Draft rules on 'green' claims and rights to repair published by European Commission

On 22 March 2023, the European Commission published two long-awaited legislative proposals which form a key part of its Circular Economy Action Plan (see our earlier blog here) and the New Consumer Agenda.

The proposals aim to empower consumers to purchase more sustainable products which are easy to repair and advertised with reliable, trustworthy claims. The harmonisation of sustainability labelling and better legal guarantees for repair at EU level will help companies currently struggling to adhere to differing national government requirements, whilst also tackling increasing greenwashing concerns that mislead consumers.

If the text of each of the draft Directives is agreed by Q1/Q2 2024, entry into force at national level would need to take place by Q2 2026, presuming the requirements are unchanged from the Commission’s proposal.

Draft Directive on Green Claims

The Green Claims Directive aims to provide further protection and transparency for consumers against greenwashing by ensuring that environmental claims made by companies are verifiable. The proposal is linked to last year’s proposed amendments to the Unfair Commercial Practices Directive, which would expand the list of product characteristics that traders must not mislead consumers about. This Directive would, among other things, deem certain types of environmental claim to be automatically unfair and thus in breach of consumer law (see further here).

Key proposals include:

• Application

The Directive would apply to voluntary business-to-consumer environmental claims made by traders which state or imply that a product or trader has a positive or no impact on the environment, is less damaging to the environment than other products or traders, or has improved its environmental credentials over time. Such claims could take various forms, including text, pictures, logos, and brand or product names. The Directive would apply to the extent that other specific legislation (for example, mandatory EU or national rules on energy labelling / ecodesign or organic food) does not apply to the product or type of claim in question.

• Exemptions:
  • The Directive would not apply to financial services or undertakings that report environmental information in accordance with the EU Accounting Directive (2013/34/EU), or to claims made under the EU green taxonomy.
  • Microenterprises are exempt unless they request to receive a certificate of conformity. 
  • Business to business claims.
• Requirements

Traders will not be permitted to make voluntary environmental claims unless they have been assessed and substantiated in accordance with the requirements of the Directive. Among other things:

• The assessment must specify which part(s) or aspect(s) of a product or service the claim relates to, demonstrate that environmental impact claimed is significant from a life cycle perspective, and consider ‘widely recognised’ scientific evidence and international standards.
• Any reliance on carbon offsetting must be clearly stated and supported by robust calculations.
• Where a claim is made in respect of a final product, the trader must also communicate information to the consumer on how to use the product to achieve the claimed environmental benefit.

The assessment must be updated if there is a change in circumstances which may affect the accuracy of the claim, and no later than five years after the claim is first communicated to consumers.

The draft also introduces requirements for new environmental certification scheme providers, including that they must provide information about their ownership, objectives, and the proposed criteria and methodology for certifying a particular product or service. Schemes established by public authorities outside the EU must be approved by the Commission. New schemes by private companies, whether operating in or outside of the EU, must be approved at national level if they can demonstrate added value.

• Verification: Member States will be required to have systems in place to verify the voluntary environmental claims made by traders. Verification will need to be conducted by an accredited third-party conformity assessment body. Once conducted, claims will be issued with a certificate of conformity. The Commission shall adopt implementing acts regarding the form of the certificate of conformity and verification undertaken by Member States. We can expect Member States to push for more clarity on this and a possible date for when the Commission will publish secondary legislation.
• Enforcement: If an authority considers that a claim does not comply with the Directive requirements, the relevant company should have 30 days to remedy the situation. Failure to do so could result in penalties. These are left to Member State discretion, but any fine imposed for cross-border infringements must be at least at 4% of the trader’s total annual Union-wide turnover in the preceding financial year.

Draft Directive on the Right to Repair

The Right to Repair Directive, amending the existing Sale of Goods Directive, will look to make it easier for consumers to seek repair of various goods rather than replacing products. This will ultimately help reduce waste. The proposal aims to ensure that consumers have easier and cheaper options to repair products, such as washing machines, fridges, electronic displays, vacuum cleaners, and certain other products, where repair is possible.

These proposals go hand-in-hand with already published initiatives by the Commission, including the Ecodesign for Sustainable Products Regulation (ESPR) and Empowering Consumers proposal. The Commission aims to cover the entire lifecycle of a product with these three proposals. You can find an overview of the ESPR in our previously-published blogpost on the topic here.

• Application: The rules would apply to all producers placing products on the market in the EU, or the importer or distributor if the producer is not based in the EU and does not have an authorised representative in the Union.
• Requirements:
  • Within the term of the applicable legal guarantee (two years under the Sale of Goods Directive), sellers will be required to offer repair except when it is more expensive than replacement. Replacement no longer the default option.
  • The Commission intends to establish a new set of rights and tools for consumers to ensure they can easily access repair. The establishment of a European Repair Information form, which consumers will be able to request from any repairer, is intended to bring transparency to repair conditions and price and make it easier for consumers to compare options.
  • Producers will also be obliged to inform consumers about products which do not fall under the right to repair (i.e. which the consumer will have to repair themselves).

Again, businesses are likely to welcome further clarity, including around the proposed mechanisms for enforcement of these rights by consumers. Businesses, particularly those based outside of the EU but which sell into it, may need to review their distribution agreements in due course to ensure that appropriate provision is made for facilitating the consumer right to repair.

The co-legislators (the European Parliament and Council) will now discuss the files and adopt their respective positions before negotiating the final text. With the EU elections taking place in May 2024, this will need to be done in the next year or risk being delayed until after the elections. With a tight agenda, it remains to be seen whether a deal on both files can be reached in early 2024 or not.

To discuss these proposals, please reach out to the authors or your usual Freshfields contact.