A study conducted by the European Commission in 2020 concluded that “consumers are faced with the practice of making unclear or not well-substantiated environmental claims”, also known as ‘greenwashing’. The study found 53.3% of the examined environmental claims in the EU to be vague, misleading or unfounded, and 40% were unsubstantiated. It also concluded that the absence of common rules for companies making voluntary green claims leads to ‘greenwashing’. It creates an uneven playing field in the EU’s market, therefore putting genuinely sustainable companies at a disadvantage.

An environmental claim is defined as ‘any message or representation, which is not mandatory under Union law or national law, including text, pictorial, graphic or symbolic representation, in any form, including labels, brand names, company names or product names, in the context of a commercial communication, which states or implies that a product or trader has a positive or no impact on the environment or is less damaging to the environment than other products or traders, respectively, or has improved their impact over time’. [Article 1 of the Proposal for a Directive on Empowering Consumers for the Green Transition]

The European Green Deal set out a commitment to tackle ‘greenwashing’ by ensuring that buyers receive reliable, comparable and verifiable information to enable them to make more sustainable decisions. The New Consumer Agenda and the Circular Economy Action Plan have also set the need to address ‘greenwashing’ as a priority.

The Proposal for a Directive on Empowering Consumers for the Green Transition, which proposed amendments to the Unfair Commercial Practices Directive and the Consumer Rights Directive, was adopted by the European Parliament in March 2022. The proposal introduced generic rules for the prohibition of misleading advertising.
Green Claims Directive
The Proposal on substantiating and communicating environmental claims (Green Claims Directive) complements the existing set of EU rules on consumer protection by addressing the identified problem of greenwashing and unreliable environmental labels. Together with the Proposal on common rules promoting the repair of goods, it forms the third package of proposals on circular economy.
Objectives
The proposal aims to:

Key provisions
The proposal aims to ensure consumers receive reliable, comparable and verifiable environmental information on products.

It includes:

The proposal targets explicit claims that:

In conclusion, it seems fair to assume that once brought into force, the Green Claims Directive will provide more clarity and stronger reassurance for consumers that products sold as ‘green’ are actually ‘green’. At the same time, it will benefit organisations that make a genuine effort to improve the environmental sustainability of their products.

The Competition and Markets Authority (CMA) has published a new Green Claims Code to help businesses understand and comply with their obligations under consumer protection law, when making environmental and sustainability claims. These ‘green claims’ were created to demonstrate how a product, service, brand or business reduces harm to the environment.
What is the Green Claims Code?
The Code is part of a wider awareness campaign launched by the CMA ahead of COP26. It focusses on six principles of consumer law, detailing that firms making green claims “must not omit or hide important information” and “must consider the full life cycle of the product”.

Following an initial introductory period, the CMA will carry out a full review of misleading green claims from 2022, including claims that are made in-store or on labelling. Sectors where consumers have expressed concerns about misleading claims will be prioritised, however any sector in which significant concerns are raised may become a priority.

Andrea Coscelli, Chief Executive of the CMA, said:

“More people than ever are considering the environmental impact of a product before parting with their hard-earned money. We are concerned that too many businesses are falsely taking credit for being green, while genuinely eco-friendly firms do not get the recognition they deserve.

The Green Claims Code has been written for all businesses – from fashion giants and supermarket chains to local shops.

Any business that fails to comply with the law risks damaging its reputation with customers and could face action from the CMA.”
Why was the Code created?
The Code was published on 20th September 2021 in response to a CMA investigation last year on the impact of green marketing on consumers, which found that 40% of green claims made online could be misleading. The Code sets out clear guidance on what can be classified as a ‘green claim’.
How do businesses ensure compliance with the law when making green claims?
Businesses should check their green claims against the Code and seek legal advice if they are unsure whether their claims comply with the law.

Green claims are genuine only when they properly describe the impact of a product, brand, business or service, with evidence to back it up.

As a guide, green claims must:

1. Be truthful and accurate: Businesses must live up to the claims they make about their products, services, brands and activities.

2. Be clear and unambiguous: The meaning a consumer is likely to take from a product’s messaging and the credentials of that product should match.

3. Not omit or hide important information: Claims must not prevent someone from making an informed choice because of the information they leave out.

4. Only make fair and meaningful comparisons: Any products compared should meet the same needs or be intended for the same purpose.

5. Consider the full life cycle of the product: When making claims, businesses must consider the total impact of a product or service.

6. Be substantiated: Businesses should be able to back up their claims with robust, credible and up-to-date evidence.

Further information on how to comply with consumer protection law in relation to green claims is available by looking at the CMA’s green claims checklist.

The Green Claims Code should help businesses remain compliant with the law and protect consumers from false ‘eco’ claims about products and services. It therefore provides a prime opportunity for organisations who have been working hard to mitigate their social and environmental impact and have the data to support this. Those who fall short in terms of environmental and sustainability credentials now risk losing customers and their reputation.