EU Commission proposes ban on greenwashing and new consumer rights to promote sustainable products

On 30 March 2022, the EU Commission published the first part of its Circular Economy Package to make sustainable products the norm (read our blog post on the package here). In line with one of the key priorities of the Green Deal to empower consumers for the green transition, the set of measures contains a proposal to enhance durability and reparability of products and to tackle greenwashing and early obsolescence through amendments of existing EU legislation, the Unfair Commercial Practices Directive and the Consumer Rights Directive.

Providing reliable information

According to the Commission, consumers are often hindered from making environmentally friendly decisions due to insufficient and unclear product information, particularly on the environmental characteristics, durability and reparability of products at the point of sale. The Commission intends to oblige traders to provide more reliable information, so consumers can make sustainable choices more easily.

The proposed amendments to Article 5(1) (contracts other than distance and off-premises contracts) and Article 6(1) (distance and off-premises contracts) of the Consumer Rights Directive intend, in particular, to require traders to provide additional pre-contractual information on the durability and reparability of products in a clear and comprehensible manner.

Durability

Pursuant to the current Consumer Rights Directive, traders are already obliged to inform consumers about legal warranty rights and additional commercial guarantees. They are, however, free to inform consumers about the absence of commercial durability guarantees. The Commission believes that, as a result, there is no incentive for producers to provide consumers with such guarantees.

The proposal requires traders to inform consumers in case producers of consumer goods offer commercial guarantees of durability of more than 2 years, if the producer provides this information. Regarding energy-using goods, traders shall also inform consumers if the producer has not provided any information. For goods with digital elements, digital content and digital services, traders shall provide information on whether and how long software updates are provided.

Reparability

The current legal framework under the Consumer Rights Directive requires traders to provide “after sales services information” on products where applicable. Specific information on the reparability of goods is currently not required. In line with the circular economy being a development priority of the EU, the Commission envisages that traders should provide additional information on the reparability of products. According to the proposal, traders should provide this information, e.g., through a reparability score which describes a score expressing the capacity of a good to be repaired. In case a reparability score is not established for a specific product under EU law, traders should provide other relevant repair information that producers made available to them, e.g., information on the availability of spare parts and repair manuals.

Avoiding unfair commercial practices

The Commission believes that tackling greenwashing is key to empowering consumers to make sustainable purchases and to foster the green transition. By way of amendments to Articles 6 et seq. and Annex I of the Unfair Commercial Practices Directive, the proposal provides for stricter regulations, according to which traders should avoid misleading and vague claims on the sustainability of products, must offer more transparency on their early obsolescence and may only use sustainability labels under strict conditions.

Greenwashing claims

The proposal suggests requiring traders to only make clear, verified, and non-misleading claims about the environmental aspects of products. The Commission proposes to add environmental characteristics like a product’s environmental and social impact, durability, and reparability to the list of main product characteristics about which consumers must not be misled. Traders shall also be prohibited from making environmental claims on future environmental performance, unless they have made clear, objective, and verifiable commitments and targets and have subjected themselves to an independent monitoring system.

With the proposed extension of the list of commercial practices which are under all circumstances considered unfair (the so-called ‘blacklist’ in Annex I to the Unfair Commercial Practices Directive), traders will be prevented from making vague environmental claims if environmental excellence cannot be demonstrated. The proposal lists claims such as ‘eco-friendly’, ‘eco’, ‘green’, ‘nature’s friend’, ‘ecological’, ‘environmentally correct’ and ‘climate friendly’ as examples of misleading generic environmental claims (recital 9). The banning of such claims shall apply whenever there is no excellent environmental performance demonstrated which is relevant to the claim or if the specification of the claim is not provided in clear and prominent terms on the same medium.

Moreover, traders shall be required to only make environmental claims that relate to an entire product if such a claim in fact holds true with respect to the entire product and not only to parts of a product. For example, the proposal envisages that products should only be marketed as “made with recycled material”, if the entire product and not only the packaging is made of recycled material (recital 11).

Early obsolescence and sustainability labels

By way of a further extension of the blacklist in Annex I, the proposal would oblige traders to:

1. inform consumers about features/updates that will limit the durability and incompatibility of third-party consumables or spare parts;
2. not induce consumers to replace the consumables of goods earlier than necessary; and
3. provide only accurate information on a product’s reparability if it can be repaired in case of defects.

Further, traders shall only be allowed to display sustainability labels, either public or private, if they are based on an independent third-party certification system or established by public authorities.

Practical implications

Companies have long recognised green claims as an opportunity to increase their sales, advertising products using a wide variety of ecological or sustainability labels or certification schemes, but also self-devised claims. Currently, there are over 100 environmental labels in the EU with different and therefore non-comparable methods to assess environmental impact. In the absence of uniform regulations, companies are exposed to unpredictable liability and reputational risks (see our previous blog post for more details). The multitude of labels does not only prevent brand-credibility and consumer trust, but also the establishment of a fair level playing field among market participants. By standardising the handling of green claims across the EU, the processes for cross-border operating and advertising will be simplified. With a unified standard that applies throughout the EU, companies will need to look less to specifications of local regulations but can more easily rely on an EU-wide level playing field.

Stricter requirements on durability guarantees and reparability information will probably also increase “sustainability competition”. The proposal therefore provides one more reason for producers to invest in products which are upgradeable, durable and repairable.

Next steps

In a next step, the EU co-legislators, the Council and the European Parliament, will discuss the Commission’s proposals. Afterwards, the amendments to the directives must be formally adopted. The average timeline from proposal to formal adoption under this procedure is around 18 months, so that the new legislation can be expected by end-2023 at the earliest. However, the amended directives must also be transposed into the national laws of the member states before actually taking effect.

Companies should monitor the further progress of the proposal in conjunction with other upcoming initiatives. The proposal will be complemented by an initiative on substantiating green claims, which is expected to be published in July. In addition, a legislative initiative on the right to repair is expected in Q3/2022.