17 Mar 2023, 16:00

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

The European Commission is about to propose 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 EU directive on green claims. The proposal 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 bringing real change. However, NGOs criticise that an early draft has severe shortcomings. This Q&A answers key questions on the upcoming legislative proposals, including what critical aspects to watch out for, and the next steps in the legislative process.

*** 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 is the Commission expected to propose?

Several media reported a leaked draft in January 2023, which likely has been reworked since then. Key features from the draft:

  • Requires member states to ensure that environmental claims made as regards products or traders are substantiated based on a methodology, which complies with a list of criteria (e.g. based on widely recognised scientific evidence, takes into account all environmental impacts relevant to the product or trader, accessible to any third party)
  • Only environmental aspects assessed through the methodology can be communicated by companies
  • Positive environmental claims cannot be made if the aspect leads to “significant negative increase of any other environmental impact or aspect”
  • Together with the claim, companies must make available information on the assessment, e.g. through QR code
  • Environmental labels must be based on certification schemes in line with the directive (e.g. requirements on methods)
  • Methodology used to substantiate climate-related claims is expected to require any greenhouse gas emissions offsets used by the traders to be reported separately as additional environmental information
  • Member states responsible for verification of substantiation
  • Member states must introduce “effective, proportionate and dissuasive” penalties

Originally, the Commission was expected to propose a regulation, a type of legislative act that is directly applied in all member states. However, the January leak is for a directive, which is a legislative act that sets out a goal that 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, and for other actors (public administrations, NGOs, business partners, for example) to have 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.

In the green claims initiative, the Commission uses PEF as a reference, but it does not obligate its use. “While the Environmental Footprint methods represent robust and prominent methodology developed in full transparency with stakeholders and based on scientific consensus, the Commission thoroughly took into consideration stakeholders’ feedback during the consultations on the green claims proposal. The Commission therefore considers it judicious to leave more flexibility to businesses regarding the methodology used for the substantiation of environmental claims,” the draft says.

5. What are the key issues of the proposal?

While the Commission presents PEF as a reference method, it does not specify one single method to be used to substantiate claims. ECOS’ Le Gallou calls this a “missed opportunity”. She says the PEF lifecycle assessment method has the advantage that it is “quite prescriptive in the sense that it does not allow you to cherry pick which impacts you want to look at and mention in your claims.”

However, Le Gallou also sees negative aspects of PEF: the way the more specific rules for each product category were being developed was “neither inclusive nor controlled enough, and are for now heavily influenced by industry and private interests.” She adds that PEF would not cover all environmental claims. “Biodiversity is very poorly covered, microplastics are not covered, neither are good things, such as reusability.”

EEB, the network of environmental citizens’ organisations in Europe, also criticises leaving open the choice for a methodology. “This could open the door to the recognition of unreliable methodologies, with no guarantee that they address the limitations of the PEF method,” it writes. “Instead, we need clear and common rules to apply across the EU for all types of claims present in the market.”

EEB also criticises the proposal for failing to ensure adequate civil society participation, for example in the process to establish assessment methods.

Both ECOS and EEB 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 leaked proposal would still allow to make such claims, requiring companies 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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