The EU Green Claims directive

Scope

• Substantiation and communication of voluntary environmental claims and environmental labelling in business-to-consumer commercial practices. It is limited to environmental labels only, i.e. those covering predominantly environmental aspects of a product or trader. It is meant to act as a safety net for all sectors where environmental claims or labels are unregulated at EU-level. It does not aim to change existing or future sectoral rules.
• Micro enterprises would not be covered by the new rules, and SMEs would have an extra year to be in compliance compared to larger businesses.

Key rules

• Specific requirements on substantiation of environmental claims, including a verification and pre-approval system for marketing claims.
• Requirements on communication of environmental claims.
• Specific provisions on environmental labels as well as labelling schemes.

Sanctions

• Member States to lay down the rules applicable.
• The penalties must be effective, proportionate and dissuasive.

Entry into force

• The European Parliament’s committees adopted the draft on 14 February 2024 and on the 12 March the European Parliament voted in favour of their position. Next steps will be reviewed by the new Parliament following elections in June.
• From its date of entry into force, Member States will have 18 months to adopt national provisions and a further six months before the rules are applied.

Scope

• The Directive covers all voluntary business-to-consumer (B2C) commercial practices before, during and after a commercial transaction in relation to a product. It deals with sustainability labels which cover environmental or social aspects or both.

Key rules

• Sustainability labels which are not based on a certification scheme or not established by public authorities will be prohibited as unfair commercial practice.
• Extension of unfair commercial practices to include practices in relation to obsolescence of products and greenwashing.
• Mandatory pre-contractual information to be provided to consumers.
• Prohibition on misleading claims.

Sanctions

• Member States to lay down the rules applicable.
• The penalties must be effective, proportionate and dissuasive.

Entry into force

• 26 March 2024 and Member States will have 2 years from this date to adapt their national rules on commercial practices and consumer information.

Shielding consumers from greenwashing and misleading environmental claims is a key objective of the European Union’s (EU) strategy to promote a more environmentally sustainable economy. In 2022, the EU revised the current legislation to enhance consumer empowerment as part of the green transition, with the core aim to strengthen the protection of consumers against unfair commercial practices and to increase the availability of information to drive more sustainable consumer habits.

The Green Claims and Green Transition Directives each set minimum requirements in business-to-consumer (B2C) commercial practices and will address greenwashing by tackling false environmental claims made towards consumers. The objective is to reduce the proliferation of public and private environmental labels and to ensure consumers are aware of the environmental characteristics of products resulting in informed purchasing decisions and ultimately, contributing to more sustainable consumption patterns. It is intended that the Directives will give a competitive advantage to companies which make a genuine effort to develop environment-friendly products, services and organisational practices, and lessen their impact on the environment.

Companies which count fewer than 10 employees and less than €2 million turnover are exempt from the obligations of the Green Claims Directive, unless they themselves wish to use it.

The Green Transition Directive will apply to all companies offering products for sale to consumers and will require them to update the information they provide to consumers. The Green Transition Directive and its amendments do not apply to any message which is mandatory under EU or national law, for example statements made under banking standards or disclosure requirements under the sustainable finance disclosure regulation (SFDR).

Companies will have to ensure the reliability of their voluntary environmental claims and communicate their claims in a transparent way. Traders’ claims will need to be checked by an independent verifier (as described below).

The Green Transition Directive introduces new pre-contractual mandatory information to be provided when contracts, other than distance or off-premises contracts, are concluded with customers. Consumers must be provided with clear and comprehensible information regarding among other things:

i. the existence and length of a producer’s commercial guarantee of durability for all types of goods;

ii. the existence and length of a producer’s legal conformity guarantee for digital content and digital services as well as the existence and length of the period during which the producer can provide software updates for goods with digital components, digital content and digital services;

iii. where applicable, the existence and the conditions of after-sales services and commercial guarantees;

iv. on the reparability score of the goods, and if not available, other information such as the availability of spare sparts, repair and maintenance instructions.

The same pre-contractual information must be provided to consumers in case of distance and off-premises contracts and where available indication on environmentally-friendly delivery option.

An Environmental Claim or an Explicit Environmental Claim is defined broadly as “any message or representation, which is not mandatory under Union law or national law, including text, pictorial, graphic or symbolic representation, in any form, including labels, brand names, company names or product names, in the context of a commercial communication, which states or implies that a product or trader has a positive or no impact on the environment or is less damaging to the environment than other products or traders, respectively, or has improved their impact over time” (find out more here).

The Directives cover explicit claims made voluntarily by businesses for consumers, which relate to the environmental impact, aspect, or performance of a product or the trader itself, and adopt a "life-cycle" approach, from raw materials to end-of-life (durability, reparability or recyclability). The rules also address environmental labelling schemes, stopping the proliferation of public and private labels and ensuring transparency and robustness of labelling schemes (find out more here).

According to the EU Commission, climate-related claims that are based on carbon offsets or carbon credits have been shown to be particularly prone to being unclear and ambiguous. This relates notably to environmental claims that products or entities are “climate neutral”, “carbon neutral”, “100% CO2 compensated”, etc. The Directives tackle claims relying on offsetting and with regard in particularly to consumers such claims should only be allowed when they are based on the actual lifecycle impact of the product in question. When climate-related claims are made, companies have to be transparent about what part of that claim concerns their own operations, and what part relies on buying offsets (find out more here).

The Green Transition Directive provides that any claim in relation the "environmental or social impact", "durability", "reparability" or "recyclability" of a product which materially distorts or is likely to materially distort the economic behaviour of consumers will be considered as misleading.

Making an Environmental Claim related to future environmental performance without clear, objective, publicly available and verifiable commitments set out in a detailed and realistic implementation plan, or presenting a common practice as an advantage to consumers, will therefore be considered as misleading if it causes or is likely to cause the average consumer to make a commercial decision that she/he would not otherwise have made (find out more here).

Any Explicit Environmental Claim must be therefore assessed prior to being made. The impact assessment must meet, among other things, the following criteria to prevent claims from being misleading:

• traders must specify if the claim is related to the whole product, part of a product or certain aspects of a product;

• the statement must rely on recognised scientific evidence, use accurate information and take into account relevant international standards;

• where a claim is made on environmental performance, take into account all environmental aspects or environmental impacts which are significant to assessing the environmental performance;

• the significance of the environmental impacts, environmental aspects or environmental performance that are subject to the claim must be demonstrated from a life-cycle perspective;

• information must be provided on whether the product or trader which is subject to the claim performs significantly better than what is common practice for products in the relevant product or trader group;

• provide transparent and specific information on carbon offsetting. It must be specified whether the offset relates to reductions or removals of carbon emissions and describe how the offsets are achieved (find out more here).

The EU rules provide for guidelines on how traders are allowed to advertise explicit environmental claims. Explicit claims are permitted if:

• the claim covers environmental impacts, aspects or performance that are assessed in accordance with the substantiation requirements laid down in the legislation and are identified as significant for the respective product or trader;

• where relevant for the claim made, information is included on how consumers may appropriately use the product to reduce its environmental impacts;

• information on the product or the trader that is the subject of the claim and on the substantiation must be made available, in a physical form or in the form of a weblink, QR code or equivalent; and

• where the claim is related to future environmental performance of a product or trader, it must include a time-bound commitment for improvements inside own operations and value chains (find out more here).

The Green Transition Directive adds the following practices to the list of commercial practices which are considered as unfair in all circumstances:

• displaying a sustainability label that is not based on a certification scheme or which have not been established by public authorities;

• making a generic environmental claim (such as “eco-friendly”, “green”, “climate friendly’, “carbon friendly”, etc.) for which the trader is not able to demonstrate recognised excellent environmental performance relevant to the claim;

• making an environmental claim about the entire product or the trader’s entire business when it concerns only a certain aspect of the product or a specific activity of the trader’s business;

• claiming, based on the offsetting of greenhouse gas emissions, that a product has a neutral, reduced or positive impact on the environment in terms of greenhouse gas emissions;

• presenting requirements imposed by law on all products within the relevant product category on the Union market as a distinctive feature of the trader’s offer;

• doing certain practices relating to the programmed obsolescence of goods (find out more here).

The Green Claims Directive provides criteria on the use of ELS defined as “a certification scheme which certifies that a product, a process or a trader complies with the requirements for an environmental label”.

ELS should be promoted but, at the same time, any new ELS may only be established under EU law. New ELSs that were not developed at an EU level are therefore not permitted. Moreover, any new ELS established by public authorities in third countries awarding environmental labels, to be offered in the EU, shall be subject to approval by the EU Commission prior to entering the EU market with the aim of ensuring that these labels provide added value in terms of their environmental ambition. The same would apply for ELS established by a private operator which would have to provide added value in terms of their environmental ambition compared with existing ELS.

ELS shall contain transparent information about the issuer as well as about the objectives, the requirements and the procedures to monitor compliance of the relevant ELS in an accessible and comprehensible form. ELS must be checked and verified by an independent third party on a regular basis.

Find out more here.

The Member States are required to set up procedures in order to verify the substantiation and the communication of Explicit Environmental Claims. The “verifier” must be an officially accredited independent body, with no conflicts of interest to ensure independence of judgment and hold the highest degree of professional integrity. The “verifier” must have the required expertise, equipment, and infrastructure to carry out the verifications as well as enough suitable personnel that observe professional secrecy.

Find out more here.

Qualified Entities as defined under the Representative Actions Directive (EU) 2020/1828 (such as consumers’ organisations) would be able to bring legal proceedings to protect consumers’ collective interest. For instance, consumers’ organisations would be able to launch proceedings if a trader makes a claim - implicitly or explicitly – in order to ensure that it complies with the minimum requirements of the legislation but it is suspected that it is not the case.

For the Green Claims Directive, EU requires Member States to lay down the rules on penalties applicable to infringements of national provisions which would be adopted pursuant to the text and shall take all measures necessary to ensure that they are implemented. The penalties must be “effective, proportionate and dissuasive” meaning that Member States will have some flexibility in this respect.

As part of the Green Transition Directive, penalties already in force through Member States’ national law will apply to the rules the Green Transition Directive introduces.

The Directives will need to be transposed into the Member States national law.

The Green Transition Directive was published in the EU Official Journal on 06 March 2024 and will enter into force will enter into force on the 20th day following such publication, i.e. on 26 March 2024. Member States have now 2 years to adapt their national rules on commercial practices and consumer information.

Regarding the Green Claims Directive, from its date of entry into force, Member States will have 18 months to adopt national provisions and a further six months before the rules are applied. The EU Commission expects that the Green Claims Directives would apply within two years from its entry into force. We therefore expect the application of these new rules in the second half of 2026.