Green Claims Directive: EU to set strict minimum criteria for communication and substantiation of environmental claims

The EU Commission has presented the eagerly awaited proposal for a new Directive for the communication and substantiation of environmental claims (Green Claims Directive). The proposal is set to provide EU-wide, strict uniform minimum criteria for the communication and substantiation of explicit environmental claims (so-called 'green claims'). In order to meet the standards, traders will have to get approval of their green claims from an independent verifier.

The proposal also stipulates that the Member States must ensure that traders face effective, proportionate and dissuasive sanctions. This may include penalties up to 4 % of the trader’s annual turnover in the Member State or Member States concerned. However, the Commission leaves it up to each Member State to decide whether or not to adopt these penalties or use its existing mechanisms under consumer protection law to enforce the provisions of the Directive.

Communication of environmental advertising claims

The proposal contains precise guidelines on how traders are allowed to advertise explicit environmental claims. The Commission wants to ensure that advertising claims of positive environmental effects are only made for those products or companies that offer environmental benefits compared to other products or companies.

Advertising environmental benefits would therefore only be permitted if, among other things:

• The claim covers environmental impacts, aspects or performance that are assessed in accordance with the substantiation requirements laid down in the Directive and are identified as significant for the respective product or trader.
• Where relevant to the claim made, information is included on how consumers may use the product appropriately to decrease its environmental impact.
• Detailed information about the product or the trader that is the subject of the explicit environmental claim and relating to the substantiation must be made available, either in physical form, or in the form of a weblink or QR code.
• If the explicit environmental claim relates to future environmental performance of a product or trader, it must contain a time-bound commitment for improvements inside own operations and value chains.
• Environmental claims or labels that make a general statement about a product's overall environmental impact, eg on biodiversity, climate, water use, soil, etc., are not allowed unless there is specific EU legislation which permits it.

Minimum criteria for substantiation of environmental claims

At the heart of the proposal are the regulations on the substantiation of environmental claims. These provisions set out what traders need to assess before making an explicit environmental claim. The EU wants to ensure that claims are only made if they have a demonstrably positive effect on the environment. The proposal therefore stipulates that the impact assessment for the explicit environmental claims must meet the following minimum criteria:

• The statements must be supported by robust scientific evidence and state of the art technical knowledge showing the relevant environmental impacts and any conflicting objectives.
• The significance of the impacts, aspects and performance of the environmental claim must be demonstrated from a life cycle perspective.
• Traders must demonstrate whether the claim is accurate for the whole product or only for parts of it (for the whole life cycle or only for certain stages, for all the trader’s activities or only a part of them).
• Information must be provided on whether the product performs environmentally significantly better than what is common practice.
• It identifies whether a positive achievement leads to significant worsening of another impact.
• Transparent information on carbon offsetting must be made available. It must be stated whether the offsetting relates to the reduction or elimination of carbon emissions and how this offsetting is achieved. The offsets need to be of high integrity and accounted for correctly to coherently and transparently reflect the claimed impact on climate.
• Where products or traders are compared with other products and traders, such comparisons shall be fair and based on equivalent information and data.
• The proposal states that the EU Commission shall adopt delegated acts to supplement the the provisions on substantiation of explicit environmental claims by further specifying the criteria, especially for claims about offsets, “climate neutrality” or similar.

Use of environmental labels

The proposal also provides for criteria on the use of environmental labelling schemes. It will also ban labels based on self-certification. This is supposed to combat the widespread practice in the market of using a variety of non-transparent and mostly private environmental labels, and to create improved transparency and resilience of the labelling systems. The proposal suggests the following minimum criteria:

• Environmental labelling schemes should be promoted; however, new public labelling schemes, unless developed at EU level, are not allowed, and new private schemes are only allowed if they provide added value in terms of their environmental ambition, compared with existing eco-label schemes and are approved in advance.
• Eco-labels shall contain transparent information about the issuer, the objectives and the requirements and procedures for monitoring compliance with the relevant eco-label scheme.
• The eco-label scheme must be verified and regularly checked by independent third parties.

Approval of environmental claims by independent verifier

A completely new, mandatory step would be that environmental claims will have to be verified by an independent verifier in accordance with the requirements of the Directive before traders are allowed to use them. This would mean that companies would need to obtain approval from such a verifier that they meet the requirements of the Directive before using a green claim. If the evidence provided by the trader is sufficient, the verifier would issue an EU-wide certificate stating that the requirements have been met. This will give traders certainty that their advertising claim is compliant in all EU Member States.

Enforcement of the Directive

Enforcement of the proposal is up to the Member States. They can either  choose to adopt the new rules on penalties set out in the Directive or they can instead continue to use the current mechanism in place to combat unfair commercial practices. It will be interesting to see which option Member States select and whether there is consensus on the approach. If a Member State chooses to adopt the enforcement provisions of the proposal, they will have to:

• designate one or more appropriate competent authority as responsible for enforcing compliance with the Directive (or rather its implementing legislation)
• give the competent authority powers to investigate and enforce the requirements, including the power to access relevant information related to an infringement, adopt injunctive relief and impose penalties
• require the competent authority to monitor the impact of compliance on the internal market
• ensure the penalty is assessed in relation to the nature, gravity, extent and duration of the infringement, its character (ie intentional or negligent), the financial strength of the responsible party, the economic benefits derived from the infringement as well as any previous infringements or other aggravating factors. The maximum amount needs to be at least 4 % of the trader’s annual turnover in the Member State or Member States concerned.

Outlook

Before the Directive can be transposed into national law by the Member States, it will first have to pass all relevant steps of the regular legislative procedure. This means that both the Council and the European Parliament have to approve it. Updates on the legislative process are available here. Once it comes into force, the Member States will have 18 months to transpose the directive into national law and a further six months before the rules are applied. The EU Commission expects a timeline of four years for the Directive to apply.

If the provisions of the Proposal are transposed into national law, this will result in strict requirements and procedures for companies making green claims in their advertising and marketing. On the other hand, businesses will benefit from a harmonised regime rather than having to cope with the current fragmented approach (which you can read about in our selection of articles setting out the current approach to environmental claims across the EU).  Once the independent verifier has checked and approved the environmental claims in advance and issued a certificate, compliance will be assured across the EU.