How the European Commission is Using its Proposal for a Directive on Green Claims to Protect Consumers from Greenwashing while Pursuing Ongoing Environmental Objectives
European Union flags outside the European Commission headquarters in Brussels, Belgium.[1]
“Unless someone like you cares a whole awful lot, nothing is going to get better. It's not.”
Dr. Seuss, The Lorax[2]
Whether saving the Truffula trees or pursuing a greener economy, Dr. Seuss reminds us that progress is impossible without action by those most passionate about enacting change.[3] What the Lorax failed to consider, however, is the undermining effects of misleading advertising practices on the efforts of environmentally-conscious consumers. Despite their aim to promote sustainable business practices through the purchase of eco-friendly goods and services, consumers now face an uphill battle against companies making false and unsupported claims regarding the environmental merits of their products and practices.[4]
A large majority of European citizens have recognized a growing need for environmental protection, with many believing that changes in current production and consumption practices are essential.[5] Despite this acknowledgment, the deluge of vague and misleading “green claims” made by companies, throughout Europe and around the world, make it almost impossible for consumers to ensure they are purchasing truly sustainable goods and services, therefore impeding any attempt to enact positive change.[6] This dilemma, often described as “greenwashing,” has caught the attention of the European Union, as well as other regulatory bodies across the globe, and is the central focus of the recent Green Claims Directive (“the Directive”) proposed by the European Commission (“the Commission”).[7]
Following the presentation of The European Green Deal (“Green Deal”) in December 2019, the Commission proposed several sustainability-focused directives aimed at achieving a greener economy.[8] Both the Green Deal and the Commission’s subsequent proposals highlight the EU’s goal of making Europe the world’s first climate-neutral continent.[9] The Green Claims Directive represents the EU’s most recent action in pursuance of this goal and functions as an extension of its 2022 proposal for a “Directive on empowering consumers for the green transition.”[10] In 2022, the European Commission proposed several amendments to its existing Unfair Commercial Practices Directive (UCPD) that focused on expanding the scope of prohibited activities to preclude companies from making misleading environmental claims relating to their products, services, or practices.[11] The Green Claims Directive “complements” the Commission’s former proposal by providing “specific rules on the substantiation, verification and communication of voluntary environmental claims” that regulate the use of green claims before they reach the market and can influence consumer behavior.[12]
The Directive’s focus on the substantiation and communication of claims follows from the Green Deal’s emphasis on the role consumers play in promoting sustainable business practices and ultimately furthering the EU’s environmental objectives.[13] Although consumers can encourage the adoption of more sustainable business practices, by purchasing exclusively from environmentally conscious businesses, both the Green Deal and the Green Claims Directive highlight how unsubstantiated or misleading green claims deteriorate the would-be effects of consumer activism.[14] Despite existing consumer protection regulations under the UCPD, a 2020 study conducted by the Commission found 53.3% of environmental claims to provide “vague, misleading, or unfounded information,” while another study by the Consumer Protection Cooperation found 57.5% of claims lacked “sufficient elements allowing for judgment of the claim’s accuracy.”[15] Consequently, rather than enabling consumers to take part in the green transition, vague and unsupported green claims have allowed companies to profit from the shift in consumer preferences without materially altering their practices to help achieve a more sustainable economy.[16]
The Commission’s proposal responds to the proliferation of green claims within the European market by establishing clear standards for assessing the substantiation and communication of the claims.[17] For a company to achieve proper “substantiation,” any voluntary environmental claims must, among other things, be founded upon “recognized scientific evidence,” indicate the extent to which the claim applies to all or merely part of a particular product or process, and depict how the environmental merits discussed exceed those required by law.[18] With respect to “communication,” the Directive states that claims shall discuss the “environmental impacts, aspects or performance that are assessed in accordance with the substantiation requirements,” shall provide guidance as to how the product can be used to reduce environmental impacts, and shall include relevant substantiation information.[19] Before a trader can publish any green claim relating to the sale of goods, the proposed Directive further requires the substantiation and communication of the claim to be verified and certified as compliant by an accredited third-party verifier.[20] Absent verification, companies making unsubstantiated or improperly communicated green claims may face legal action for noncompliance as well as penalties established by the Member States following adoption of the Directive’s provisions.[21]
The proposed regulations ultimately aim to ensure consumers receive “reliable, comparable, and verifiable” information from traders, to certify that consumers can make well-informed and environmentally responsible purchasing decisions.[22] By heightening the standards for companies wishing to capitalize on intensifying environmental concerns amongst consumers, the Green Claims Directive incentivizes the adoption of sustainable business practices by providing companies an opportunity to gain a competitive advantage over those unwilling to comply with its requirements.[23] By taking action against greenwashing, the proposal not only seeks to provide consumers with the information necessary to promote sustainable consumption, but also reflects how consumer behavior can play a key role in achieving the EU’s environmental objectives.[24]
The Lorax spoke “for the trees,” and the EU is speaking for consumers – using its Green Claims Directive to ensure they can continue fostering a greener economy, one sustainable purchase at a time.[25]
[1] Photo: Kate Abnett, EU to propose clampdown on companies using fake 'green' claims, Reuters (Mar. 22, 2023), https://www.reuters.com/business/sustainable-business/eu-propose-clampdown-companies-using-fake-green-claims-2023-03-22/. [2] Dr. Suess, The Lorax 64 (1971), https://yale.learningu.org/download/91736886-e31e-47c0-8a3b-f1c1843a6f7c/H3146_The%20Lorax_Storybook.pdf. [3] See id. (“Unless someone like you cares a whole awful lot, nothing is going to get better. It's not.”) [4]Green Claims, Eur. Comm’n: Energy, Climate Change, Environment, https://environment.ec.europa.eu/topics/circular-economy/green-claims_en (last visited Aug. 8, 2023) (“Today it is difficult for consumers to make sense of the many labels on the environmental performance of products (both goods and services) and companies.”). [5]See European Commission Press Release IP/20/331, New Eurobarometer Survey: Protecting the environment and climate is important for over 90% of European citizens (Mar. 3, 2020) [hereinafter New Eurobarometer Survey] (describing findings from the European Commission’s “Eurobarometer Survey”). According to its 2020 Eurobarometer Survey, the European Commission reported that 94% of citizens in all EU Member States considered environmental protection to be important to them and identified the most effective way to address related issues as changing “the way we consume” and “the way we produce and trade.” Id. [6] See European Commission, Questions and Answers on European Green Claims (March 22, 2023), https://ec.europa.eu/commission/presscorner/detail/en/qanda_23_1693 [hereinafter Questions and Answers] (defining a “green claim” as and environmental claim implying that a company, or its products or services, have “a positive environmental impact, lesser negative impact, no impact, or improvement over time”). [7] See id. (describing “greenwashing” as the practice of making unsubstantiated environmental claims about a company’s “products or processes” that makes them “appear more environmentally friendly than they truly are” and discussing how the Directive proposes to mitigate the problem); see also Laura Kim Et Al., The Green Claims Global Drive: Developments in the UK, US and EU, Covington (May 5, 2023), https://www.globalpolicywatch.com/2023/05/the-green-claims-global-drive-developments-in-the-uk-us-and-eu/ (discussing emerging regulations relating to greenwashing in the United States, United Kingdom, and Europe). In response to the global influx of greenwashing, the regulatory bodies in the US and the UK have also taken to addressing growing environmental and consumer protection concerns. See id. In the US, the Federal Trade Commission has begun the process of reviewing and updating its “Guides for the Use of Environmental Claims,” while, in the UK, Competition & Market Authority has begun reviewing misleading environmental claims made throughout various sectors of its economy under the guidance of its 2021 “Green Claims Code.” See id. [8] European Commission Press Release IP/23/1692, Consumer protection: enabling sustainable choices and ending greenwashing (Mar. 23, 2022) [Hereinafter Green Claims Directive Press Release] (discussing the various proposals issued by the European Commission in previous years following the EU’s 2019 European Green Deal). [9] European Commission Press Release IP/19/6691, The European Green Deal sets out how to make Europe the first climate-neutral continent by 2050 (December 11, 2019), [hereinafter Green Deal Press Release] (discussing generally the objectives and provisions of the European Green Deal). [10] See Questions and Answers, supra note 3 (explaining how the Green Claims Directive relates to existing consumer protection regulations and formerly proposed Directives). [11] See European Commission Press Release IP/22/2098, Circular Economy: Commission proposes new consumer rights and a ban on greenwashing (March 30, 2022) [hereinafter Empowering Consumers Directive Press Release] (discussing the proposal for a Directive on Empowering Consumers for the Green Transition and its suggested amendments existing consumer protection regulations). With respect to greenwashing, the Commission’s 2022 proposal called for several changes to the EU’s Unfair Commercial Practices Directive (UCPD), which generally prohibits “misleading commercial practices,” including those relating to the use of green claims. Seeid. The Directive Empowering Consumers for the Green Transition seeks to expand the list of prohibited practices to include specific activities related to greenwashing, for example, “making generic, vague environmental claims where the excellent environmental performance of the product or trader cannot be demonstrated.” Id. The Directive also offers new sustainability-related factors to be added to the list of characteristics surrounding which traders are prohibited from misleading customers; under the Directive, a case-by-case assessment determines what is considered “misleading.” Id. [12] Questions and Answers, supra note 3 (explaining how the Green Claims Directive furthers the EU’s actions against greenwashing and noting the significance of preventing the use of misleading claims before communicated to customers rather than upon retroactive assessment). [13] See Commission Proposal for a Directive of the European Parliament and of the Council on Substantiation and Communication of Explicit Environmental Claims (Green Claims Directive), at 1, COM (2023) 166 final (Mar. 3, 2023) [hereinafter Green Claims Directive] (“In the European Green Deal the Commission committed to ensure that consumers are empowered to make better informed choices and play an active role in the ecological transition.”). [14] See id. at 2-3. (discussing how greenwashing represents a “barrier” precluding consumers from making “environmentally sustainable consumption choices”). [15] Id. at 3. [16] See id. at 4 (noting the disadvantage facing companies engaged in sustainable practices as competitors use unfounded green claims to take advantage of consumer environmental consciousness). [17] See Green Claims Directive Press Release, supra note 5 (“According to the proposal, when companies choose to make a ‘green claim' about their products or services, they will have to respect minimum norms on how they substantiate these claims and how they communicate them.”). [18] See Green Claims Directive, supra note 9 at 18-19 (defining the substantiation requirements for making green claims under the proposed Directive). [19] See id. at 20-21 (defining the proposed requirements on the communication of green claims). [20] See id. at 22-23 (defining the requirements for verifying the substantiation and communication of claims). [21] See id. at 55 (detailing the applicable penalties for failing to comply with the Directive’s provisions); see also Tara Bernoville, How the EU greenwashing regulations will impact your business, PlanA Earth (May 10, 2023), https://plana.earth/academy/how-eu-greenwashing-regulations-impact-business (discussing the penalties associated with the proposed Directive as well as other non-economic implications for companies). [22] See Green Claims Directive Press Release, supra note 5 (discussing the underlying objectives of the Green Claims Directive). [23] See Questions and Answers, supra note 3 (discussing the implications of the Green Claims Directive for small, medium, and large companies in the EU as well as international companies selling the European consumers). Although likely involving upfront costs to ensure compliance, companies choosing to make properly substantiated and communicated claims stand to benefit from the standardized requirements proposed as the claims, once verified, will be certified for use across the EU, thereby offering a competitive advantage amongst competitors. See id. [24] See Green Claims Directive, supra note 9 at 2 (“Completing the EU legislative framework supporting more sustainable consumption will contribute to reaching the Sustainable Development Goal 12.6 to encourage companies, especially large and transnational companies, to adopt sustainable practices and to integrate sustainability information into their reporting cycle.’”) [25] Dr. Suess, The Lorax 29 (1971), https://yale.learningu.org/download/91736886-e31e-47c0-8a3b-f1c1843a6f7c/H3146_The%20Lorax_Storybook.pdf.
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