What are the top three developments in the European Union concerning green claims and the associated risk of greenwashing?
The EU has come to the realisation that as the importance of ESG has increased simultaneously the number of green claims has also risen. Moreover, the EU considers that it has become difficult for market actors to make sense of these omnipresent environmental claims and labels; especially since greenwashing has been growing at the same speed as the consumers’ environmental awareness. Thus, the EU Commission advocated to reinforce the protection of consumers against false environmental claims. As a result, consumer related policy has been introduced as part of the Circular Economy action plan. These policies will help to empower consumers to make informed choices and play an active role in the ecological transition.
1. European Commission proposes new consumer rights and a ban on greenwashing
The recent proposals by the European Commission are part of the EU Green Deal that aims to “transform the EU into a modern, resource-efficient and competitive economy”.
On 30 March 2022, the European Commission presented several proposals to pursue its goal of a “truly circular economy in the EU”. The proposals aim at promoting the production of sustainable products and creating unified provisions on sustainability claims for the lawful marketing of “more sustainable” products. One of the initiatives presented by the Commission in March is to update the EU consumer rules to empower consumers for the green transition. With the updated provisions, the Commission wants to strengthen consumer protection by enabling consumers to make informed decisions when purchasing products. The Commission further specifies that “greenwashing” shall be banned and misleading practices with respect to the durability of a product be prevented.
The first proposal by the Commission to reach this goal is the amendment of the Consumer Rights Directive (Directive 2011/83/EU) by obliging traders to provide consumers with sufficient information on the durability and reparability of products. The information should be provided to the consumers in a clear and comprehensible way before a purchase decision is made.
Furthermore, the Commission proposes various amendments to the Unfair Commercial Practices Directive (Directive 2005/29/EC - UCPD). In particular, the Commission wants to add environmental or social impact as well as the durability and reparability of products to the list of product characteristics about which the traders must not mislead. This change would be a clear sign on the EU level to place more importance on environmental aspects in the advertising practices. In addition, the Commission wants to prohibit traders from making environmental claims with respect to future goals of a company if such goals are not pursued by “clear, objective and verifiable commitments and targets” and are not audited by independent third parties. Lastly, the Commission proposes additions to the so called “blacklist” of the UCPD which lists market conduct that is classified as misleading per se. Based on such, among others, trades must not make generic, vague environmental claims if the environmental excellence of the marketed product cannot be demonstrated, claim a certain environmental feature for the whole product if it only concerns certain aspects, use a voluntary sustainability label, that does originate from a third-party verification scheme or has been established by a public authority.
The Commission hopes that the above amendments to the directives will encourage consumers to make more informed choices and eventually choose products that are actually better for the environment and that clearer rules will facilitate enforcement to stop traders from unlawful advertising. In addition, the Commission has published the draft of a new directive which aims at establishing a uniform methodology for the substantiation of green claims and prerequisites for their communication (“Green Claims Directive”). Amongst other things, the directive requires that only such environmental claims shall be published that are based on third-party verified, scientific evidence. Moreover, additional information must be provided to the targeted audience of such claims to ensure transparency. National authorities are to be appointed to enforce compliance with the new regulations.
From our point of view, the initiative by the Commission will hopefully improve the legislative environment which is currently very heterogenous in the Member States and eventually make it easier for traders to market and advertise their products in a lawful way.
2. Screening of websites for “greenwashing” – The European Commission takes action together with the national authorities
In 2021, the European Commission released its findings of a wide screening of websites focussing on environmental claims and potential “greenwashing” practices.
This was the first time that the Commission has conducted these screens for several years and focussed its screening on environmental claims in sectors including cosmetics, household equipment and garments. After an initial wide online search, the Commission together with consumer agencies limited its more detailed review to 344 potentially misleading claims used online and concluded that insufficient information was provided in connection with certain claims to evaluate the correctness of the claim in more than half of the cases, vague and general unqualified statements such as “conscious”, “eco-friendly” and “sustainable” were made to suggest to consumers that the product does not have any negative impact on the environment in more than a third of the cases, and no easily accessible evidence was provided to substantiate the used claims in 59% of the cases.
In its overall summary, the Commission stated that “in 42% of the cases authorities had reason to believe that the claim may be false or deceptive and could therefore potentially amount to an unfair commercial practice under the Unfair Commercial Practices Directive”.
This action by the European Commission emphasizes the importance of environmental labelling on EU level as it can greatly influence consumer behaviour.
In view of current developments and in particular the EU Green Deal, it is to be expected that further actions will follow at EU level. Coming to the attention of the Commission can have serious consequences for the trader. As already happens in many countries at the national level (for example by consumer protection organisations), the results of a review of product advertising are often made public. Appearing on such a “greenwashing list” as a trader can lead to a considerable loss of image and consequently to a loss of sales and should be avoided.
When advertising environmental benefits, it needs to be ensured that the claim is sufficiently substantiated and used in a clear and comprehensible manner by which consumers cannot be misled to take a purchase decision that they would not have taken otherwise.
3. EU Ecolabel and EU certification marks
The increase of marketing of eco-qualities has also led to an emergence of countless environment-related labels. While they are intended to provide quality assurance and are thus highly relevant for purchasing decisions, in fact, neither quality, transparency nor verifiability of these labels are sufficiently ensured. To counteract this development, the EU has developed its own label – the EU Ecolabel. In addition, the Commission announced to implement stricter requirements for the use of environmental labels and sanction violations.
The EU Ecolabel can be applied on products (both goods and services) with a guaranteed, independently-verified low environmental impact on a voluntary basis. The label will be awarded to products meeting high environmental standards throughout their entire life cycle. These standards were developed by experts, in consultation with key stakeholders. In addition, EU Ecolabel-products must comply with stringent requirements that ensure that they are of very good quality and fit for use.
Moreover, recently the label users themselves have started illustrating the quality of their label by registering it as an EU certification mark. Certification marks are a specific kind of trademarks. While the aim of a traditional trademark is to ensure that a product can be attributed to a specific company, the EU certification mark relates to the guarantee of specific characteristics of certain goods and services, irrespective of the identity of the undertaking that actually produces or provides the goods and services at issue and actually uses the certification mark. The certification mark can only be applied if the product complies with a given standard set out in the regulations of use to be filled with the EUIPO and controlled under the responsibility of the certification mark owner. Hence, such marks are useful to establish an eco-label on the market. The regulations of use provide transparency and verifiable standards – thus, provide validation of the quality of the eco-label. A certain number of eco-labels have already been registered as certification marks with the EUIPO and it can be expected that more will follow.
Social Media cookies collect information about you sharing information from our website via social media tools, or analytics to understand your browsing between social media tools or our Social Media campaigns and our own websites. We do this to optimise the mix of channels to provide you with our content. Details concerning the tools in use are in our privacy policy.