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Currently under discussion in the European Parliament, the proposed Green Claims directive aims to regulate the use of environmental claims by economic operators, in order to combat greenwashing and enable consumers to make more sustainable purchasing decisions. Background, objectives, consequences – we explain everything at stake in this new piece of regulation, which follows on from the European Green Deal.
What is the Green Claims directive and what is the context behind it?
The use of environmental claims is a voluntary business practice that allows companies to highlight one or more environmental characteristics of their products or services. Although not a new practice, it has grown significantly in recent years, as consumers become increasingly concerned about the sustainability of the products they buy.
While using environmental claims can help attract consumers by highlighting the sustainability of the products sold, it is not without risk and can sometimes mislead consumers, commonly known as greenwashing. The use of carbon credits, without clear context (contribution versus carbon offsetting), is often singled out in particular.
A study carried out by the European Union in 2020 found that more than half of environmental claims conveyed vague, misleading or unfounded information, and that 40% of claims were unsubstantiated (!).
These greenwashing practices cause significant consumer confusion and a lack of trust in the credibility of information provided by companies. They also lead to unfair competition between businesses, penalizing those making genuine efforts to improve the sustainability of their products and services.
The “Green Claims” directive aims to directly address this issue by establishing a clear framework for environmental claims, ensuring consumers have access to reliable, comparable, and verifiable information. It gives concrete form to a key commitment made by the European Union under the European Green Deal, which aims to empower consumers to take action in support of the ecological transition.
Content and objectives of the Green Claims directive
Adopted in March 2023, the proposed European directive on environmental claims under the European Green Deal introduces a number of new rules to regulate the use of green claims and guarantee the reliability of environmental labels used by companies as part of their environmental communication and labeling.
General provisions applicable to environmental claims
It notably provides that environmental claims must be substantiated based on an assessment against a set of minimum criteria (set out in Article 3 of the draft text). Otherwise, companies will be prohibited from using environmental claims in their communications, under penalty of sanctions.
This assessment must, in particular:
- take into account internationally recognized scientific approaches to determine and measure the environmental performance of the product (or the professional);
- assess whether the claim is accurate for the entire product or only for specific parts;
- provide information indicating whether the product's environmental performance is significantly better than standard practice.
Regarding the communication of environmental claims, the Green Claims Directive notably stipulates that they must be accompanied by information substantiating the product's environmental performance. The goal is to ensure consumers have access to sufficient detail to make informed purchasing decisions.
Specific provisions applicable to environmental labels
The directive also introduces several new rules for environmental labels, as set out in Article 8. These aim, in particular, to ban all sustainability labels that fail to meet minimum transparency and credibility requirements, as well as those based on self-certification. Furthermore, the creation of new labeling schemes would only be approved if they provide genuine added value and are developed at European Union level.
One of the major contributions of this directive is that, before being used, environmental claims and eco-label schemes will need to be verified and certified by third parties. This verification must be carried out by an officially accredited independent body, free of conflicts of interest and with the appropriate expertise. Once the verification has been carried out, the verifier will then decide (or not) to issue a certificate of conformity for the claim or label used, recognised throughout the European Union.
Green Claims directive: what are the concrete consequences for companies and consumers?
Thanks to these new rules, consumers should be able to benefit from greater clarity and greater assurance that a product sold as “environmentally friendly” actually is. They should also have access to better-quality information, allowing them to choose environmentally responsible products and services.
On the business side, this new directive notably has the advantage of establishing a common approach to environmental claims for all European companies. It should therefore help increase the competitiveness of companies genuinely committed to sustainability, while penalising those that resort to fraudulent business practices. In the longer term, the directive directly aims to increase demand for “green” products and services thanks to a higher level of consumer trust.
It should be noted, however, that these new rules are also likely to result in additional costs for companies wishing to use environmental claims. They will indeed need to bear the costs associated with substantiating and verifying the compliance of the green claims they wish to use. That said, each company will be able to control these costs itself by deciding whether or not to use certain claims, depending on its business strategy.
The risk of greenhushing: between caution and invisibility
By establishing a stronger regulatory framework for the use of environmental claims in corporate marketing strategies, the upcoming Green Claims directive should help effectively combat greenwashing. This is especially true given that penalties are in place for non-compliance with these principles:
- fines of up to 4% of annual turnover;
- exclusion from public procurement and ineligibility for certain types of funding;
- confiscation of revenue generated through the use of misleading environmental claims.
While this new regulation marks a major and commendable step forward, it also carries the risk of encouraging greenhushing —the practice of companies deliberately choosing not to communicate about their environmental efforts.
This greenhushing trend has actually been observed for several years now as environmental legislation has tightened: some companies intentionally avoid communicating about their climate strategy to limit their exposure to criticism.
Although less visible than greenwashing, this phenomenon is no less problematic. It also creates real risks for the companies concerned, in particular the loss of a competitive advantage and of ESG funding opportunities, as well as reduced employee engagement internally.
Conclusion
If this European Green Deal directive is indeed adopted, companies will be subject to a more restrictive regulatory framework regarding environmental claims. In order to best anticipate these upcoming changes and limit the risk of non-compliance, it is strongly recommended to implement rigorous, transparent communication practices right now:
- make sure to explain and substantiate every claim with figures;
- ensure that these figures were obtained using a recognised scientific methodology.
Carrying out life cycle assessments is, in this respect, an essential tool for obtaining precise data on the environmental impact of the products being marketed, and for considering ways to reduce that impact for the least “virtuous” products.
It is important to bear in mind that while these transparency efforts may come at a cost, implementing responsible communication practices can nonetheless prove highly beneficial for a company, by improving its brand image and increasing sales thanks to a higher level of consumer trust.