What’s new in greenwashing? The Green Claims Directive on its way to adoption

Following the adoption of the Empowering Consumers for the Green Transition Directive (the “Empowering Consumers Directive”) which came into force on 26 March 2024 with a number of provisions to protect against commercial practices that mislead consumers, the Green Claims Directive is now also taking shape.

Roadmap of the Green Claims Directive

On 22 March 2023, the European Commission presented its proposal for the Directive on the Substantiation and Communication of Environmental Claims (the "Green Claims Directive"). After the European Parliament adopted its position on the proposed draft, the European Council, under the Belgian Presidency, reached a common position on 10 June 2024 after several months of negotiations. The final vote of the European Council took place at the Environmental Council on 17 June 2024, with the next step being negotiations with the European Parliament. A final agreement is expected at the end of 2024 or beginning of 2025. The Green Claims Directive would then have to be transposed into national law within 24 months.

Main targets of the Green Claims Directive

The Green Claims Directive aims to create a comprehensive system of harmonised standards and criteria for the use of voluntary business-to-consumer environmental claims, with a view to reducing greenwashing and misleading environmental claims, enhancing environmental protection, helping consumers to make informed and sustainable choices and improving legal certainty for companies.

To achieve these goals, the proposed Green Claims Directive contains various requirements for voluntary explicit environmental claims and eco-labels. In this respect, it sets out a three-part control process for the verification of claims:

• Substantiation: Explicit environmental claims must be substantiated based on generally recognised scientific evidence, considering all environmental aspects and impacts relevant to the assessment of environmental performance over a product’s life cycle. In addition, the claims must not be overly vague or general, such as "climate-friendly" or "sustainable". 
• Communication: The information and evidence on which the explicit environmental claim is based must be made available to consumers either in physical or digital form (e.g. via a link or QR code).
• Verification: Explicitenvironmental claims must be verified and certified by an accredited third-party body. Once the claim has been examined, a certificate of conformity will be issued, which shall be recognised in all Member States by competent authorities. However, the certificate does not guarantee a comprehensive protection, as the claims will still be assessed by the courts against the general principles of unfair competition law.

Amendments proposed by the European Council 

The European Council has proposed various amendments to the Green Claims Directive in order to achieve a balance between protecting consumers from greenwashing, promoting environmentally sustainable innovation, and ensuring that the administrative and financial burden on companies and national authorities remains manageable. This includes, inter alia:

• Simplified procedure for verification: To minimise the burden on companies to obtain verification from third parties on the substantiation of claims, the European Council has defined circumstances in which a simplified procedure is sufficient for certain claims. Inter alia, claims about exceeding the minimum environmental legal requirements or claims based on environmental labels are eligible for the simplified procedure. 
• Future environmental claims: For environmental claims relating to future performance, e.g. “net-zero by 2050”, the Green Claims Directive stipulates that, in addition to the requirements set out in the Empowering Consumer Directive (i.e. such claims must be supported by clear, objective, publicly available and verifiable commitments set out in a realistic implementation plan and verified by an independent third party expert who should regularly monitor the progress with regard to the commitments and targets, including the milestones to achieve them), such claims shall also be subject to the verification and certification requirement under the Green Claims Directive. Effectively, this results in a double verification requirement for companies. The proposed simplified procedure shall explicitly not apply to future environmental claims as they are considered too complex.
• Information on carbon neutrality claims: On claims relating to carbon neutrality, the European Council does not limit the use of claims to those companies that have used carbon credits only to offset residual greenhouse gas emissions, which is the Parliament’s position. Instead, the European Council calls for the European Commission to come up with secondary legislation to ensure uniform rules for substantiating traders’ claims related to climate, including guidelines on demonstrating the quality and integrity of carbon credits. 
• Environmental labelling schemes: Member States shall still be able to establish new national or regional public environmental labelling schemes if they have been previously approved by the European Commission. Further, the European Council suggests a derogation from the ex-ante verification for certain national and regional public environmental labelling schemes which are typically regulated by EU or national law if these schemes meet certain criteria.
• Implementation period: The European Council introduced a postponed application date of 36 months instead of 30 months after the Green Claims Directive comes into force to allow sufficient preparation for its application.

Outlook

The European Council has proposed several amendments seeking to strike a balance between consumer protection, the burden on economic operators and the promotion of environmental improvement. Although the legislative process is still ongoing, it is slowly approaching the finishing line, and it now remains to be seen where the EU is heading with its final legislation after the summer break. However, it is already clear that companies will face a considerable amount of work in implementing the requirements which they should prepare for.