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Green Claims Directive 

Preparing for Compliance with the EU Directive

The European Union (EU) is taking a significant step towards ensuring transparent and accurate environmental marketing practices with the introduction of the Green Claims Directive. This directive aims to regulate and substantiate environmental claims made by companies, prohibiting vague terms such as ‘net zero,’ ‘carbon neutral,’ and ‘eco-friendly’ unless they are adequately verified. In this article, we will explore the key aspects of the Green Claims Directive, the companies it applies to, its status, and how businesses can prepare to comply with the new requirements. 

 

Why was the Green Claims Directive put into place?

The Green Claims Directive was introduced to address the growing concern over misleading and unfounded environmental claims in the market; read more on greenwashing here. A study by the European Commission has shown that a significant portion of green claims, approximately 53%, provide vague or misleading information to consumers. Moreover, a staggering 40% of these claims lack any supporting evidence. The lack of verification is also a major issue, as half of all green labels offer weak or non-existent verification processes. This situation is further complicated by the existence of numerous sustainability and green energy labels in the EU, with over 230 sustainability labels and 100 green energy labels, each varying significantly in terms of transparency and reliability. The Green Claims Directive aims to tackle these challenges and promote more transparent and substantiated environmental claims to ensure consumers can make informed choices. 

 

What is the Green Claims Directive?

The Green Claims Directive builds upon the existing consumer protection framework and covers both business-to-consumer (B2C) and business-to-business (B2B) marketing. It specifically applies to voluntary explicit environmental claims and does not overlap with other Union rules governing environmental claims. Under this directive, companies will be required to substantiate their claims with scientific evidence, address significant environmental issues from a life-cycle perspective, and ensure transparency regarding offsets. While the directive does not prescribe a single method, it emphasizes the importance of using a comprehensive approach to evaluate environmental impact. 

 

What companies must comply with the Green Claims Directive?

The proposed requirements of the Green Claims Directive will apply to the vast majority of EU operating companies, including small and medium-sized enterprises (SMEs) and large public corporations across various industries. Even companies based outside the EU but targeting EU consumers will need to comply. However, micro-SMEs with fewer than ten employees or generating less than €2 million in annual turnover will be exempt from the rules. 

 

Green Claims Directive Status and Timeline

On March 22, 2023, the European Commission unveiled its proposal for the Green Claims Directive. Once the directive enters into force, Member States will have 18 months to incorporate it into their national legislation. While the expected timeline for the directive’s implementation is 2026, the duration may change due to the pace of EU negotiations on the final text.  

 

How to Prepare for the Green Claims Directive

To comply with the forthcoming requirements of the Green Claims Directive, companies need to establish a robust environmental claims management framework that prioritizes integrity, transparency, and data verification. 

  • Review environmental claims: Conduct a comprehensive review of all existing environmental claims made across products, services, and marketing materials. Scrutinize the language used and assess the substantiation behind these claims. Identify and rectify any claims that may be considered vague, misleading, or lacking proper evidence. This thorough review will provide a clear understanding of areas that need adjustment to align with the anti-greenwashing regulations. 
  • Establish rigorous substantiation processes: Implement robust processes to substantiate environmental claims. This may involve conducting comprehensive life cycle assessments (LCAs) to evaluate the complete environmental impact of products or services. Gather and analyze relevant data to ensure claims are supported by scientific evidence and transparent from a life-cycle perspective.  
  • Prioritize transparency and accurate communication: Emphasize transparency and accurate communication when conveying environmental claims. Develop clear guidelines and internal policies for environmental marketing, ensuring all claims are supported by reliable data and verified by reputable third-party organizations. Provide detailed information about environmental initiatives, highlighting efforts to address significant environmental issues. Transparently disclose information about offsets and any limitations or trade-offs associated with the claims to build consumer trust. 

 

Conclusion

Adhering to the Green Claims Directive not only ensures compliance but also offers additional benefits for companies. Transparent and accurate communication of environmental impacts and performance reduces the risks associated with reputational damage and legal consequences arising from misleading claims. Non-compliance with the directive could result in legal investigations and fines of up to 4% of annual turnover. By adopting responsible environmental practices, businesses can enhance their brand value and cultivate consumer loyalty.

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