Green Claims Directive calls for verified and specified environmental claims in B2C commercial practices

The European Commission adopted a proposal for a Green Claims Directive on 22 March 2023. This completely new directive is intended to act as special legislation concerning environmental claims. The proposal applies to B2C commercial practices and concerns explicit environmental claims made in a textual form or contained in an environmental label that relate to a product or the trader itself. A claim that a packaging is made using recycled plastic, for example, is an environmental claim. 

In addition to proposing a new Green Claims Directive, the Commission has also proposed amending certain other directives, such as the Directive 2005/29 concerning unfair B2C commercial practices. Through the proposed amendments, the Commission would ban generic environmental claims, such as ‘green’, ‘environmentally friendly’ and ‘ecological’, if a company cannot substantiate them with recognised excellent environmental performance. Directive 2005/29 is intended to act as general legislation that applies to environmental claims, whereas the Green Claims Directive would apply to explicit environmental claims and the substantiating, verifying and communicating thereof.

Substantiation and communication requirements specified and increased

Pursuant to the proposed directive, a maker of environmental claims must carry out an assessment to substantiate such claims. The assessment must include certain components. For example, the company must specify whether the environmental claim is related to the product as a whole or only a part thereof. The company must also substantiate the claim by supporting it with widely recognised scientific evidence. Furthermore, the company must demonstrate that the environmental claim does not concern a regulatory requirement that the product must fulfil in any case.

What’s more, the proposed directive lays down requirements on how environmental claims must be communicated. When making a claim that concerns the future, the company would have to include a time-bound commitment for improvements inside its own operations and value chains. The proposed directive also lays down disclosure obligations, according to which the company would have to communicate to the consumer how the improvements that are subject to the environmental claim are achieved.

Companies that offset their emissions would have to provide consumers with more detailed information on the offsetting, such as information on the nature of the offsets and whether these relate to emissions reductions or removals.

Third-party verification before using environmental claims in commercial communication

The proposed directive states that an independent third party, i.e. a conformity assessment body, must verify the substantiation and communication of an environmental claim. The current task of conformity assessment bodies is to assess the conformity of various devices, for example, so this would mean a major change. It should also be noted that the environmental claim must be verified by the third party before the claim is used in commercial communication.

Another major aspect of the proposed directive is that the research data used for assessing the environmental claim should be reviewed and updated whenever the circumstances so require, in any case within five years from when the data was made public. The updated claims are subject to assessment by the conformity assessment bodies as well.

Financial and other consequences for making unfounded environmental claims

Pursuant to the proposed directive, Member States would be required to lay down effective and proportionate penalties for infringing the directive’s provisions. These penalties could take the form of fines imposed by a supervisory authority. The proposed fines would likely be significant as their goal is to prevent any economic benefits derived from making unfounded environmental claims. Under the proposed directive, a company could also be excluded from access to public funding for up to 12 months as penalty for making environmental claims that infringe on the proposed directive. The proposal would also make it possible to confiscate any revenues gained from products that are the subject of infringing claims.

Under the proposed directive, non-governmental organisations, among others, would have the right to submit complaints concerning infringing claims. Non-governmental organisations with an interest in the environmental marketing of companies are likely to make active use of this opportunity.

Recognise environmental claims and substantiate them with evidence

While the contents of the directive proposals might still change and the national implementation of the directives will take some time, companies should already take action. An important first step is that everyone in the organisation is made aware of what constitutes an environmental claim in marketing or company communications. Companies should also assess how consumers are likely to understand their environmental claims and whether these claims are sufficiently substantiated. It is worth noting that current legislation already requires that companies are able to prove an environmental claim when it is made.