08 May 2023, 11:00

Q&A: How the EU aims to reign in false green claims on products

The European Commission has proposed a set of detailed rules for companies to back up their green claims on products, ranging from “carbon-neutral” sunscreen to “biodegradable” plastic packaging. The proposal for a directive on green claims has the potential to make a difference by reducing the number of green claims, making them more specific, and obliging companies to provide more information to consumers. It could make greenwashing a lot harder while highlighting companies which actually achieve real change. However, NGOs criticise that the initial proposal is “far from the real (green) deal”. This Q&A answers key questions on the legislative proposals and the next steps in the legislative process. [Updates to include Commission proposal]

*** Please note: This Q&A is part of the CLEW focus on company climate claims. This dossier lists our existing publications and future content plans. Other journalists can also get involved - Find out more here. Our upcoming events and opportunities are here. This blog explains why we decided to launch the project. ***

1. What is the problem the EU is trying to tackle?

The number of retail products or services marketed as “climate neutral,” “low-plastic” or “packaging reusable” is rising rapidly as they increasingly represent a way for companies to get a competitive advantage. However, environmental claims like these remain largely unregulated, leading to some calling it the “Wild West” of green advertising.

This means that consumers face an opaque world of sometimes robust, but often misleading, irrelevant or even factually wrong claims, in many cases amounting to greenwashing.

A 2020 study by the European Commission found that about half of the environmental claims assessed “provide vague, misleading or unfounded information about products’ environmental characteristics across the EU and across a wide range of product categories (both in advertisement as well as on the product).”

A survey by a German consumer advice centre showed that products advertised as “climate neutral” mislead consumers because the vast majority of people don’t have a clear idea what the claim means. Some legal experts also say that adverts with unregulated climate claims are barriers to real emission cuts.

Existing consumer laws – while making possible a raft of landmark climate “greenwashing” cases – fall short. Today, companies can call their products ‘carbon-neutral’ and provide no further information. While such a claim can be challenged, market surveillance authorities face an insurmountable number of possible inquiries.

Another issue the Commission tries to tackle is that there are companies that would like to report their progress and they do not know how to do it properly.

2. How will the EU tackle the problem? – The initiative on substantiating green claims

As part of the European Green Deal – the EU’s green growth strategy – the European Commission has promised to step up its regulatory efforts to tackle false green claims. “Companies making ‘green claims’ should substantiate these against a standard methodology to assess their impact on the environment,” it said. The 2020 Circular Economy action plan commits that “the Commission will also propose that companies substantiate their environmental claims using Product and Organisation Environmental Footprint methods.”

Experts say that regulation is a major driver when it comes to sustainability, and the Commission tackles green claims with two legislative proposals. The directive on empowering consumers for the green transition, proposed in 2022, would ban generic and unsubstantiated claims.

The new proposal, the directive on substantiating green claims, would introduce rules on how to make a green claim the right way, providing more information on what methodologies should be used to substantiate it and which information must be provided to the consumer.

With the proposal, the Commission aims to “protect consumers and companies from greenwashing and enable consumers to contribute to accelerating the green transition by making informed purchasing decisions based on credible environmental claims and labels, improve the legal certainty as regards environmental claims and the level playing fields on the internal market, boost the competitiveness of economic operators that make efforts to increase the environmental sustainability of their products and activities, and create cost saving opportunities for such operators that are trading across borders."

Margaux Le Gallou, programme manager at NGO ECOS, says that if done right, the proposal will ensure that reliable claims get the visibility they deserve so that the products actually stand out. “Today, the companies bringing real change often do not get recognition.”

3. What has the Commission proposed?

The Commission’s proposal is a Directive on Green Claims. A directive stipulates general goals, but has to be translated into national law by the member states.

The proposal:

  • Targets "green claims" made by businesses that state or imply a positive environmental impact, lesser negative impact, no impact, or improvement over time for their products, services, or organisation
  • Directive would require member states to set up verification and enforcement processes, to be performed by independent and accredited verifiers
  • Claims must be substantiated and checked by an independent verifier, who will then issue a certificate of compliance
  • Details on making and substantiation of claims:
    • the option of using one standard methodology to substantiate claims was not pursued
    • instead, claims must be substantiated with scientific evidence that is widely recognised, identifying the relevant environmental impacts and any trade-offs between them
    • Together with the claim, companies must make available information on the assessment, e.g. through QR code
    • claims or labels that use aggregate scoring of the product's overall environmental impact on, for example, biodiversity, climate, water consumption, soil, etc., shall not be permitted, unless set in EU rules
    • Climate-related claims: companies have to be transparent about which part of that claim concerns their own operations, and which part relies on buying offsets
    • Climate-related claims: requirements on the integrity of the offsets themselves as well as on their correct accounting
    • Microenterprises (fewer than 10 employees and less than €2 million turnover) are exempt from the obligations of this proposal
    • Member states must introduce “effective, proportionate and dissuasive” penalties
    • Directive also addresses environmental labelling schemes:
      • must be transparent, verified by a third party, and regularly reviewed
      • EUlevel schemes should be encouraged. New public schemes, unless developed at EU level, will not be allowed; and new private schemes are only allowed if they can show higher environmental ambition than existing ones and get a pre-approval

Originally, the Commission was expected to propose a regulation, a type of legislative act that is directly applied in all member states. However, the proposal is a directive - a legislative act setting out a goal which all EU countries must achieve. Each member state has to translate it into national legislation. This means that there could be slightly differing rules for green claims across the bloc.

4. What is the Product Environmental Footprint method and what is its role in the proposal?

The EU Product and Organisation Environmental Footprint (PEF and PEO) methods were developed by the Commission's Joint Research Centre to help companies calculate their environmental performance based on reliable, verifiable and comparable information. The methods also give other actors – such as public administrations, NGOs, and business partners - access to such information.

They measure 16 environmental impacts (e.g. climate change, particulate matter, acidification, resource use) for a number of product groups and economic sectors throughout their life cycle. The PEF has so far been developed, for instance, for beer, dairy, dry pasta, packed water, decorative paints, leather, T-shirts and thermal insulation.

The Commission originally considered making the methodology mandatory in substantiating claims. However, in the final proposal it says that even if the environmental footprint methods can adequately substantiate certain claims, it does not yet cover all relevant impact categories for all product types. “Prescribing a single method like the environmental footprint as the standard methodology of substantiation for all environmental claims would not be appropriate and pose a risk for companies not being able to communicate on relevant environmental aspects or performance in relation to their products or activities,” says the Commission. It decided not to prescribe one standard methodology.

5. What are the key issues of the proposal?

NGO ECOS says “what could have been legislation contributing to providing reliable environmental information to consumers, was substantially watered down”. The proposal is “far from the real (green) deal”, said programme manager Margaux Le Gallou.

ECOS criticises that the rules fail to impose one EU-wide method to calculate the environmental impacts, instead allowing companies to “cherry-pick methodologies”. This meant that claims would not be comparable. The organisation says the PEF method should be further developed in a “truly inclusive and transparent” way.

Both ECOS and EEB, the network of environmental citizens’ organisations in Europe, have called for a ban on climate neutrality claims. They argue that these mislead consumers by suggesting that products or services do not have any climate impact – something which will only be possible on a larger scale in a distant future. The proposal will still allow companies to make such claims, requiring them to use offsetting schemes based on robust accounting and leading to positive impact on the environment, such as the EU’s Carbon Removal Certification Regulation. The NGOs call this a missed opportunity of the proposal.

6. What happens next?

The proposal has been postponed several times, but the Commission finally presented it on 22 March. Now, it will go through the regular legislative process in which both the European Parliament and the member state governments in the EU Council adopt their positions, before agreeing a final version in joint negotiations. This is set to take many months.

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