EU Green Claims Directive: A Quick Summary

The EU Green Claims Directive (March 22,2023) proposed regulations against greenwashing. Who does it affect and what are the requirements?

1. Situation

Greenwashing is apparent. Consumers face misleading commercial practices related to the sustainability of products, unclear or poorly-substantiated environmental claims (‘greenwashing’) from companies, and sustainability labels that are not always transparent or credible.

This is shown in the environmental claims inventories carried out by the EU Commission in 2020, which found that:

• a considerable share of environmental claims (53.3%) provide vague, misleading or unfounded information about products’ environmental characteristics across the EU and across a wide range of product categories.
• 40% of environmental claims were “unsubstantiated”, meaning that these claims lacked clarity, accuracy and verifiability.
• out of the 344 sustainability claims assessed, in over half of the cases (57.5%), the trader did not provide sufficient elements allowing for judgement of the claim’s accuracy.
• In many cases, authorities had difficulties identifying whether the claim covered the whole product or only one of its components (50%), whether it referred to the company or only certain products (36%) and which stage of the products lifecycle it covered (75%)

2. Aims of the Green Claims Directive:

• To address greenwashing, for consumer protection: “ensuring that buyers receive reliable, comparable and verifiable information to enable them to make more sustainable decisions and to reduce the risk of ‘green washing’…to allow consumers to make their choices based on transparent and reliable information on the sustainability, durability and carbon footprint of the products” (1.1)

3. Who is subject to regulation?

• Product producers trading within the EU market, regardless of whether the production process(es) take(s) place within or outside the EU
• Microenterprises (fewer than 10 employees and with an annual turnover not exceeding EUR 2 million) are exempted (6.2, p.19)

4. Requirements:

The Green Claims Directive proposes regulatory requirements on the use of environmental claims in commercial communications, and eco- / environmental labelling. While after stakeholder consultation, the use of one single standard for quantifying environmental impacts to substantiate green claims were not pursued and a “more flexible approach” was proposed (3.2.1, p.12), the following policy options were still proposed.

A detailed summary of the proposed requirements is below:

4.1 Regarding communications of environmental claims

4.1.1. Prohibition of environmental claims that do not fulfil a minimum set of criteria.

This means, environmental claims must be substantiated via assessment that (6.2, p.18–19):

• relies on recognised scientific evidence and state of the art technical knowledge;
• demonstrates the significance of impacts, aspects and performance from a life-cycle perspective;
• takes into account all significant aspects and impacts to assess the performance;
• demonstrates whether the claim is accurate for the whole product or only for parts of it (for the whole life cycle or only for certain stages, for all the trader’s activities or only a part of them);
• demonstrates that the claim is not equivalent to requirements imposed by law;
• provides information on whether the product performs environmentally significantly better than what is common practice;
• identifies whether a positive achievement leads to significant worsening of another impact;
• requires greenhouse gas offsets to be reported in a transparent manner;
• includes accurate primary or secondary information.

4.1.2 Comparative claims must be made on the basis of (6.2, p.19):

• the use of equivalent information for the assessment of environmental impacts, aspects or performance of compared products;
• the use of data generated or sourced in an equivalent manner for the products or traders that are subject to comparisons;
• the coverage of stages along the value chain is equivalent for the products and traders compared while ensuring that the most significant stages are taken into account for products and traders compared;
• the coverage of environmental impacts, aspects or performances is equivalent for the products and traders compared and ensures that those most significant are taken into account for all products and traders compared;
• the assumptions used for the comparison are set consistent for the products and traders compared;
• for comparative claims on the improvement of impacts (compared to an earlier version of the product) include explaining the impact of improvement on other aspects and impacts and stating the baseline year.

4.1.3 Communication of environmental claims must (6.3, p.20–21):

• only cover environmental impacts, aspects or performance that are assessed in accordance with the substantiation requirements laid down in this proposal and are identified as significant for the respective product or trader;
• where relevant for the claim made, include information on how consumers may appropriately use the product to decrease environmental impacts;
• be accompanied by information on the substantiation (including information on product or activities of trader; aspects, impacts or performance covered by the claim; other recognised international standards, where relevant; underlying studies and calculations; how improvements that are subject to the claim are achieved; the certificate of conformity and coordinates of the verifier).

4.2 Regarding environmental or eco-labelling

4.2.1 Banning of labels based on self-certification

(not based on a certification scheme, or not established by public authorities) (p.4)

4.2.2 Banning of new national or regional publicly owned environmental labelling schemes

• In case of new labelling schemes that “demonstrate added value in terms of environmental ambition, coverage of environmental impacts, of product category group or sector and their ability to support green transition of SMEs as compared with existing labelling schemes”, it should undergo a “validation procedure and assessed by national authorities” (6.4, p.22)

4.2.3 Environmental claims and labels “will have to be 3rd party verified and certified” (6.4, p.21).

• The verifier shall decide to issue (or not) a certificate of conformity recognised across the EU, allowing the use of environmental claims in commercial communication;
• According to Artile 11 (p. 23), “verifier must be an officially accredited independent body, with no conflicts of interest” and come with “the required expertise, equipment, and infrastructure to carry out the verifications”;
• Under footnote 66 (p.23), this verifier follows the definition under OJ L 218, 13.8.2008, p. 30–which means that the verifier has to be a “a uniform national accreditation body should be without prejudice” (point 11, (EEC) No 339/93 or OJ L 218, 13.8.2008, p. 30).

4.2.4 Environmental labelling schemes are required to follow transparency and credibility requirements

(as per policy option from impact assessment) (6.4, p.21):

• Environmental labelling schemes require transparency and accessibility of information on ownership, decision-making body and objectives (6.4, p.22);
• The criteria underlying the award of labels must be developed by experts and are reviewed by stakeholders;
• There must be a complaint and resolution mechanism;
• There must be procedures for non-compliance and the possibility of withdrawal or suspension of labelling in the case of persistent and flagrant non-compliance.