The European Commission is expected to present a Proposal for a Directive on Green Claims (“Proposed Green Claims Directive” or “the Proposal”) within the next few months. Together with the Proposal for a Directive empowering consumers for the green transition through better protection against unfair practices and better information (“Consumer Empowerment Directive Proposal”), the Proposed Green Claims Directive would contribute to the EU’s green transition towards a circular, climate-neutral and clean economy by creating a common methodology for the substantiation of green claims that concern the environmental footprint of products, services and companies. It would aim to reduce greenwashing and enable consumers to take informed purchasing decisions based on reliable information about the sustainability of products and traders.
If adopted, it is likely to significantly limit the environmental claims that businesses can make in the EU/EEA. Businesses may want to consider approaching the Commission to try to influence the final legislative proposal that it is expected to present by March 2023. Once the Commission presents its legislative proposal, businesses should consider proposing amendments to the European Parliament and Council.
Harmonization of the Rules on Green Claims in the EU
Currently EU law does not explicitly regulate environmental claims. Instead, environmental claims are subject to the general rules of Directive 2005/29 on Unfair Business-to-Consumer Practices and Directive 2006/114 on Comparative Advertising. While the Commission and Member States have issued guidance interpreting these directives and their national implementation in the context of green claims, in practice there is a wide range of variations on the requirements for and enforcement against these claims among Member States. The Proposed Green Claims Directive is expected to create a harmonized set of rules on the substantiation of voluntary green claims applicable to all companies operating in the EU/EEA.
Covered Green Claims
The Proposal is expected to define green claims subject to the new rules as “any message or representation, including text, pictorial, graphic or symbolic representation (e.g., labels, brand names, company names or product names), which states or implies that a product or trader has a positive or no impact on the environment or is less damaging to the environment than other products or traders, respectively, or has improved their impact over time.” The Proposal is not expected to apply to claims that cover aspects other than those related to the environment. For example, sustainability claims would only be covered if they refer to environmental sustainability (e.g., preventingbiodiversity loss).
The proposed rules are also only expected to cover voluntary claims made by companies in the context of business-to-consumer (“B2C”) transactions. The rules would also not cover environmental mandatory labelling or disclosures under EU environmental rules. For example, mandatory declarations under Proposal for Ecodesign for Sustainable Products Regulation, or the requirements under the EU Taxonomy Regulation or the Proposal for a Regulation Establishing a Union Regulatory Framework on the Certification of Carbon Removals) are out of scope.
General Rules on Green Claims
The Proposal is expected to impose general requirements on the environmental claims that companies can make that will mirror those of the existing Commission’s guidance. In particular, it will require that companies:
- only make environmental claims that have been substantiated through an approved methodology that meets specific criteria (see below);
- do not make a positive environmental claims where a product has both a positive and negative environmental impact. Companies may communicate the positive claim only if they also communicate the negative impact in a clear and understandable way. For example, if savings in water consumption lead to a notable increase in greenhouse gas emissions or to a negative environmental impact in another stage of the life-cycle of the product (e.g., CO2 savings at the stage of manufacturing leading to a notable increase of CO2 emissions at the use phase), both facts should be disclosed together with the claim;
- make available the information on the assessment on which the environmental claim is based, including (i) information on the product or activities of the trader subject to the claim, (ii) environmental aspects, environmental impacts or environmental performance covered by the claim, (iii) the methodology used, (iv) the underlying studies or calculations used to assess, measure and monitor the environmental impacts or aspects covered by the claim, (v) a brief explanation how improvements in environmental performance are achieved, etc. Access to this information may be provided in the form of a weblink, QR code or equivalent; and
- review the accuracy of their environmental claims (and their substantiation) at least once every five years from the date of the underlying studies or calculations. In cases where there are circumstances that may affect the accuracy of the claim (i.e., when there are updates of the scientific methodology substantiating the claim), the environmental claim should be reviewed and updated immediately.
Methodology to Substantiate Green Claims
In line with current Commission’s and Member States’ guidance on environmental claims, the Proposal is expected to require economic operators to duly substantiate their environmental claims on the basis of a methodology that:
- is based on widely recognized scientific evidence, state of the art technical knowledge and takes into account relevant international standards. Where there is no recognized scientific method or insufficient evidence to assess environmental impacts and aspects, claims referring to such environmental impacts would not be allowed;
- assesses the environmental impact throughout the whole life-cycle of the product;
- takes into account: the product composition; materials used in the production of the products; emissions from the processes and the use of the product; its durability, reparability and end of life aspects;
- assesses if the achievement of positive environmental impacts, aspects, or performance leads to significant increase of any other negative environmental impact, etc.;
- is accessible to third parties, wanting to use it, and any access fee is proportionate; and
- is regularly reviewed by a third party with a view to take account of technical and scientific progress and the development of relevant international standards as well as revised where necessary to reflect such progress.
The Proposal is expected to add a lengthy list of additional requirements with which the methodologies to substantiate environmental claims must comply. This is a significant departure from the previous, lighter requirements under the Commission’s and Member States’ green claims guidance. In this context, the Proposal links these requirements to the existing EU Product and Organization Environmental Footprint methods (“PEF” and “OEF”). Where a company complies with the Product Environmental Footprint Category Rules (“PEFCRs”) for a product, the claims made on the basis of the PEFCRs are deemed compliant with the requirements of the Proposal.
Requirements Related to Comparative Environmental Claims
The Proposal is also expected to include rules on environmental comparative claims, namely, that:
- companies use the same methodology to assess the environmental impacts, aspect or performance of products or traders to which the comparison is made (e.g., where two traders make a claim on climate change, where one considered only direct impacts, whilst the other considered both their direct and indirect impacts, the results are not comparable);
- data used for the substantiation of the comparative claim must be generated or sourced in an equivalent manner to ensure their comparability (e.g., choosing indicators on the same aspects but that use a different formula for quantification makes comparisons impossible, and therefore, there is a risk of misleading consumers); and
- the most significant stages along the value chain must be taken into account for all products and traders compared, etc.
If adopted, these requirements are likely to make environmental comparative advertising more challenging for companies. Product certification and testing is costly, and the proposed wording would in practice require companies to conduct head-to-head studies to be able to claim any comparative advantage. Broad, sector-wide claims based on publicly available studies would no longer be acceptable.
New Rules on Forward Looking Claims
The Proposal is also expected to introduce new strict rules on forward-looking claims (i.e., claims that suggest that a product, service or company will achieve specific environmental benefits by a certain future date). The Proposal is expected to require that claims related to the future environmental performance of a product, service or trader:
- be accompanied by commitments that include milestones to be achieved within clearly specified time frames (if a target set for 2030 does not include any periodic milestones, it is impossible for stakeholders, or the trader itself, to monitor whether they are on track and what are the challenges);
- indicate a baseline year for targets and the indicators reflecting performance in the baseline year and the year linked to the improvement set out in the claim (e.g., “50% reduction of greenhouse gas emissions compared to 2015” instead of “50% reduction of greenhouse gas emissions”);
- not include actions or targets already achieved, etc.
Enforcement and Access to Justice for third Parties
The proposal is expected to introduce new and reinforced rules on enforcement against companies making non-compliant environmental claims. Member States are expected to be required to carry out a compliance monitoring:
- as part of their regular checks;
- in cases where they have sufficient reason to believe that an environmental claim presents a risk of infringement of the rules, laid down in the Proposal; or
- in response to complaints.
Companies making non-compliant environmental claims would be required to fix the non-compliance within a short deadline. After receiving a notification for non-compliance, companies would only have 10 business days to provide an answer. Where a trader does not provide a timely or satisfactory answer, enforcement authorities must require the trader to correct the non-compliant claim or immediately stop its communication. The trader will have to implement the corrective actions within 30 business days.
The Proposal is also expected to allow third parties to submit complaints against non-compliant green claims before administrative authorities, and thereafter courts, if the third parties have sufficient interest or have the rights infringed. Such complains may lead to injunctive actions, including the immediate stop of the communication of the non-compliant claims.
The European Commission is expected to formally present its proposed Green Claims Directive by the end of March 2023. Once presented, the European Parliament and Council will consider the Proposal for adoption through the ordinary legislative procedure. This process will allow for the introduction of amendments and will take at least 18 months. As indicated above, industry should keep a close eye on the development of this proposal as the requirements it will impose will have a significant impact on the current practices.