On March 22, 2023, the European Commission took a definitive step towards regulating green claims by proposing a new directive aimed at ensuring the credibility of such claims across the EU. Under this proposed directive, companies would be obliged to substantiate any voluntary green claims made about their products or services in business-to-consumer interactions.
But what does this mean for companies, consumers, and the collective European dream of a greener economy? Let’s unpack the story.
EU’s decision to take a firmer stance on green claims was informed by a study conducted in 2020 claiming that:
Consumers were navigating a maze of claims, many vague or misleading. This was the alarm bell that prompted the EU to take action.
In February 2021, the EU Commission published the proposal for a Green Claims Directive, which aims to establish common rules for environmental claims and labeling on products in the EU. EU’s objectives with this directive are sharply defined:
As of October 2023, the key features of this directive include:
Scope of Application: The directive specifically addresses voluntary green claims made to consumers by businesses, excluding:
Non-EU traders will need to comply with the Green Claims Directive requirements if they make environmental claims to EU consumers.
Future Performance Claims: If a claim involves future environmental improvements, it must come with a detailed plan and timeline for achieving these goals
Third Party Verification: Explicit environmental claims which will need to be independently verified by a third party assessment body
Evidence-Based Claims: Claims must be supported by widely recognized scientific methods, peer-reviewed evidence, and life cycle assessments, adhering to established standards (e.g., ISO 14064, GHG Protocol)
Recognition of Environmental Labels: The Commission will maintain and publish a list of officially recognized environmental labels that will be permitted for use in the EU market
Regulations on Labelling: Labels that use a rating or score to indicate a product or company’s overall environmental impact are prohibited unless issued under an EU-approved environmental labelling scheme
International Labelling Schemes: New public environmental labelling schemes from third countries intended for the EU market must receive Commission approval
The Green Claims Directive casts a wide net, capturing any voluntary claim that implies a product or service has a positive, reduced, or neutral (carbon neutral) impact on the environment.
A slew of commonly used expressions have now been prohibited from casual use, including ‘carbon-neutral,’ ‘climate-neutral,’ ‘environmentally friendly,’ ‘eco-friendly,’ ‘natural,’ ‘biodegradable,’ and ‘energy-efficient,’ unless they can be substantiated with solid evidence. They now require proof beyond mere reproach.
It’s important to note that the directive does not cover claims and labels that are already governed by other EU laws.
Amidst a sea of negative speculations, the directive emerges with a nuanced approach to carbon offsetting, aiming to refine rather than reject its role in sustainability strategies.
It sends out a clear message: offsets are a part of the solution but not the sole answer to climate challenges
Here are the primary concerns the directive addresses:
According to the European Commission, the cost of substantiating claims will range from €500–€8,000 for claims relating to a product’s environmental footprint to €54,000 for claims relating to a company’s environmental footprint.
So why should companies bear the cost of meeting tough green regulations?
It’s simple: being green is good for business.
A study by KPMG reveals that a solid two-thirds of UK shoppers seek out eco-friendly products, and more than half will turn their backs on a brand caught bending the truth about their green credentials.
Almost 20% have already walked away from brands over greenwashing fears. It’s clear that being caught making false eco-claims can hit companies where it hurts—losing customers, business, and trust.
The EU will legislate the proposal into law in 2024, followed by a period until 2026 for Member States to integrate it into national law, with full enforcement across the EU starting after 2026.
The timeline outlined by the EU provides a phased approach to adoption and enforcement, giving companies a clear runway to align their practices with the new regulations. Start preparing now to stay ahead of the curve.
EU’s Green Claims Directive is more than a set of rules—it’s the script for a new narrative in the European market, one where truth in sustainability dialogue isn’t just expected, it’s mandated. For companies and consumers alike, this directive could mark the end of the greenwashing era and the beginning of an authentic, transparent journey toward sustainability.