What is a green claim?
The new rules will apply to all “explicit environmental claims made by traders about their products or traders in business-to-consumer commercial practices.”
There are several important elements in this regard.
- The new EU standard applies only to products and traders of products, so it does not apply to services. Because this is a proposal for a directive, it cannot be excluded that Members States could expand the scope of legislation for environmental claims to apply to services.
- Environmental claim means any voluntary message or representation (in any form) in the context of a commercial communication, which states or implies that a product or trader (i) has a positive impact on the environment, (ii) is less damaging to the environment than other comparable products, or (iii) has improved their environmental impact over time. These phrases are some examples of an environmental claim: “animal-friendly,” “biodegradable packaging,” “carbon-neutral,” or “sustainable fishing.”
- The new EU standard will apply to “voluntary environmental claims” only. Mandatory claims to which specific rules apply (for example, the energy label that is affixed to household appliances) are outside the scope of the Green Claims Directive.
- Furthermore, the term “explicit environmental claims” must be distinguished from “comparative environmental claims.” An explicit environmental claim is a claim that is in textual form or contained in an environmental label or certification. A comparative environmental claim states or implies that a product or trader has less environmental impacts or a better environmental performance than other products or traders.
What are the main rules proposed in the Green Claims Directive?
The European Commission proposed a set of rules:
- Green claims must be based on an actual assessment that meets the minimum requirements. Among these requirements is that green claims will have to be proven scientifically.
- Green claims can cover only the environmental impacts that are substantiated in accordance with the requirements and that are considered “significant” for the product or the trader concerned.
- Green claims must be accompanied by information on their substantiation, which can be made available in physical form or in the form of a weblink, QR code, or equivalent. This means that companies that make green claims must think twice about what to put on their packaging.
- Companies that make green claims must have their green claims verified by an accredited assessment body (“verifier”) and their conformity certified (“certificate of conformity”) before the claims are made known to the public.
- Comparative green claims can be used only if they can be substantiated based on information and data that are equivalent to those used for assessing the environmental impacts, environmental aspects, or environmental performance of the product or trader.
- The directive contains many provisions on how to enforce the new rules. Member States will have to designate authorized bodies who are responsible for enforcing the rules and for sanctioning violations.
The financial consequences of violating the rules are significant. Companies that would be found guilty of greenwashing would run the risk of being fined up to 4% of their yearly turnover.
Why is the Green Claims Directive important?
This standard will compel companies to be more transparent about their environmental performance and to use factual information to substantiate their green claims about, for example, CO2 emissions, sustainable agricultural practices, and packaging.
For many sectors, this offers challenges as well as opportunities. Companies that effectively pursue sustainability goals will have a competitive advantage through their credible claims. On the other hand, companies that use greenwashing to mislead consumers will incur strict sanctions and reputational damage.
Companies that are active in the food sector and several other sectors need to be aware of the wide scope of greenwashing and must critically examine their green claims.
Entry into force?
The Green Claims Directive will become effective after the European Parliament and the Council approve it. This is expected to be around February or March 2024. Member States will have 18 months after the Directive enters into force to implement it in their national consumer protection laws.
By being aware of the proposed legislative changes, you can prevent yourself from breaking the future rules inadvertently. This minimizes the risk of being sanctioned and of suffering reputational damage consequent to any potential greenwashing.
For more information on this piece of legislation, feel free to contact Charles Claeys.
