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Green claims

EU clampdown on green slogans coming with risk of sanctions

According to the directive under discussion, companies will have to obtain a certificate of conformity on the reliability of assertions

by Natalia Bagnato

25 September 2024

La sede della Commissione europea e a Bruxelles (Reuters)

3' min read

3' min read

As consumer awareness of sustainable products increases, so do measures against the misleading use of green terms by companies. We are talking about unfair business practices used by companies to misrepresent to consumers the environmental impacts of their products or activities (so-called greenwashing).

Reform in two stages

The extent of the phenomenon is proven: a 2020 European Commission study ('Environmental claims in the EU: Inventory and Reliability assesment') found that 53% of environmental claims made by companies, so-called environmental claims, provide vague, misleading or unsubstantiated information and that 40% of them are totally unsubstantiated. In light of these findings, the Commission has adopted a policy to counter the phenomenon of greenwashing, developed in the wake of consumer protection and competition law. Of particular note are the EU Directive 2024/825, adopted on 6 March 2024, and the proposal for a directive on green claims, which is still pending adoption.

The EU Directive 2024/825 on empowering consumers for the green transition - which has to be transposed by the Member States by 27 March 2026 and will apply as of 27 September 2026 - on the one hand frames greenwashing as an unfair business practice and, on the other hand, prohibits the use of generic positive environmental claims in the absence of recognised excellence in environmental performance. This means that companies' claims must be demonstrable through compliance with specific regulatory standards or an officially recognised eco-labelling scheme within the EU. Therefore, to avoid misleading business practices, companies will be able to use specific and demonstrable environmental claims.

It is also important to point out the proposal for a directive on the attestation and communication of explicit environmental claims (green claims directive) which, in line with the Union's strategy to combat greenwashing, focuses on the credibility and communicability of information. In particular, with reference to voluntary environmental claims, the proposal states that companies will have to ensure that these claims are supported by reliable scientific evidence and a comprehensive life cycle analysis of the product. The same companies will then have to obtain a certificate of conformity, issued by a third, independent body, concerning the reliability of the environmental claims.

Specific criteria

In the area of conformity certification, the Commission will be the body required to adopt a set of guidelines to define simple procedures to ensure greater uniformity and comprehensibility of such certifications. The proposal also aims to introduce specific criteria for the use of comparative environmental claims and to strengthen safeguards to improve eco-labelling schemes.

The same proposal requires Member States to designate a competent authority to ensure the correct application of the rules. The designated authority will have to be given incisive investigative powers, including the power to request companies to submit supplementary documentation with respect to what has been declared and to sanction any non-compliance. In fact, sanctions are foreseen in the form of fines, confiscation of the proceeds received from the sale of the products concerned, and temporary exclusion from public procurement procedures. In order to determine the size of the sanctions (the maximum amount of which will have to be at least 4% of the annual turnover), various factors will have to be taken into account, such as the nature, seriousness and duration of the violation, the financial capacity of the person responsible, as well as the economic benefits achieved by the company.

The US Federal Trade Commission recently updated its Green Guides, (non-binding) guidelines that establish uniform criteria for the use of terms such as recyclable and biodegradable, with the aim of protecting consumers and promoting fair trade practices.

In the EU, meanwhile, pending the transposition of Directive 2024/825 and the approval of the Green Claims Directive, companies now more than ever have to be careful not to engage in greenwashing practices. Courts and national competition and market authorities are even more sensitive to this issue also in view of the emerging European regulatory framework. In Italy, the Autorità Garante della Concorrenza e del Mercato (Agcm) has repeatedly emphasised its commitment to countering companies' use of false or misleading environmental claims, most recently reiterated in its annual report for 2023.