On 17 January 2024, the European Parliament adopted a Directive on Empowering Consumers for the Green Transition (see press release and revised text). The Directive will also need to be adopted by the Council before it can come into force.
The aim of the Directive is to improve consumer information on product durability, as well as ban greenwashing and other unfair commercial practices. In order for consumers to be empowered to make better-informed decisions, they should not be misled about a product’s environmental or circularity aspects, such as durability, reparability or recyclability. The Directive does this by amending the Unfair Commercial Practices Directive and the Consumer Rights Directive to address a number of marketing practices related to greenwashing and the early obsolescence of goods. It forms part of the EU’s first Circular Economy Package, which aims to make sustainable products the norm (read more here).
This Directive is intended be complemented by the Green Claims Directive, which is still being negotiated by the European Parliament and Council (see below).
Directive on Empowering Consumers for the Green Transition: key takeaways
In summary, the new Directive will do the following:
- It will ban the use of generic environmental claims (e.g., environmentally friendly, green, biodegradable, eco) unless they are properly substantiated by demonstrating recognised excellent environmental performance.
- It will ban claims that a product has a neutral, reduced or positive impact on the environment (e.g., climate neutral) if this is achieved via the use of carbon offsetting schemes.
- It will ban claims related to future environmental performance (e.g., in the form of a transition to climate neutrality, or a similar objective, by a certain date) if they are not supported by clear, objective, publicly available and verifiable commitments set out in a detailed and realistic implementation plan that includes measurable and time-bound targets and other relevant elements necessary to support its implementation (such as allocation of resources). The claim would also need to be regularly verified by an independent third party expert, whose findings are made available to consumers.
- It will ban unfounded durability claims, prompts to replace consumables earlier than strictly necessary and presenting goods as repairable when they are not.
- Only sustainability labels based on official certification schemes or established by public authorities will be allowed.
- Guarantee information will have to be more visible, and a new harmonised label will be created to give more prominence to goods with an extended guarantee period.
The ban relating to carbon offsetting in particular has gathered much attention. To be clear, the Directive does not ban the use of carbon offsetting schemes or even advertising such schemes with correct and non-misleading statements. What it bans is making claims about carbon offsets in relation to them having a neutral, reduced or even positive impact on the environment and thus giving the impression that the environmental impact of a product or service is neutralised through the offsetting.
As the revised Recital 12 explains:
“It is particularly important to prohibit the making of claims, based on the offsetting of greenhouse gas emissions, that a product, either a good or service has a neutral, reduced, or positive impact on the environment in terms of greenhouse gas emissions. Such claims should be prohibited in all circumstances and added to the list in Annex I to Directive 2005/29/EC as they mislead consumers by making them believe that such claims relate to the product itself or to the supply and production of that product, or as they give the false impression to consumers that the consumption of that product does not have an environmental impact. Examples of such claims are ‘climate neutral’, ‘CO2 neutral certified’, ‘carbon positive’, ‘climate net zero’, ‘climate compensated’, ‘reduced climate impact’ and ‘limited CO2 footprint’. Such claims should only be allowed when they are based on the actual lifecycle impact of the product in question, and not based on the offsetting of greenhouse gas emissions outside the product’s value chain, as the former and the latter are not equivalent. Such a prohibition should not prevent companies from advertising their investments in environmental initiatives, including carbon credit projects, as long as they provide such information in a way that is not misleading and that complies with the requirements laid down in Union law.”
Interaction with the Green Claims Directive
The proposed Green Claims Directive will be complementary to the Directive on Empowering Consumers for the Green Transition and will provide more detailed conditions on the substantiation and communication of environmental claims.
The proposal for a Green Claims Directive, which is still being negotiated, is designed to help combat greenwashing by setting minimum criteria that companies making claims to consumers in the EU about the environmental benefits and performance of their products or services need to meet, as well as setting minimum criteria for environmental labelling schemes. Any such green claim would need to be substantiated in accordance with a minimum set of criteria set out in the Directive and the claim would need to be independently verified by an accredited verifier.
The Directive is intended to regulate how green claims are substantiated and communicated, as well as control the proliferation of environmental labels, so that consumers are provided with environmental information that is reliable, comparable and verifiable in advance.
However, the Green Claims Directive is still at a much earlier stage in the negotiation process and it is unlikely that the European Parliament and Council will be able to reach final agreement before the institutions need to down tools in preparation for the European Parliament elections this June.
See our previous blog post for more information on the Commission’s proposal.
The Directive on Empowering Consumers for the Green Transition now needs to be formally approved by the Council as well before it can be published in the Official Journal of the EU.
Member states will then have 24 months to transpose it into national law. The measures will then apply 6 months later (30 months after the Directive enters into force)
Greenwashing remains a top priority for many regulators and for private enforcement globally, with the EU seeking to lead the way with its package of new legislation. We expect litigation and formal complaints to national regulators in this space (for example, by NGOs and consumer protection associations) to continue this year. The level of greenwashing scrutiny is showing no signs of abating.
The new EU provisions will make some far-reaching changes and introduce new liability risks that companies should prepare for. For example, companies are well advised to review their existing green claims (in particular claims based on carbon offsetting) and make sure any such claims can be adequately substantiated, as well as ensure they have the right processes in place to avoid greenwashing risks. While for some claims, companies will “only” need to increase their level of documentation and substantiation, other claims (such as those based on offsetting schemes) may no longer be made (while a company continues to rely on offsetting its greenhouse gas emissions).
Once the Directive on Empowering Consumers for the Green Transition has been published in the Official Journal of the EU, we will provide a more detailed analysis of its provisions, including on penalties and enforcement.
For more information on greenwashing, see our podcast series: Running the greenwashing gauntlet: exploring the litigation and regulatory risks.