EU Proposal for a Green Claims Directive
Governmental Agency: European Commission
Jurisdiction: European Union
Ref no: 2023/0085(COD)
Status: In Review
The Directive on substantiation and communication of explicit environmental claims (Green Claims Directive) is a significant departure from the previous, lighter requirements under the green claims guidance.
This initiative will require companies to substantiate claims they make about the environmental footprint of their products/services such as “biodegradable,” “less polluting,” “water saving,” or having “bio-based content” by using standard methods for quantifying them.
This should help commercial buyers and investors make more sustainable decisions and increase consumer confidence in green labels and information. Collectively, these measures intend to curtail greenwashing, prevent businesses profiting from unsubstantiated claims, and support consumers to navigate the +200 environmental labels active in the EU.
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The proposal introduces a number of requirements for businesses, including:
- Clear criteria on how businesses should prove their environmental claims and labels.
- Requirements for these claims and labels to be checked by an independent and accredited verifier.
- New rules on the governance of environmental labelling schemes to ensure they are solid, transparent and reliable.
Parliament would require claims and their evidence to be assessed within 30 days, but simpler claims and products could benefit from quicker or easier verification. Companies that break the rules may face penalties, such as temporary exclusion from public procurement tenders, loss of revenue, and fines of at least 4% of their annual turnover.
All businesses would be expected to comply with the Directive, but micro enterprises (fewer than 10 employees and with an annual turnover not exceeding €2 million) would be exempted from some requirements.
Some provisions would ensure that small and medium sized enterprises would receive help, including financial support, access to finance, specialized management and staff training as well as organizational and technical assistance.
Within the EU internal market, this Directive is likely to reduce the number of inaccurate or misleading green claims. This will be an advantage for businesses making genuine claims, who will continue to be able to communicate the sustainability of their products, services and organizational practices.
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On June 17, 2024, the Council adopted its position, following the adoption of the European Parliament's position on March 12, 2024. The finalized directive is expected to be agreed and adopted early or mid 2025.
The Council's position included amendments such as:
- Exempting certain environmental claims and labels from third-party verification requirements. Eligible companies would prove compliance with new rules through a technical document instead. Labelling schemes that comply with the new rules and are officially recognized in a member state, regulated by the EU or national law would also be exempt.
- Only "offset claims" that use carbon credits to balance out CO2 emissions must prove a net zero target, show progress towards decarbonization, and disclose the percentage of total greenhouse gas emissions that have been offset. "Contribution claims" that use carbon credits to contribute to climate action do not have to prove a net zero target.
