The EC has enacted a new Directive aimed at preventing misleading environmental and social responsibility claims.
What's the issue?
The European Commission (EC) launched the European Green Deal in December 2019. This included a wide-ranging legislative agenda intended to help the EU reach climate neutrality by 2050. In March 2020, the EC announced a new circular economy action plan which was followed in November 2020 by the launch of the New Consumer Agenda.
As part of this, the EC proposed a Directive on Empowering Consumers for the Green Transition (ECGTD) on 30 March 2022. The ECGTD will sit alongside the Green Claims Directive which is at an earlier stage in the legislative process and covers specific requirements for making green claims.
What's the development?
Among other things, the ECGTD expands the Consumer Rights Directive's pre-contractual information requirements to include information about environmentally friendly delivery options, conformity guarantees, the length of time for which software updates will be supplied and information about repairability. Where a producer offers a free guarantee for over two years, the information must be displayed by traders made aware of that via a harmonised label.
The Unfair Commercial Practices Directive is amended, effectively to ban 'greenwashing' by:
- Including 12 new automatically unfair practices relating to misleading environmental information.
- Expanding what qualifies as a "main characteristic" of a product to cover certain environmental and social aspects.
- Adding two additional prohibited misleading actions around making environmental claims and advertising irrelevant benefits.
What constitutes an "environmental claim" is widely drafted and the Directive also restricts the use of sustainability labels unless they are based on a certification scheme or established by a public authority – in other words, it prohibits self-certification.
The Directive applies to all non-mandatory sustainability claims made to consumers relating to a product, service, company or brand in any medium and in any form, including brands, product names, and marketing materials. It also applies to "social characteristics" claims – for example, on inclusion, gender equality and diversity.
What does this mean for you?
The legislation implementing the Directive will apply to consumer products and services supplied in the EU. Implementing legislation will need to be adopted by 27 March 2026 and will have to be applied by 27 September 2026.
For UK businesses selling to consumers in the EU, this Directive will need to be taken into account. Notably, changes may be needed to terms and conditions in order to comply with revised pre-contractual information requirements. This will be the first notable amendment to the Consumer Rights Directive, implemented in the UK as the Consumer Contracts Regulations since Brexit. Packaging and labelling may also need to be updated.
