Preparing for the EU's greenwashing crackdown
Constantin Eikel of Bird & Bird previews major new EU legislation which will transform how companies market their ‘environmentally friendly’ products, and outlines proactive steps to prepare for the new provisions
Did you know that ocean plastic has rarely ever actually touched the ocean? Did you know that in 2020, more than 50% of all examined environmental claims were found to be vague, misleading, or unfounded and 40% were unsubstantiated? Or that there are more than 230 different environmental labels in use in the EU?
These questions are the driving factors behind the EU’s draft Empowering Consumers Directive and draft Green Claims Directive. The EU is determined to regulate green advertising with these Directives and is – at least in the current form of the drafts – taking a very strict approach. If adopted they will bring substantial changes, but you can prepare.
Using "generic environmental claims" will require evidence of "recognised excellent environmental performance." This means that you'll need to adhere to approved certification schemes that can validate your claim. This applies to terms such as 'environmentally friendly,' ‘eco’, 'eco-friendly,' 'green,' 'nature's friend,' 'ecological,' 'environmentally correct,' 'climate friendly,' 'gentle on the environment,' 'carbon friendly,' 'carbon neutral,' 'carbon positive,' 'climate neutral,' 'energy efficient,' 'biodegradable,' and 'biobased.' If you're unsure about obtaining the necessary certification, it's advisable to gradually transition your marketing away from these terms.
Assessment for text claims and labels
In a bold move to tackle the issue of unverified environmental claims, the EU is ushering in a new era of accountability. This means that a thorough "assessment" will become the norm. The EU has laid out 10 key points that will shape this assessment, bringing much-needed clarity and credibility to environmental claims. These include:
Relying on widely recognised scientific evidence;
Demonstrating the significance of the environmental impacts, aspects and performance;
Considering the full life cycle; and
The requirement to compare your environmental performance with common practices in your product group or sector.
Any company will have to carry out this assessment and this will require new work streams. Competitors’ performance must be evaluated, and good and reliable data of your own products is required. While the draft is on the horizon, it's not too early to begin laying the foundations for a resilient environmental data collection system across your value chain.
After your assessment, don't rush to shout your green claim from the rooftops. There's a crucial step before you are allowed to publish your claim: approval by "verifiers." While it's not yet crystal clear who these verifiers will be in each member state, one thing is certain – your claims must pass their scrutiny before going public. This means your marketing plans must factor in assessment time and verifier approval time. Last-minute changes may not be an option.
The verifiers will be independent testing bodies authorised by member states. As for costs, the EU has estimated the following:
€500 for simple claims;
€8,000 for environmental footprint claims; and
€54,000 for complex claims, including the environmental footprint of an organisation.
The verification process is one of the most criticised parts of the Green Claims Directive. It is a change in the advertising landscape: aside from health claims and a few other exceptions, companies can publish their claims without prior approval and if they are unlawful, they might face litigation. This has worked historically, but admittedly with a delay. New types of claims appeared, and it always took a few months (or even years) for enforcement to start. The same has happened for green claims. After an initial wave of misleading claims, many courts and authorities have now set clear boundaries. This has led to a decrease of misleading claims.
With the certification requirement in place, it will be the other way round: companies may only communicate once a claim has been pre-approved. On that note, the Directive lacks any clear remedy against the rejection of a certification, even if the certification should have been granted.
Finally, companies may only communicate claims that relate to “significant” environmental impacts, aspects or performance in view of the full life cycle. If it is not significant, it may not be communicated. The Directive does not explain what will be considered “significant”. This may be up to the courts (and verifiers) to decide.
These are only a few of the upcoming changes. If the drafts are adopted, we expect the implementation of the Empowering Consumers Directive by 2026 and the Green Claims Directive by 2027.
This raises an important question: what actions should companies take at this moment? At present, we strongly recommend:
Implementing a robust environmental data collection system along your value-chain (which will help with other new obligations as well, such as the Digital Product Passport); and
Considering the draft Directives of any green marketing campaign or cooperation that has a longer lifetime than 2027.
Lastly, you might be curious about what ocean plastic truly represents. This term was originally coined for the collection of plastic in vulnerable communities situated near rivers or oceans, where plastic was statistically more likely to find its way into the ocean. The aim of collecting plastic in these communities is to halt its journey into the ocean, a commendable effort that simply needed a more transparent and fitting name.