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Currently under discussion in the European Parliament, the proposed Green Claims Directive aims to regulate the use of environmental claims in order to combat greenwashing and enable consumers to make more sustainable purchasing decisions. Context, objectives, consequences... We explain all the issues at stake in this new regulation, which is in line with the European Green Pact.
What is the Green Claims Directive and what is its background?
The use of environmental claims is a voluntary commercial practice that enables companies to highlight one or more environmental characteristics of their products or services. Although the practice is not new, it has grown considerably in recent years as consumers become increasingly concerned about the sustainability of the products they buy.
While it can attract consumers by highlighting the sustainability of products sold, the use of environmental claims is not without risk, and can sometimes lead to consumer misinformation, commonly known as greenwashing. A study carried out by the European Union in 2020 revealed that more than half of all environmental claims were vague, misleading or unfounded, and that 40% were unsubstantiated (!).
These greenwashing leads to considerable confusion for consumers and a lack of confidence in the credibility of the information displayed by companies. They also lead to unfair competition between companies, penalizing those that make genuine efforts to improve the sustainability of their products and services.
TheGreen ClaimsDirective directly addresses this issue by establishing a clear regime for environmental claims, so that consumers have access to reliable, comparable and verifiable information. It is the concrete expression of a major commitment made by the European Union as part of the European Green Pact, which aims to give consumers the means to act in favor of the ecological transition.
Content and objectives of the Green Claims Directive
Adopted in March 2023, the proposed European directive on environmental claims puts in place a number of new rules to frame the use of ecological claims and guarantee the reliability of environmental labels used by companies as part of their environmental communication.
General provisions applicable to environmental claims
In particular, it stipulates that environmental claims must be justified on the basis of an assessment of a certain number of minimum criteria (specified in Article 3 of the draft text). If this is not the case, environmental claims may not be used by companies in their communication practices, on pain of sanctions.
In particular, this assessment must :
- take into account internationally recognized scientific approaches to determining and measuring the environmental performance of the product (or professional);
- assess whether the claim is accurate for the entire product or only for certain parts of it;
- provide information on whether the product's environmental performance is significantly better than current practice.
With regard to the communication of environmental claims, the Green Claims Directive stipulates that they must be accompanied by information on the justification of the product's environmental performance. The aim is to ensure that consumers have access to the precise information they need to make an informed choice when purchasing a product.
Specific provisions applicable to environmental labels
The directive also includes a number of new rules for environmental labels, specified in Article 8. These include a ban on all sustainability labels that do not meet minimum transparency and credibility requirements, and on those based on self-certification. In addition, the creation of new labeling systems would only be approved if they provide real added value and are developed at European Union level.
One of the major contributions of this directive is that, prior to their use, environmental claims and label systems must be verified and certified by third parties. This verification must be carried out by an independent, officially accredited body with no conflicts of interest and the appropriate expertise. Once the verification has been carried out, the verifier will then decide whether or not to issue a certificate of conformity for the claim or label used, recognized throughout the European Union.
Green Claims Directive: what are the practical consequences for businesses and consumers?
Thanks to these new rules, consumers should be able to benefit from greater clarity and greater assurance that a product sold as "ecological" really is. They should also have access to better information to help them choose environmentally-friendly products and services.
As far as companies are concerned, this new directive has the particular advantage of establishing a common approach to environmental claims for all European companies. This should increase the competitiveness of companies that adopt a genuinely sustainable approach, while penalizing those that resort to fraudulent commercial practices. In the longer term, the directive aims directly toincrease demand for "green" products and services thanks to a higher level of consumer confidence.
It should be noted, however, that these new rules may also entail additional costs for companies wishing to use environmental claims. They will have to bear the cost of justifying and verifying the conformity of the claims they wish to use. Nevertheless, each company will be able to control these costs itself, deciding whether or not to use certain claims in line with its business strategy.
Risk of greenhushing: between caution and invisibilization
By establishing a stronger regulatory framework for the use of environmental claims in corporate marketing strategies, the forthcoming Green Claims Directive should effectively combat greenwashing. All the more so since sanctions are provided for in the event of non-compliance with the principles:
- a fine of up to 4% of sales;
- exclusion from public procurement contracts and ineligibility for certain types of financing;
- confiscation of revenues obtained through the use of misleading environmental claims.
But while this new regulation marks a major and laudable step forward, it also runs the risk of encouraging greenhushing (literally "shutting up about green"), i.e. the implementation by certain companies of a voluntary strategy of non-communication on their environmental practices.
This greenhushing trend has been observed for a number of years now, in the face of tightening environmental legislation: some companies voluntarily choose not to communicate on their climate strategy in order to limit their exposure to criticism.
Although less visible than greenwashing, this phenomenon is no less problematic. It also entails real risks for the companies concerned, in particular the loss of competitive advantage and ESG financing opportunities, and the demobilization of in-house employees.
Conclusion
If this directive is adopted, companies will be subject to a more restrictive regulatory framework concerning environmental claims. In order to best anticipate these upcoming changes and limit the risks of non-compliance, we strongly recommend implementing rigorous and transparent communication practices now:
- be sure to explain and back up any allegations with figures;
- ensure that figures have been obtained using a recognized scientific methodology.
In this respect, life cycle analyses are an essential tool for obtaining precise data on the environmental impact of products on the market, and for considering ways of reducing the impact of less "virtuous" products.
It's important to bear in mind that while these transparency efforts may come at a cost, implementing responsible communication practices can nonetheless prove highly beneficial to the company, improving its brand image and boosting sales thanks to a greater level of consumer confidence.