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The 12 most important questions about the EU Green Claims Directive

In March 2023, the European Commission published the legislative proposal "on the substantiation and communication of explicit environmental claims" to curb greenwashing. The aim is to oblige companies to make honest and transparent environmental claims. The main aim is to protect consumers.

(Update:) In January 2024, the European Parliament officially adopted the "Directive on Empowering Consumers for the Green Transition" (ECGT). The ECGT serves as a precursor or "sister" to the EU Green Claims Directive (GCD) and must now be incorporated into the national legislation of all EU member states.

In our article we have prepared the most important questions about the Green Claims Directive for you.

What is a green claim?

A green claim is an environmental statement that is used in an advertising or marketing context and gives the impression that a company, product or service is environmentally friendly. Claims to be "more environmentally friendly than the competition" also fall under green claims.

What is the Green Claims Directive?

The Green Claims Directive is a European Union directive with the aim of creating clear and uniform standards for the use of environmental claims for products and services and preventing greenwashing. The Green Claims Directive was triggered by a survey conducted by the European Commission in 2020, according to which 53% of the environmental claims examined were vague, misleading or unsubstantiated. In addition, 40 percent of the claims had no evidence and 50 percent of the labels had no or only weak verification. This is fatal for consumers, who find it difficult to distinguish between greenwashing and honest environmental commitment and who are to be protected by the new law.

How is the EU Green Claims Directive trying to curb greenwashing?

The directive focuses on curbing "greenwashing" by prescribing strict control and verification standards for environmental claims. The monitoring of these processes is the responsibility of the Member States, which will rely on independent, certified inspection bodies. The focus is on protecting consumers, who can use the Green Claims Directive to distinguish which companies are genuinely committed to protecting the environment.

What are the most important measures of the Green Claims Directive?

The most important measures of the EU Green Claims Directive include 

  • Clear information on how companies should demonstrate their environmental claims
  • Verification of the information by independent and accredited test centers
  • New regulations on the management of environmental labeling systems to ensure their stability, transparency and reliability

Which environmental claims are affected by the Green Claims Directive?

According to the current draft, companies may only make environmental claims if they are based on scientific standards and current technical knowledge. In addition, a brief explanation is required that shows how the stated improvements are achieved. General environmental claims such as "environmentally friendly", "eco", "green" or "ecological" would therefore be prohibited if they are not based on proven environmental performance. Climate-related claims that refer solely to the compensation of greenhouse gas emissions are subject to special regulations. For example, they must be reported separately from other greenhouse gas emissions. As a general rule, companies may only make a statement if they have undergone an external verification system and received a certificate of conformity.

Which companies are affected by the Green Claims Directive?

The Green Claims Directive applies to all companies operating in the EU. Micro-enterprises with fewer than 10 employees and a turnover of less than €2 million are exempt from the directive.

Does the EU Green Claims Directive exclude certain companies or sectors?

Micro-enterprises with fewer than 10 employees and a turnover of less than EUR 2 million are not affected by the Green Claims Directive. 

Does the Green Claims Directive also apply to companies outside the EU that sell to EU consumers?

Non-EU companies targeting EU consumers are also affected by the directive. 

When does the Green Claims Directive come into force?

The European Council and Parliament reached a provisional agreement on the Green Claims Directive on September 19, 2023. The draft report was published on October 11, and the vote in the main committee is expected to take place in mid-February. The dossier could then go to the plenary in March 2024 (provisional).

How does the complaints procedure work under the EU Green Claims Directive?

An authorized person or organization submits a complaint to the competent authority. This authority reviews the complaint and decides whether it complies with the provisions of the Directive. If violations are found, the authority requires corrective action to be taken within 30 days. Non-compliance can lead to measures such as warnings or fines. The complainant is free to take legal action at national or EU level if necessary.

What are the sanctions for non-compliance?

Non-compliance with the directive can result in fines of up to 4 percent of annual turnover. In addition, income from related transactions may be confiscated or the company may be excluded from public contracts or financing for up to 12 months.

What advantages does the Green Claims Directive offer companies?

The EU Green Claims Directive offers various advantages for companies: 

  • Increased credibility: Clear and substantiated environmental claims strengthen consumer confidence in the company.
  • Competitive advantage: Companies that actually act sustainably stand out from the competition, which is less environmentally friendly.
  • Risk reduction: Compliance with the directive minimizes the risk of legal disputes and sanctions due to misleading information.
  • Employee commitment: Companies that act sustainably and communicate this credibly can increase the commitment and satisfaction of their employees.
  • Long-term sustainability: The policy promotes sustainable business practices that benefit not only the environment but also the long-term business strategy.
  • Positive public perception: A company that adheres to strict environmental guidelines improves its image in the eyes of the public, stakeholders and the employer market.
  • Incentive for innovation and market opportunities: The need to provide accurate information can encourage companies to develop innovative and environmentally friendly solutions.

Sources:

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