An Essential Guide to the EU Green Claims Directive

If you're a brand or retailer making environmental claims about your products or services in the EU, you need to be aware of the Green Claims Directive.

One of the key pieces of environmental legislation that forms part of the EU Green Deal, the directive was introduced by the European Commission in March 2023 to help eliminate vague or misleading green claims.

In this article, we will explore the Green Claims Directive in detail—including what it says, how to prepare for it, and the penalties of non-compliance.

Green Claims Directive: the Essentials

What is the purpose of it? Ensure that brands who make environmental claims to EU consumers are clear and substantiated.

Who does it affect? Businesses that make environmental claims about their products or services within the EU market.

When will it come into effect? Pending final approval, the Directive is set to pass by the end of 2024. Member States will then have 24 months to implement it.

What are the penalties? Expensive legal action and fines of up to 4% of a company's annual turnover in EU Member States (or €2 million if turnover information is not available).

What’s the context?

Greenwashing, where companies mislead consumers about the environmental impact of their products or services, is becoming a significant concern. In response, many countries and jurisdictions are proposing new guidelines and laws to tackle greenwashing and safeguard both consumers and the environment. For instance, the UK's Competition and Markets Authority (CMA) introduced the Green Claims Code in 2021.

The EU Green Deal, released in 2019, emphasises the need for companies making green claims to back them up with a standard method for assessing environmental impact. This concept has evolved into the proposed EU Green Claims Directive, aiming to ensure transparency and honesty in environmental marketing.

What is the goal of the Green Claims Directive?

The Green Claims Directive aims to improve how businesses make environmental claims in the EU with these key goals:

• Ensure accuracy and trust: Businesses must substantiate their environmental claims with scientific evidence, avoiding vague or misleading terms.
• Promote sustainable choices: The Directive helps consumers make informed, sustainable purchases by ensuring environmental claims are reliable.
• Standardise regulations: It aims to standardise the rules on environmental claims across the EU, easing trade barriers and enhancing the efficiency of the single market.
• Improve environmental labelling: The Directive supports consistent and recognisable eco-labels and certifications across the EU.
• Enable effective enforcement: It requires Member States to appoint authorities to oversee enforcement and impose penalties for non-compliance.

What is a “green claim”?

A "green claim" is a statement by companies about the environmentally friendly aspects of their products or services. These claims highlight the environmental benefits or reduced impact compared to other products or services.

Green claims can relate to various stages, including manufacturing, packaging, distribution, use, consumption, and disposal of products.

Who does the Green Claims Directive affect?

The Green Claims Directive impacts businesses in the EU that make environmental claims about their products or services. It covers all types of environmental claims, regardless of the medium or platform, including any statements, symbols, or graphics alluding to environmental benefits.

The directive targets voluntary claims in consumer transactions and does not affect business-to-business dealings. It also doesn’t replace mandatory environmental labelling or disclosures required by other EU environmental laws.

Who is exempt from the EU Green Claims Directive?

Micro-enterprises with a turnover under €2 million and fewer than 10 employees are exempt from the Directive. Small and medium-sized enterprises (SMEs) will get an extra year to comply with its regulations, providing them with additional preparation time.

What are the requirements of the Green Claims Directive?

The Green Claims Directive lays down several key requirements for businesses making environmental claims in the EU:

• Substantiation of claims: Companies must have their environmental marketing claims approved before use, with an evaluation period of 30 days. These claims need to be backed up by scientific evidence that identifies and assesses the environmental impacts and trade-offs.
• Verification and certification: An accredited body must verify and certify green claims as compliant before they can be shared.
• Transparency and clarity: Claims should be straightforward, avoiding any vague or ambiguous language.
• Specific and relevant: Claims must focus on specific environmental benefits and avoid being general or non-specific.
• Avoidance of misleading practices: Businesses are not allowed to mislead consumers about the environmental characteristics or impact of their products or services.
• Compliance with standards: The use of eco-labels and environmental product certifications is allowed if they comply with the Directive’s standards and are officially recognised.
• Regulation of labelling schemes: The Directive imposes stricter regulations on environmental labelling schemes, including those from third countries. New schemes from outside the EU need European Commission approval to enter the EU market.
• Cooperation with authorities: Businesses must cooperate with the national authorities enforcing the Directive and provide relevant information upon request.
• Carbon offsets: Businesses can only make claims based solely on carbon offsets if they can prove a net-zero target, show progress towards decarbonisation, and disclose the percentage of total greenhouse gas emissions that have been offset.
• Product comparisons: Ads that compare products must be fair and use consistent evaluation methods.
• Data recency: Claims of product improvements must be based on data no older than five years.

What happens if you don’t comply with the Green Claims Directive?

Member states are responsible for enforcing the Green Claims Directive, ensuring that businesses meet their obligations. Authorities designated by each member state will oversee compliance and implement dissuasive penalties for non-compliance.

Member states also have the authority to conduct investigations, which may result in trading sanctions for businesses who are found to be non-compliant.

Businesses that break the Directive's rules could face severe consequences, including procurement bans, loss of revenue, and significant fines.

The Directive also opens the door for third-party complaints, potentially leading to legal action against non-compliant companies.

What is the fine for the green claims directive?

For non-compliance, fines can reach up to 4% of a company's annual turnover in EU Member States, or €2 million if turnover information is not available.

Member states have the discretion to impose even higher fines, reinforcing the Directive's enforcement framework and ensuring businesses take their compliance responsibilities seriously.

What is the status of the Green Claims Directive?

The Green Claims Directive was first proposed in March 2023 and is now close to becoming law.

It was approved by the EU Parliament in February 2024 and confirmed in plenary in March 2024. It now needs a final stamp from the European Council after the June elections. This is highly likely to happen, meaning the Directive is set to pass by end of 2024. Member states will then have 24 months to implement it.

For businesses in the EU, this means checking and updating your environmental claims and procedures to meet the new standards. Although the exact deadline for these changes to become mandatory is not yet set, it’s wise to start acting now to ensure you’re not on the back foot when it is.

How can brands and retailers ensure they’re fully compliant with international regulations?

To be fully compliant with the Green Claims Directive, brands and retailers should start thinking about taking the following steps:

• Gather scientific evidence: Obtain scientific evidence to substantiate all environmental claims, ready for inspection if required.
• Communicate clearly: Use clear and precise language in all green claims to prevent misunderstandings, ensuring all third-party information complies with the Directive.
• Review and verify: Conduct comprehensive reviews of environmental claims, mapping out transparency and verification data.
• Collect environmental data: Establish processes to collect and analyse environmental data throughout the product's value chain, from production to disposal.
• Perform lifecycle assessments: Regularly carry out lifecycle assessments to document and understand the full environmental impact of products.
• Update operational practices: Adapt operating models, data management, and technology to ensure you can meet the Directive’s substantiation and verification requirements.

Simplifying compliance with green claims automation

Ensuring you’re fully compliant with the Green Claims Directive and other environmental regulations can be complex, time-consuming, and expensive. That’s why we built Compare Ethics—an AI-powered platform designed to simplify and streamline  the process for brands and retailers.

Our AI technology quickly identifies compliance gaps, automates document verification, simplifies sharing of compliance reports, and ensures the clarity of your claims. Our team of experts, meanwhile, are always on hand to help you navigate regulations confidently and hone your broader green claims strategy.

Plus, we're the only platform that guarantees assurance on your environmental and sustainability claims.

Interested in finding out more? Book a call today.

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