be discussed in the European Parliament and the Council. It is not yet clear how long the procedure will take. It also remains to be seen what changes will be made to the draft. The obligation for prior verification and certification of advertising claims is also likely to raise the constitutional question of the extent to which it is compatible with companies’ freedom of expression. If the directive is adopted, national legislators must implement the requirements within 24 months. Even though it will take a while until then, one thing is already clear: the requirements for environmental advertising will be tightened. With the new regulations, the Commission wants to ensure a level playing field and reduce legal uncertainty for companies. At the same time, the new requirements will entail a greater effort for companies regarding environmental claims. Advertisers should therefore keep a close eye on the further development.

[1] See the European Commission press release of December 11th, 2019, available at https://ec.europa.eu/commission/presscorner/detail/en/ip_19_6691.