Certified environmental claims – the draft of the “EU Green Claims Directive”

Background and objectives of the proposal

In the opinion of the EU Commission, consumers face obstacles when it comes to making ecologically sustainable consumption decisions. In a study carried out in advance of the proposal, the EU Commission found that a substantial part of environmental claims (53.3 percent) on a wide range of product categories contained vague, misleading or unsubstantiated information about the environmental characteristics of the products referred to. Moreover, 40 percent of such claims were not substantiated.

The proposed Green Claims Directive specifically seeks to combat false environmental claims (green claims). The risk of greenwashing should be reduced by ensuring that consumers receive reliable, comparable and verifiable information. The intention is to enable consumers to make more sustainable decisions.

Legal framework

The directive mainly refers to environmental claims (and ecolabels) of companies that assert or imply a positive environmental impact. Examples given by the Commission include: “T-shirt made from recycled plastic bottles”, “CO2 compensated delivery” or “ocean-friendly sunscreen”. Going forward, companies would be obliged to justify and substantiate such environmental claims.

Any substantiation must meet a number of minimum requirements including, among other things, that it must be based on recognised scientific findings and the latest state of the art technology and the relevance of the claim has to be demonstrated with respect to the product’s entire life cycle.  For example, greenhouse gas offsets must be presented in a transparent manner. 

The directive also contains provisions on the communication of environmental claims; all claims made must contain information on how consumers can use the relevant product appropriately to reduce its environmental impact. Such information will have to be made available together with the environmental claim either physically or via a web link, a QR code or equivalent means.

Micro-enterprises of less than 10 employees and an annual turnover not exceeding €2 million should, however, not be subject to the directive unless they wish to be issued a certificate of conformity for their environmental claim.

Verification and enforcement

In order to monitor and enforce compliance with its requirements, the directive requires member states to set up independent verification bodies to verify the environmental claims in advance and certify them if they are considered reliable and trustworthy. A certificate of conformity issued to this effect by the verification body should then allow companies to use the environmental claim throughout the internal market.

Member states must designate appropriate consumer protection authorities to enforce the directive.

Sanctions

Of particular importance are the provisions relating to sanctions. The directive imposes several obligations member states have to comply with when establishing their sanctions regimes. One decisive factor is that sanctions are to be determined considering, among other things, the economic interests and financial strength of the respective company. The maximum fine imposed in this context should amount to no less than 4 percent of the annual turnover of the company concerned meaning that, in individual cases, substantial fines of several million euros could be incurred.

Outlook

The EU Commission’s proposal has been submitted to the EU Parliament and is now to be approved by the Parliament and the Council. The plenary session of the EU Parliament has preliminarily been scheduled for March 2024. However, in view of the upcoming elections for the EU Parliament, a further delay cannot be ruled out. Once the proposal has been approved, member states will have to adopt the necessary legal and administrative provisions within a period of 18 months.  The regulations would then have to be applied by member stats 24 months after the directive’s entry into force.

Conclusion

The EU Commission’s proposal for a Green Claims Directive is expected to cause enormous work and costs for the companies concerned as, if they want to use reliable, comparable and verifiable environmental claims in advertising, they will be subject to comprehensive checks. The proposal exceeds the already extensive requirements of case law within the framework of fair trading law. On the one hand, the complex requirements could be a huge obstacle, in particular, for small and medium-sized enterprises. On the other, companies operating throughout the internal market would no longer have to deal with the complexity of the requirements of different jurisdictions as, once certified, it could easily use the environmental claim throughout the internal market.