The Green Claims Directive

The EU Institutions are in the process of agreeing new rules to further prevent greenwashing.  On 17 June 2024, the Council adopted its general approach to the proposed Green Claims Directive (“GCD”). The GCD is focused primarily on how companies would need to substantiate and verify green claims which are potentially permissible in the EU.  It complements the Directive on Empowering Consumers of the Green Transition (“ECGT Directive”) which entered into force in March 2024.  That Directive focuses primarily on blacklisting and prohibiting certain greenwashing practices. Together these two Directives will create a single regulatory framework concerning environmental, and to some extent, social claims.       

This Alert sets out the core requirements under the draft GCD, and some of the current differences between the Commission, Parliament and Council positions.  NB Other updates concerning greenwashing and green claims (such as the recent German Federal Court of Justice (BGH) Judgment) are outlined in other Client Alerts and communications.            

General Scope and Core Requirements

Although the wording on the scope of the Proposed GC Directive is yet to be agreed, the GCD will be broad in scope.  It would regulate certain ‘environmental claims’, meaning – any statement (written and oral) or imagery which gives the impression that: (1) a product or organisation has a positive or zero impact on the environment, (2) is less damaging to the environment than other similar products/organisation, or (3) has improved its impact over time.  In particular, the GCD would regulate environmental claims made voluntarily by traders in business-to-consumer commercial situations and which relate to a product, service or the trader itself.

Before using explicit environmental claims, companies will be required to carry out an assessment to substantiate the claim.  The GCD sets out detailed rules on what the assessment must entail – including the science-based data needed to support the claim such as life-cycle assessments, environmental footprint assessments,and the need to use recognised EU or internationally recognised scientific approaches in measuring relevant issues such as environmental impacts – and not omit any relevant data. That information would generally need to be made publicly available in physical form or online including in relevant EU languages. In general, only claims based on the latest scientific evidence would be possible, meaning, amongst other things, that companies would be required to keep the substantiation and communication of claims up-to-date and revised at least every 5 years.    

Explicit environmental claims would need to be verified under certification schemes - before being made publicly available or displayed.  More specifically, an independent third-party accredited conformity assessment body which is not engaged in any activity that may conflict with their judgement or integrity - would need to verify the claim.  The verifier could indicate ways of how the company should communicate the environmental claim regarding compliance with the draft GCD.  Once the verifier has carried out the verification of the submitted claim, it would decide whether or not to issue a certificate of conformity. The certificate would then be recognised across the EU and shared between Member States via the Internal Market Information System.

Exceptions to the general GCD rules are likely to be limited and apply only to certain microenterprises – although microenterprises would remain able to obtain certificates of conformity should they wish to. 

The GCD sets down rules regarding specific types of explicit environmental claims.  For example, explicit comparative environmental claims would require additional data and information – to ensure, amongst other things, comparisons are based on equivalent information and data.  For explicit environmental claims based on aggregated information, or aggregated parameters (geographical areas or general product types etc) – these types of claims will likely only be allowed where EU rules on the calculation of such aggregated data are established.

To, amongst other things, prevent the proliferation of self-certification schemes, the draft GCD also introduces minimum criteria for environmental labels and environmental labelling schemes.  Environmental labels (i.e. trust mark, quality mark or equivalent markings promoting a product/process or business with reference to its environmental aspects) would need to be substantiated by an independent verifier.  Environmental labelling schemes must satisfy minimum requirements regarding transparency, objectivity and independence.[1]

The Commission, Parliament and Council Positions

Following an initial negative opinion from the Commission’s Regulatory Scrutiny Board, the Commission revised its proposal for a Green Claims Directive, which was subsequently published on 22 March 2023.[2] On 12 March 2024, the European Parliament adopted its first reading position.  On 17 June 2024, the Council adopted its general approach. The EU Institutions must now agree and adopt the Proposed GC Directive. Currently there are a number of slightly differing visions expressed in the Commission, Parliament and Council positions.

The Parliament’s initial position adopted on 12 March 2024, generally supported the Commission’s proposal with some amendments.  Those amendments included, amongst other things: (1) a proposal for packaging to be included in the scope of the GCD – and subject to, amongst other things, the pre-approval requirements, (2) the establishment of a ‘simplified’ verification system for claims which, for example, do not require a Life-cycle Assessment, (3) a proposal for the Commission to adopt guidelines on widely recognised substantiation methods, (4) as regards future environmental performance claims (e.g. ‘net-zero by 2045’) – to include an implementation plan with defined, publicly available, targets and reporting, (5) stricter rules on off-setting rules so that, for example, compensation and reduction claims relating to fossil emissions can only be made using permanent removals as defined in the EU carbon removal certification network, (6) deadlines for verifiers to assess explicit claims, (7) requirements for traders to bring their claims into compliance within certain deadlines after a Member State Competent Authority finding of non-compliance.

The Council’s ‘general approach’ adopted on 17 June 2024, also generally supported the Commission’s proposal but, with some amendments.  Those amendments included, amongst other things: (1) exempting certain claims and labels from the verification procedure, (2) allowing private operators to establish environmental labelling schemes which provide ‘added value’ as set out in an implementing act, (3) more flexibility in the calculation of carbon credits for net-zero claims, and (4) delayed implementation.   

Steps Following Adoption

The finalised GCD text is expected to be agreed and adopted early/mid 2025. Following its adoption, it is currently unclear how much time Member States would be given to transpose the GCD (likely at least 18 months, and perhaps 24 months) with certain phase-in periods for industry (e.g. SMEs) to comply.  Member States would be required to appoint a relevant national competent authority empowered to receive complaints concerning alleged breach of the Proposed GC Directive requirements.  Member States would also be required to adopt measures to ensure penalties are effective, proportionate and dissuasive – where, according to the Commission/Parliament drafts, the GCD would state that “fines should be…set at least at […]  4% of the trader’s total annual turnover in the Member State or Member States concerned”.

EU Member States may decide to adopt measures which go beyond the requirements in the Proposed GC Directive, although the legal basis for the adoption of the Proposed GC Directive itself would be important in this context. For example, the GCD itself would regulate business-to-consumer practices, although Member States may choose to broaden the scope to include business-to-business commercial practices.

Under the GCD, the Commission would be empowered to adopt implementing (secondary) legislation in a number of areas including: (1) further rules on the substantiation of explicit claims in specific areas if it later transpires that they are needed to stop widespread misleading of consumers, or to address obstacles to trade; (2) further rules on the additional information (e.g. on environmental impacts) that traders must communicate when using certain explicit environmental claims to ensure consumers are not misled; and (3) form and format of verification certifications. 

Aim and General Context

The GCD aims to harmonise EU/EEA law vis-à-vis green claims, prevent legal fragmentation of the single market, set minimum criteria on environmental claims, and ensure information provided to EU consumers is reliable, comparable, and verifiable so that they are empowered to make green choices. The GCD, together with the ECGT Directive, is intended to realise the objectives expressed in the European Green Deal, particularly vis-à-vis greenwashing, and the UN SDGs.  They were announced in the New Consumer Agenda and the Circular Economy Action Plan.  They form part of the broader EU consumer-protection legal framework – including EU law concerning product liability, product safety, and collective redress.  They aim to harmonise areas of law where certain EU Member States have been keen to take action – and where certain Member State national law already exists.

For more information on the Green Claims Directive, please contact Marcus Navin-Jones mnavinjones@crowell.com and Juge Gregg jgregg@crowell.com . 

Register here for our upcoming webinar on green claims, taking place on September 19th, where we will dive deeper into this critical topic.