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EU Commission Tightens Regulations Around Green Claims

Published March 28, 2023
Published March 28, 2023
Troy Ayala

Greenwashing has certainly been a hot topic—what emerged with the boom of clean beauty soon snowballed into a fiery debate of scientific studies, retailer guidelines (including those that later received lawsuits), and online discussion.

Singular entities such as Bluebird, Provenance, Sustainable Beauty Coalition, Avery Dennison, Novi, and What’s In My Jar are looking to improve clarity on how brands and consumers can be more sustainable, be it through blockchain technology-enabled supply chain transparency, or simply demystifying green claims terminology. But many will agree that while individual passion for the environment can go very far; legislative regulation is where the real power lies. Otherwise, brands can simply pick and choose whether or not they put in the effort that will help lessen the industry’s impact on the planet. Furthermore, with no single explicit definition of exactly what is sustainable, confusion will continue to arise.

Early this year, the FTC opened up a review of its Green Guides, which were last updated in 2012, to get new (and much-needed) input on the Green Guides to avoid brands from making false marketing claims, seeking public commentary for this review.

Last week, on the other side of the pond, the EU Commission proposed new criteria against misleading environmental claims and greenwashing in order to ensure more clarity for consumers and less misinformation perpetuation. It is part of the organization’s wider mission to make a transition into more green consumption habits possible for society at large through items like the Empowering Consumers Proposal.

“If we do not start consuming more sustainably, we will not achieve our European Green Deal goals—it is as simple as that. While most consumers are willing to contribute, we have also seen an increase in ‘greenwashing' and early obsolescence practices. To become the real actors of the green transition, consumers must have a right to information to make sustainable choices. They must also be protected against unfair commercial practices which abuse their interest in buying green,” comments Commissioner for Justice Didier Reynders. A study by the enterprise found that 53.3% of environmental claims made in the EU were misleading, and 40% unsubstantiated. The EU Commission’s proposal covers explicit claims (examples listed include “packaging made of 30% recycled plastic” and “ocean friendly sunscreen”), voluntary claims about environmental impact, as well as public and private environmental labels.

Any companies wishing to make green claims need to provide independent verification and scientific evidence for these claims, similar to the UK Competition and Markets Authority’s Green Claims Code. With 68% of European consumers concurring that their consumption habits have a negative impact on the planet, there is certainly a desire for things to change, and here is where clear and legible labelling on products and their claims can make all the difference.

Labels using aggregate scoring of environmental impact, unless these are set in EU rules, are not allowed, nor are any new public labelling schemes, unless these are developed at EU level. For example, the EU Ecolabel is not subject to these labelling rules. The organization cites the fact that currently the 230+ environmental labels existing are leading to increased consumer confusion. Private labelling schemes will be subject to increased approval scrutiny including “higher environmental ambition.” Comparisons to other products must be grounded in data proving these statements.

“If we do not start consuming more sustainably, we will not achieve our European Green Deal goals—it is as simple as that."
By Didier Reynders, Commissioner for Justice, EU Commission

When it comes to claims around carbon neutrality, companies have to verify if these are due to their own operations or done by purchasing offsets, which in themselves will be subject to stricter regulation to ensure their integrity.

Overseeing all of these verification and enforcement processes are the Member States which need to set up independent and accredited entities responsible for fulfilling these duties. In the case of protecting consumer interests, “qualified entities” like consumer organizations will be able to take legal action against any enterprise they believe is not fulfilling its green claims, as part of the Representative Actions Directive in the Commission Green Claims proposal.

The proposals align with the principles previously set forth in the Unfair Commercial Practices Directive (UCPD), which prohibited misleading commercial practices across industries. The EU Commission emphasizes the crucial element of claims needing to be verified before the product comes to market, nipping potential misinformative marketing in the bud for future releases. As for products already on the market, brand owners will need to double down on verification, in some cases even seek new accreditation, to continue making their current claims.

With these guidelines, the EU Commission hopes to “give a competitive advantage to companies who make a genuine effort to develop environment-friendly products, services and organizational practices, and lessen their impact on the environment.” Furthermore, by having a unified regulatory practice across the EU, it will eradicate fluctuating green claim practices between different countries inside the market. Businesses outside of the EU but selling into it will also have to adhere to the requirements.

However, in acknowledgement of different budgets and enterprise sizes, companies with less than 10 employees and €2 million ($2.1 million) turnover are exempt from the proposal. The EU Commission wants Member States to increase financial, technical, and organizational access that will make it easier for smaller businesses to get the necessary green claim verifications and incorporate more environmentally friendly practices across the enterprise.

While these proposals are a great step in the right direction, exempt parties such as these could still perpetuate misinformation or false claims to consumers. Arguably one could say that the smaller the business, the lesser the impact; however, as the current industry shows, misinformation, no matter how small the original source, can be spread like wildfire. Increasing access to the tools that enable all business, no matter their size or budget, to make greener choices is a helpful stepping stone in the journey towards eco-friendly practices.

Reaching a universal and unanimous standard for sustainability claims may seem like a utopian vision, but it’s undeniably necessary if big changes are to be expected.


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