Green Claims Directive gets closer to the finish line

On 12 March, the European Parliament agreed on its position for the Green Claims Directive​​ (GCD). The dossier, aimed at regulating the use of environmental claims​​ in Europe, is now being negotiated by the EU Member States and is expected to be approved later in the year. Here is what companies need to know.

Greenwashing: a common practice

Sustainability is increasingly becoming a deciding factor for consumers when purchasing products and services. This, in turn, is influencing companies that want to meet this demand for environmentally friendly products. Indeed, more and more products claim to be 'green,' 'sustainable,' or 'eco-friendly.' But are these claims truthful?

In 2020, the European Commission found that 53% of environmental claims in the EU were vague, misleading, or unfounded, and 40% were unsubstantiated. This is commonly known as ‘greenwashing’ – an attempt to make people believe that one’s company and products are doing more to protect the environment than they really are.

Better consumer information as an essential part of the Green Deal

The GCD was presented by the Commission in February 2023 next to the Directive to Empower Consumers for the Green Transition (ECGT) with the aim of making environmental claims more trustworthy.

The GCD requires environmental labels and claims to be third-party verified and certified, and for businesses to substantiate their claims through a comprehensive assessment that needs to meet several requirements. Although it does not prescribe a single method for the assessment, claims will have to, among others, rely on scientific evidence and state-of-the-art technical knowledge, take into account the lifecycle perspective and all environmental aspects, and provide information on whether the product performs environmentally significantly better than what is common practice. The Directive also re-states the ban on green claims based solely on carbon offsetting introduced by the ECGT.

Fears of greenhushing

Although there is widespread support on the need to tackle greenwashing, the file has not been without controversies. The GCD has faced some accusations that it may create unhelpful administrative burdens for companies trying to do more for the environment, and particularly SMEs that may lack the necessary resources to comply with the requirements.

There are some concerns that rules that are too strict, combined with constant scrutiny, may lead to greenhushing​​ - choosing not to publicise details of a product’s environmental performance or a company’s sustainability ambitions to avoid allegations of greenwashing.

The Parliaments’ position

Perhaps looking to address these concerns, the European Parliament has introduced some amendments to the original Commission proposal. Of special significance is the inclusion of a simplified verification procedure that introduces the possibility to grant a ‘presumption of conformity’ for simpler claims and products.

The Parliament also agrees that micro-enterprises should be excluded from the requirements set by the Directive and further asks to give an additional year to SMEs compared to larger businesses to prepare for compliance.

Somewhat controversial has been an amendment introduced to allow companies to mention offsetting and carbon removal schemes ‘if they have already reduced their emissions as much as possible and use these schemes for residual emissions only’.

What’s next?

With the Parliament’s position now agreed, we are waiting for the Council to make a move. Work on the file will go on until after the European elections in June with the final text not expected to be agreed by the Commission, Parliament and Council until late 2024. Member States will then have to incorporate the new rules into their national legislation. All in all, the measures are not expected to enter into force until 2027.