As foreshadowed in our recent article, the European Commission has now released its highly anticipated proposed directive on green marketing: The Green Claims Directive. By virtue of the Directive, the Commission has proposed new rules which are intended to prevent increasingly environmentally motivated consumers from being misled over unsubstantiated marketing tactics, by cracking down on the companies who employ those tactics.
According to data released by the Commission, around 53% of environmental claims made by companies contain “vague, misleading or unfounded” information, and 40% are “completely unsubstantiated”. If there was ever a justification for a piece of legislation and its enforcement, this is it.
The Directive seeks to establish an EU-wide methodology which will regulate how business label their goods and communicate to their customers about their true impact on the planet. Included within the methodology is an independent review function – in short, a company wishing to market itself on the basis of environmental claims will have to have them verified by an accredited third party who will in turn issue a certificate of conformity if the claim stacks up - and the data upon which those claims are based will have to be readily accessible to consumers via a QR code or website link. And perhaps most importantly, the Directive will introduce penalties for non-compliance; something which thus far has been missing from the gambit of anti-greenwashing tools. Companies found to be making unsubstantiated claims could face penalties amounting to at least 4% of their annual revenue.
The move towards external verification (as opposed to the “mark your own homework” model of old) and the threat of potentially significant fines could really start to turn the tide on green claims, thereby allowing consumers to finally have some confidence in the products and brands with which they are aligning themselves, and those brands to receive the credit they deserve. Indeed, the European Commissioner for Environment (Virginijus Sinkevicius) said of the plans, “We want, first of all, consumers to get trustworthy information which is consistent and verifiable” and “We want … to ensure that those companies that make genuine efforts to reduce their impacts on nature, resource use, climate emissions or pollution are rewarded.”
In terms of its reach, this is broad. It is intended that the resulting legislation will apply to explicit environmental claims made by businesses to consumers in the EU and that an “environmental claim” will include any message or representation in any form that states or implies in relation to any product, service or organisation a positive environmental impact, a lesser negative impact, no impact, or an improvement over time.
Some environmental campaign groups have criticised the proposal as not strong enough, with the Environmental Coalition on Standards (ECOS) saying the proposal remains vague on how it will be implemented. Programme manager for Environmental Information and Assessment at ECOS, Margaux Le Gallou, commented: "Sadly, without harmonised methodologies at the EU level, the new Directive will provide little clarity to consumers and business and will only complicate the job of market surveillance authorities."
The Directive will now be subject to the approval of the European Parliament and the Council who will likely run a consultation process with business and other stakeholders. Whilst there is no set date for entry into force currently, we imagine there will be significant climate body pressure for the approval process to be prioritised. You may ask of any similar activity within UK – well, in good news for consumers and companies making genuine claims, the UK is also on the brink of new legislation with the imminent unveiling of the Digital Markets, Competition and Consumer Bill, and Rishi Sunak has said that passing the new bill (which is reported to include penalties of up to 10% of global turnover for companies who commit breaches of it and up to £300,000 for individuals who break the laws) is a priority for the government.
It appears that the EU and the UK are singing from the same hymn sheet on this issue and that we are very likely to see large fines being levied against corporations if they fail to heed the warnings.
EU Launches Green Claims Rules to Protect Consumers from Greenwashing