EU Cracks Down on Environmental Claims

Update: On February 20, the Empowering Consumers for the Green Transition Directive (the “Directive”) received final approval from the European Council and was published in the Official Journal of the EU on March 6, 2024. The Directive will enter into force on March 26, 2024, and Member States will be required to transpose it into national law no later than March 27, 2026. Applicability and enforcement will commence on September 27, 2026. At that point, penalties may be assessed for failing to comply with the Directive.

Key Takeaways

• On January 17, the European Parliament approved the Directive, aimed to improve environmental marketing practices and ban the use of misleading environmental claims.
• This Directive amends the Unfair Commercial Practices and Consumer Rights Directives (2005/29/EC and 2011/83/EU) with new prohibitions and requirements to provide consumers with clear, relevant, and reliable information about a product’s environmental and social characteristics or circularity aspects.
• The Directive is part of a broader EU package of environmental initiatives seeking to enhance both consumer and environmental protection, including the Ecodesign for Sustainable Products Regulation, the proposed Green Claims Directive, and the Right to Repair Directive.
• The Directive will enter into force on March 26, 2024; applicability and enforcement will commence September 27, 2026, following transposition by Member States no later than March 27, 2026.

The Details

The Directive prohibits several types of marketing claims and further imposes additional transparency requirements to improve consumer protection. The Directive applies to businesses marketing goods and services to EU consumers, as well as non-EU businesses making marketing or other claims directed at EU consumers. It covers any “environmental claim,” defined as any non-mandatory message or representation that states or implies that a product, product category, brand, or business:

• has a positive or no impact on the environment;
• is less damaging to the environment than other products, product categories, brands, or businesses, respectively; or
• has improved their impact over time.

Importantly, “environment” in this context encompasses the earth’s atmosphere and climate, and by extension, climate and greenhouse gas (GHG) related claims.

Prohibitions

The Directive prohibits a range of green marketing activities, labels, and messaging that are now commonly employed. These include:

• General or generic environmental benefit claims such as “biodegradable,” “eco-friendly,” “climate-neutral,” “energy efficient,” or “eco” are not allowed unless there is evidence of recognized, outstanding environmental performance that justifies the claim.
  • EU traders should also avoid claims of “conscious,” “sustainable,” or “responsible” as these also relate to social characteristics.
  • The U.S. Federal Trade Commission’s Green Guides already identify “general” environmental benefit claims as presumptively misleading; the EU move goes somewhat further by directly prohibiting these without additional support for the claim.
• Claims that a product (good or service) has a neutral, reduced, or improved impact on GHG emissions if such claims are based on GHG offsetting.
  • Examples of these claims are ‘climate neutral,’ ‘carbon positive,’ ‘climate net zero,’ and ‘reduced climate impact’. Under the Directive, these claims would only be allowed when they are based on the actual lifecycle impact of the product in question, not based on offsetting greenhouse gas emissions outside the product’s value chain.
• The display of sustainability labels (social or environmental) that are not based on an independent, third-party certification scheme or established by public authorities.
• Claims about the entire product when the benefit (climate or otherwise) only relates to one aspect of the product.
• Certain other claims related to product durability, replacement, and repairability.

Additional Provisions

The Directive further outlines other requirements related to environmental and climate-related claims, including:

• Businesses making claims related to future environmental and GHG performance objectives will be required to substantiate them with a publicly accessible, comprehensive, and practical implementation plan that an independent third party expert regularly verifies it. Both the plan and the third-party verification must be available to consumers.

Businesses making product comparisons based on environmental or social attributes must disclose the methodology used, the specific products being compared, the producers or suppliers involved, and mechanisms for maintaining the information’s currency.

Implementation Timeline and Looking Forward

On February 20, the Directive received final approval from the European Council and was published in the Official Journal of the EU on March 6, 2024. The Directive will enter into force on March 26, 2024, and Member States will be required to transpose it into national law no later than March 27, 2026. Applicability and enforcement will commence on September 27, 2026. At that point, penalties may be assessed for failing to comply with the Directive.

Although it will take time for Member States to transpose the Directive, some may act early by revising their marketing guidance. For example, the Dutch Authority for Consumers and Markets (ACM) published its ‘Guidelines on Sustainability Claims’ in June 2023, which appears to align with key aspects of the Directive.

Beveridge & Diamond’s ESG, International Environmental Law, Product Stewardship, Consumer Products, Textiles and Fashion, and Chemicals practices provide strategic, business-focused advice to U.S. and multinational companies that make, distribute, transport, or sell consumer products in a hyper-competitive and evolving consumer goods market. Together, we help clients identify, understand, and comply with complex regulatory requirements and navigate interrelated reputation issues in the fast-moving area of sustainability. For more information, please contact the authors.