The EU is cracking down on corporate greenwashing.
This week, the European Commission released its proposal for a Green Claims Directive for companies operating in the EU.
The core aim of this Green Claims Directive is to stop greenwashing in its tracks and provide consumers with reliable information about the sustainability of products and brands to help them feel empowered to make informed decisions about purchases.
The Green Claims Directive is the latest measure within the European Green Deal, which aims to transition Europe to a climate neutral economy and includes a commitment to tackle ‘false environmental claims’.
As a starting point, the European Commission carried out a study in 2020 which analysed existing green environmental claims on a wide range of different types of products against criteria for clarity, unambiguity, accuracy, and verifiability – and the results were stark.
The Green Claims Directive, announced this week, is a measure designed to address these findings – preventing misleading and unsubstantiated corporate claims about sustainability.
In this post we’ll take a look at the Green Claims Directive in more detail, covering:
All companies operating in the EU must comply with the Green Claims Directive – with one exception.
Companies with fewer than 10 employees and less than €2 million in revenue are exempt from the Directive. This is in recognition that the Directive will cause additional marketing costs for companies that want to talk about their environmental impact, and that this will unfairly impact small, early-stage companies.
A green claim – sometimes also called an environmental claim – refers to any sustainability credential that is used to describe a product, service, or brand.
So, for example:
And so on.
These claims are becoming more and more prolific as businesses come to realise that consumers of all kinds of goods and services are now making purchasing decisions based on environmental impact.
But often these claims are not backed up by solid evidence to prove the claim. In which case, there’s a strong chance that the company is greenwashing – making a green claim in order to win over that climate-concerned consumer base, without actually doing the work needed to address their environmental impact.
For consumers, that means it’s very difficult to make an informed decision about which product or service to opt for to minimise environmental impact.
And the businesses that actually are working hard to address their impact and find ways to positively benefit the environment, are getting lost in this sea of greenwashing.
Which is why regulations like the EU Green Claims Directive are needed.
For more information on the different green claims, head to our article: A guide to making credible green claims: from carbon neutral to net zero and beyond
The Green Claims Directive dictates that any green claims made by businesses must be: ‘specific, quantifiable, based on reliable scientific evidence, and not mislead or confuse consumers.’
But how will this actually work in practice?
The Green Claims Directive was initially set to include the development of a set methodology which all companies would have to adhere to – but in practice it was found that a methodology which worked for all kinds of products, industries, and claims would not be accurate enough.
Instead, the proposal includes a set of minimum requirements for companies – essentially a set of criteria which must be followed if a company wants to include a green claim in its commercial communications.
The proposed criteria is as follows:
These requirements also need to be verified by an independent, third-party before the green claim can be used.
The European Commission’s research also found that there are at least 230 different green labels in use – labels marking approval from schemes like Fairtrade, the Marine Stewardship Council, or the Soil Association which supposedly offer backing to green claims. But, with so many labels out there, the EU found that they actually just add to consumer confusion.
So as part of the Green Claims Directive, any new labelling schemes must prove that they go above and beyond existing labelling schemes. Existing labels must be transparent about what they cover, be independently verified, and be regularly reviewed – so if companies are currently using a label or certification, they also need to be clear about this.
Yep, you read that right – the Green Claims Directive includes offsetting as an item to disclose.
That’s because often companies make climate-related claims which rely on their offsetting to fulfil. For instance, two very common claims which typically involve offsetting are:
But consumers aren’t always aware of what these terms mean behind the scenes, particularly the involvement of carbon offsetting and removals.
So, the Green Claims Directive specifically references green claims which rely on offsetting in Section 27 of the proposal.
According to the Directive, if a claim relies on offsetting, the company must:
Legislation like this is vital in improving the integrity and credibility of the voluntary carbon market as a climate action for businesses – pushing businesses to stop buying cheap, low-quality carbon credits and making high-quality, credible carbon offsetting the default.
But, it does mean that any business buying carbon credits and using climate-related messaging in their marketing will need to ensure they are communicating transparently about their approach to offsetting and the carbon projects supported (if they aren’t already doing so).
If you’re an existing Lune customer this isn’t a problem – all of our carbon projects are credible and pre-vetted. You can find much of the information you’ll need to disclose in our project evaluation guide and on the individual carbon project pages in the Lune dashboard – drop us an email and we can walk you through this.
If you aren’t a Lune customer and you’re concerned about the credibility of your carbon offsetting in light of the Green Claims Directive, get in touch and we can help you address this.
Companies who fail to comply with the Green Claims Directive will be subject to varying penalties depending on the severity, starting with fines.
National authorities at a country-by-country level will need to regularly monitor green claims and issue fines to companies which are found to be misleading consumers – so how different countries react and how this will therefore work in practice is yet to be seen.
To summarise, the Green Claims Directive is undoubtedly a move in the right direction.
Environmental claims are currently unregulated, and many businesses have taken advantage of this to greenwash consumers into buying their products under false environmental pretences.
The requirements of the Green Claims Directive mean that companies can now only make green claims if they are willing to be transparent about why they think that claim applies to their company or product, and have this third-party verified.
Not only is this good news for the planet, and for climate-concerned consumers, it’s also great news for businesses that are actually putting in the work to approach business sustainability in the right way to really make a difference – because now it will be much easier for consumers to identify your brand as a truly green one.
However, it does mean there’s a new hoop to jump through on sustainability.
If your company is currently making any green claim, and wishes to continue doing so, you will need to start preparing, meaning:
Concerned about how to check your offsetting for quality and real-world impact? This is our area of expertise – get in touch and we’ll walk you through it.
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