What is happening?
On 22 March 2023, the European Commission is expected to table the Green Claims Directive (GCD). This much-awaited law aims to crack down on greenwashing by regulating how companies substantiate and communicate their green claims.
If done right, this law, could bring some order in the wild west market environment of green advertising, and help protect EU consumers from misleading claims. For the first time, legislation will oblige companies to make supporting evidence available alongside a green claim.
A leaked legislative proposal from January 2023 indicated that legal obligations would apply to all claims and labels displayed in products, services or companies in both physical and online points of sale across the EU single market. The EEB hopes that such broad scope will be retained in the final proposal, as well as the strong focus on market surveillance.
Besides, the leaked proposal rightly addressed the limitations of the Product Environmental Footprint (PEF) method to provide a complete picture of products sustainability, but failed to set clear common rules for companies across the EU (see below: What to watch out for: key nodes and green NGOs’ demands).
Why is it important?
With over half of EU consumers shopping with sustainability in mind, green marketing has been proliferating: 75% of the products on the market in 2014 carried an implicit or explicit environmental claim. However, a recent study by the European Commission found that more than half of green claims are vague, misleading or unfounded. In addition, almost half of the 230 ecolabels available in the EU have very weak or no verification procedures.
What is the legal context?
The Green Claims Directive is a key piece in the puzzle of the Sustainable Product Initiative presented by the Commission one year ago. While the original aim was to oblige companies to substantiate their environmental claims using the PEF method, the Commission has now expanded its scope to regulate all types of green claims, including also those not covered by the PEF.
The new law should work hand in hand with the Directive on Empowering the Consumers for the Green Transition (ECGT), currently under scrutiny by the European Parliament. While the ECGT Directive will rule what companies cannot do (i.e., which claims are considered unfair commercial practices), the GCD will establish how they can operate (i.e., which methodologies companies should use to substantiate and communicate their green credentials).
The Green Claims Directive will also complement the Ecodesign for Sustainable Products Regulation (ESPR). While the latter sets obligations for mandatory information, the GCD will concern voluntary claims.
Blanca Morales, Senior Coordinator for EU Ecolabel, European Environmental Bureau (EEB):
“The proliferation of greenwashing is hampering the green transition: it hinders consumers’ ability to make informed sustainable choices, and makes it harder for the companies that strive to reduce their environmental impacts to differentiate themselves from free riders. We need clear EU rules to wipe out greenwashing claims, and we need companies to provide the evidence behind their credentials: no data, no claim.”
What to watch out for: key nodes and green NGOs’ demands
The EEB welcomes the integration of the PEF as a reference method, with complementary requirements addressing its limitations (which include missing impacts, questionable secondary data, and unbalanced governance). The proposed ban on green claims for products containing toxic chemicals is a good example of this.
Another positive development was the provision that the PEF method would not be used in those sectors where it fails to properly reflect all relevant impacts. For food and agricultural products, for instance, the leaked proposal rightly recognised that biodiversity protection and limited pesticide use must be part of the equation.
However, the proposal also gives companies the choice to use alternative methodologies. It would then be up to verifiers and national authorities to decide whether those alternative methods are compliant with the law.
This could open the door to the recognition of unreliable methodologies, with no guarantee that they address the limitations of the PEF method. Instead, we need clear and common rules to apply across the EU for all types of claims present in the market, including for the sectors where the PEF or any other life cycle assessment method fail to address all relevant environmental dimensions (such as on textiles or food).
To ensure that green claims rules and assessment methods are established through a transparent and inclusive process involving civil society, we call for a dedicated Consultation Forum on Green Claims (similar to the Consultation Forum set for Ecodesign, or the EU Ecolabelling Board).
While the leaked proposal highlights the need to involve environmental NGOs and consumer groups in the development of requirements for substantiating green claims, it fails to ensure adequate civil society participation. Instead, it only proposes consulting a group of national experts, an option which limits the transparency of discussions and the possibility to reach consensus.
We expect the Green Claims Directive to wipe out the too many misleading labels available in the EU market. The new law must require labels to build on strong governance principles, including independent certification and verification processes.
Moreover, the EU should create a registry of ecolabels that comply with the GCD instead of delegating the approval of “new” private ecolabels to national authorities (as in the leaked proposal), as this favours fragmented approaches across member states and a lower ambition overall.
The EU Ecolabel has been guiding consumers and companies towards more sustainable products over the last 30 years. It is the only EU-wide label awarded to products and services with a lower footprint than conventional ones over their entire life cycle, and should be recognised as a reliable scheme to reward excellent environmental performance.
Similarly, the Directive should acknowledge the reliability of other ISO Type I ecolabels that are well established in different member states, including those run by both public authorities and independent organisations such as environmental NGOs.
Carbon neutrality claims should be banned, as they mislead consumers by suggesting that products or services do not have any climate impact – something which is impossible to achieve from a scientific point of view.
The leaked proposal allows such type of claims by simply increasing the transparency requirements (i.e., requiring companies to use offsetting schemes based on robust accounting and leading to positive impact on the environment, such as the Carbon Removal Certification Regulation). This would be a missed opportunity on the path to achieve a carbon neutral economy, which requires companies to focus on reducing their emissions.
We welcome the provisions that oblige companies to provide studies and any other supporting evidence alongside their green claims (e.g., through a QR code). Currently, authorities only ask for supporting evidence when the reliability of a specific green claim is questioned – a verification process that requires time and public resources, and is only done on a case-by-case basis.
Moreover, the Directive should set clearer obligations with respect to the frequency and number of checks that market surveillance authorities should undertake to keep greenwashing at bay – as any legislation is only as good as its enforcement obligations.