Trustnet.Trade Editorial
With its new Green Claims Directive, the EU is taking one major step in the fight against greenwashing. As a result, the new legislation is going to ensure that environmental claims made by companies are reliable, comparable, and verifiable – of great importance to consumers making informed choices on issues of real sustainability.
Addressing Greenwashing Directly
Greenwashing is increasingly becoming a problem, where companies give misleading or false information about how ‘green’ their product is. It was this which the EU attempted to address when it proposed the Green Claims Directive in March of 2023. The Directive is part of the European Green Deal and is specifically designed to bring more transparency while contributing to the achievement of the target set regarding the climate by the EU for 2050: to be climate neutral.
The legislature has identified the following key objectives for the Directive:
- The Better Protection of the Environment: In performing its functions, it shall help in establishing a circular, clean, and climate-neutral economy.
- The Protection of Consumers and Businesses: Will protect consumers from deceptive claims and give a fair market to companies that offer genuinely green alternatives
- Enabling Competitiveness: Encourage companies to innovate and further enhance their environmental performance
- Ensuring Cost Saving: By facilitating free trade of business for sustainable businesses across the EU through harmonisation of rules across the markets.
Substantiated and Transparent Claims
The environmental claims shall be based on clear and transparent criteria and scientific evidence. This means that the following shall be required:
- Durability and Recyclability: The claims should be specific, easy to understand and verifiable
- Life Cycle Perspective: Assessments should consider the entire life cycle of the products from production to the final waste state.
- Comprehensive Impact Analysis: Claims should evaluate all all significant environmental effects
- Transparency in Greenhouse Gas Offsets: Companies shall clearly report the net-zero progress showing the offsets progress.
Verification and Simplification
A core element of the directive concerns the requirement that environmental claims be verified independently by a third party before publication. This ensures that, as far as possible, the claims are independently verified. There is, however, a simplified procedure for certain claims if a technical document is completed, allowing some flexibility while maintaining stringent standards.
Public Environmental Labels
The directive also applies to existing national and regional labelling schemes. Labels approved under EU criteria will not require third-party verification, and EN ISO 14024 type 1 ecolabels accepted in one member state will be accepted throughout the EU. The aim of this is harmonisation of environmental labels and thereby simplification and coherence.
Climate-Related Claims
There are specific rules for climate-related claims, especially those involving carbon credits. A business is required to clearly state the type and quantity of carbon credits and demonstrate that the same contribute or offset claims to climate action. Examples of the application of a net-zero target and progress toward reductions have been given.
Penalties for Non-Compliance
Significantly, businesses are hit with heavy penalties for making adverse, inaccurate, or unsubstantiated environmental claims so that the directive may successfully serve its purpose. The fine may run as high as 4% of the annual turnover of the concerned business. This, therefore, makes the economic impact of non-compliance high enough to deter greenwashing.
Next Steps
On 18 June 2024, the EU Council adopted its mandate on the Green Claims Directive, a critical, big step. It is expected that the negotiations with the European Parliament will begin during the legislative term and continue through 2025. The enforcement of the Green Claims Directive is currently expected to occur around 2027. After the directive is formally adopted, EU member states will have 18 months to transpose it into their national laws. Following this, they will need an additional 24 months to apply the measures, leading to a target for full compliance by 2028.
Conclusion
The Green Claims Directive is positively a footprint toward accountability and transparency in environmental marketing from the EU. It seeks to protect consumers from inaccurate information about environmental performance, to be able to back up genuine sustainability efforts, and then help attain climate neutrality in the EU by 2050. This new level of accountability will not only guide consumer decisions aright, therefore steering consumers toward the right choices but also put companies on the right path toward sustainable action – the very essence of sustainability for the environment and society.
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