In March 2023, the European Commission proposed the Green Claims Directive (the “Directive“), which aims to tackle greenwashing (read our previous update on the Directive here). On 12 March 2024, the European Parliament voted in favour of the Directive at first reading. This move further complements the EU’s commitment to empowering consumers, ensuring fair competition and fostering a more environmentally responsible marketplace.
Objective
The Directive seeks to protect consumers against greenwashing, i.e. information that is not true or presented in a confusing or misleading way to give the inaccurate impression that a product or enterprise is more environmentally sound. The Directive aims to set clear standards on how companies can substantiate, communicate and verify their green claims. The Directive also requires companies to submit product marketing claims, such as “biodegradable“, “less polluting“, “water saving” or having “bio based content“, for independent verification before being allowed to use them. Green claims based solely on the use of carbon offsetting schemes will also be banned.
Further, the Directive imposes additional requirements to substantiate comparative environmental claims that state or imply that one product or trader has less environmental impact or a better environmental performance than other products or traders.
Implementation
The final text for the Directive is subject to change as it goes through the next stages of the EU legislative process. That said, if the Directive is implemented in its current form, companies will need to provide scientific evidence to back-up their environmental claims, likely through life-cycle analyses that consider the entire environmental impact of products, i.e. from raw material extraction to disposal.
While the specific communication method is not set yet, companies will be required to make available relevant information regarding their claims in a physical form or in the form of a weblink, QR code or environment score (such as A-G ratings for a product’s environmental impact).
For Member States, the focus will be on verification. Member States will be required to establish systems or entities to verify claims and ensure that businesses comply with the Directive. Additionally, Member States may offer support, such as financial aid or training, to help small and medium-sized businesses comply with their requirements under the Directive.
The Directive outlines potential consequences for businesses that violate it, including: (i) fines, which could be in the range of 2-4% of a company’s annual turnover in the EU; (ii) loss of revenue, by way of confiscation of profits gained from sales involving misleading claims; and (iii) exclusion from public opportunities, by temporarily banning companies from participating in public procurement processes, including grants and tenders, for up to 12 months.