Few topics have been as prominent over the past 18 months as misleading environmental claims in advertising. There has been a host of decisions from regulators targeting so-called ‘greenwashing’. The European Commission recently published a proposal for a Directive regarding explicit environmental claims. Our Products team outlines some of the key proposals in the proposed Directive.

Nothing has been as topical as misleading environmental claims in advertising regulation over the past 18 months. There has been a host of decisions from regulators targeting so-called ‘greenwashing’, the practice of making misleading environmental claims. Greenwashing looks set to remain in the spotlight as, on 22 March 2023, the European Commission published a proposal for a Directive on the substantiation and communication of explicit environmental claims (the Proposed Directive). Here we outline some of the key proposals in the Proposed Directive.

Explicit environmental claims

Currently, EU law does not directly regulate environmental claims. Such claims may fall within the scope of the Unfair Commercial Practices Directive on the basis that they are misleading but this has led to diverging approaches among national regulators across the EU. The Proposed Directive would harmonise the approach within the EU and covers almost all explicit environmental claims made by companies, other than those subject to more specific rules. Such claims would need to be substantiated and verified in accordance with criteria under the Proposed Directive.

For example, the claim should:

• Specify whether the claim relates to the entire product or business of the trader
• Rely on widely recognised scientific evidence, accurate information and take relevant international standards into account
• Follow a life cycle approach
• Only be made where the environmental performance is significant, and
• Not be made when the environmental performance is equivalent to what is required under law

Further information about the substantiation must also be provided to consumers, whether physically or via a weblink or QR code.

The Proposed Directive also addresses comparative environmental claims and future environmental claims. Comparative claims would also have to be based on equivalent information and data. Future environmental claims would have to include time-bound commitments for environmental improvements.

Labelling

The Proposed Directive outlines a procedure for establishing environmental labelling schemes. From the transposition of the Proposed Directive, only schemes established in accordance with the Proposed Directive would be permitted. This would not affect any pre-existing labelling schemes. The Proposed Directive would also require the European Commission to adopt implementing acts to provide more detailed requirements and rules for the procedure of approving these schemes.

Verification system

Under the Proposed Directive, all explicit environmental claims and labelling schemes would have to be verified by third party conformity assessment bodies (verifiers) in accordance with procedures established by Member States. Once such claims or schemes are verified, verifiers would provide a certificate of conformity certifying that the explicit environmental claim or environmental label complies with the requirements of the Proposed Directive.

Exemptions and funding for SMEs

Microenterprises would be exempt from the requirements of the Proposed Directive unless they wanted their environmental claims to be verified. A microenterprise is a business that has less than 10 employees and annual turnover/balance sheet total of less than €2 million.
The Proposed Directive would also require Member States to take measures to help SMEs comply with the Proposed Directive’s requirements. These may include: (a) financial support; (b) access to finance; (c) specialised management and staff training; and (d) organisational and technical assistance.

Penalties

Like the Omnibus Directive which introduced large fines for certain breaches of EU consumer law, Member States would be required to implement maximum fines of at least 4% of annual turnover in relevant Member States for cross-border infringements of the Proposed Directive. Other penalties include the confiscation of revenues gained by the trader from a transaction with the relevant products concerned and banning the trader from participating in public procurement tenders and accessing public funding for up to 12 months.

Next steps

The Proposed Directive will now go to the European Parliament and Council for consideration. As currently drafted, the Proposed Directive looks set to tightly regulate green claims which will increase businesses’ administrative costs. However, it remains to be seen what amendments will be made to the Proposed Directive as it works its way through the EU legislative process.

For more information, contact a member of our Product Regulation & Consumer team.

The content of this article is provided for information purposes only and does not constitute legal or other advice.