Greenwashing Under the EU’s Watchful Eye: New Directives Aim to Restore Faith in Eco-Advertising
The EU is declaring war on greenwashing with two new directives. With some considerable consequences for environmental advertising claims. Advertising with popular slogans such as “climate neutral” based on CO2 compensation will be banned. Online retailers should follow developments in this area closely and constantly review their communication with environmental claims.
Climate change and species extinction are on everyone’s lips. Consumers are increasingly basing their purchasing decisions on the fact that products are sustainable and not harmful to the environment. For this reason, many online retailers are trying to base their advertising on environmental claims in order to meet the needs of their customers.
In addition, more and more companies are voluntarily assuming responsibility and investing considerable sums in environmental projects. And they understandably want to report on this commitment to the public.
However, caution is required with such environmentally-related advertising claims, also known as green claims. This is because companies can quickly stumble into the realm of greenwashing.
Green claims are in fact any communication by a company to the outside world that is in any way capable of establishing a link between the product, service or company and its positive impact or less harmful impact on the environment. The special thing is that it is even sufficient if, for example, only the color green is used. It is already possible for communication to slip into the area of green claims. Popular examples of green claims include “climate neutral”, “sustainable”, “100% recycled plastic” or “one product, one tree planted”.
Greenwashing: What It Is and Why It Matters
And because it is so easy to get into the area of green claims, greenwashing, i.e. the attempt to portray a product, service or company as more environmentally friendly than it actually is, is not far away. Although most companies generally communicate their environmental commitment with good intentions, sometimes unintentional lack of transparency and inaccuracy creep in, partly because there is a lack of generally binding legal guidelines. In a few cases, deliberately false statements are even made in order to gain a competitive advantage.
In the well-known “EU Sweep” in 2021, in which the EU searched websites across the EU for greenwashing claims, worrying figures came to light:
- In more than 50% of cases, there was a lack of sufficient information for the consumer to assess the accuracy of the environmental claim.
- In 37% of cases, vague, general claims such as “sustainable” or “environmentally friendly” were made, giving the consumer the unsubstantiated impression that the product had no negative impact on the environment.
- In 59% of cases, there was a lack of easily accessible evidence for the environmental claims.
Greenwashing comes in many forms, and the following examples should give you a feel for this:
“Climate-neutral product” through CO2 compensation by supporting reforestation projects
Claiming that a product is climate-neutral by supporting reforestation projects can constitute greenwashing. This is because it can be assumed that the CO2 emitted during the manufacture of the product remains in the atmosphere for much longer than the lifespan of the reforestation projects supported.
Planting trees with “seedballs”
Online stores that promise their customers that they will plant one or more trees when they buy one of their products and work with a tree planting project that only drops so-called “seedballs” with tree seeds from drones/airplanes. If this fact is not disclosed to the consumer, there is a risk of greenwashing. This is because a consumer will generally assume that a “planted tree” is a real seedling that has been monitored by rangers over a certain period of time and not a dropped seedball that has been left to its own devices.
Misleading images and colors
Images of forests and rivers: These images can suggest an environmental friendliness that is not there. Companies should therefore only use images that correspond to the actual environmental aspects of their product or service. The color green is often associated with nature and environmental friendliness. Companies should therefore only use the color green if their products or services are demonstrably environmentally friendly.
The potential to mislead consumers is particularly high, as green claims are difficult for them to verify and there is a lack of binding standards for advertising with environmental claims in the EU.It is clear that greenwashing – whether inadvertent or deliberate – leads to a considerable loss of trust among customers that can hardly be repaired. In addition, greenwashing also casts a shadow on the commitment of many honest companies.
New EU Rules: Raising the Bar for Environmental Claims
The EU now wants to counteract this uncertainty and the increasingly rampant greenwashing with two groundbreaking directives that set clear guidelines for advertising with environmental claims. In some cases with serious consequences for the current practice of environmental claims.
The Empowering Consumers for the Green Transition Directive (EmpCo) introduces some drastic bans and requirements, the most important of which are:
- Claims based on offsetting greenhouse gases and stating that a product has a neutral, reduced or positive impact in terms of CO2 will be prohibited in future. Companies may continue to advertise their commitment to climate protection projects, but not in connection with the CO2 impact of one of their products.
- General environmental claims will be prohibited in future if they are not verifiable. Examples of such claims: “100% green” or “climate-friendly”.
- Claims about future environmental performance (e.g. “We will be climate neutral by 2030”) without realistic commitments from the company to achieve the stated goal. Companies must communicate their plans and have them regularly reviewed by an independent expert.
- It is also prohibited to display an environmental label that does not originate from an EU certification system or a government agency.
In addition to the EmpCo, the Green Claims Directive (GCD) is being introduced, with the following key contents:
- At the heart of the GCD are extensive minimum criteria for proof of green claims, as well as communication and information obligations, including
- In future, green claims will only be permitted on the basis of generally recognized scientific findings
- Evidence must be provided as to whether the product performs significantly better than comparable products in terms of the environment
- All information must be made directly accessible (e.g. via a link or QR code)
- In future, advertising with environmental claims must be approved in advance by a certified national testing body. The green claim may only be made once an EU-wide certificate has been issued. It is very doubtful how companies will be able to implement this in their day-to-day business. Considerable administrative and cost expenditure must be expected.
The EmpCo has already been adopted by the European Parliament, which means that if the 24-month deadline for transposition into national law is accepted, it can be expected to be introduced in the respective EU countries by 2026. The EmpCo will be transposed into national law without any changes, as “full harmonization” is required. So things are getting serious here. The GCD has not yet been adopted by the European Parliament, but it is expected to be adopted this year, meaning that the GCD can also be expected to be introduced into national law in 2026. Changes to the GCD are still conceivable, albeit not fundamental ones, as it has not yet passed through the European Parliament.
Does this mean that greenwashing is allowed until then? The answer is quite clear: no. Even without the EmpCo and GCD, directives and laws that prohibit unfair business practices, including greenwashing, apply both at EU level and in national legal systems (in Germany, for example, the UWG).
Companies that nevertheless engage in greenwashing already risk costly warnings and injunctions by environmental and consumer organizations (such as Deutsche Umwelthilfe and Wettbewerbszentrale in Germany). However, the damage to a company’s image caused by greenwashing is probably much worse.
Avoid Greenwashing, Embrace Transparency: Building Trust with Consumers
Online retailers are well advised to use the period until the new EU directives become effective in their home countries and check existing advertising now to ensure that all claims are correct and verifiable. Transparency should also be created. All relevant information should already be easily accessible to the consumer. It is also advisable to adapt company processes now so that the new EU directives can be integrated into day-to-day business.
It is to be hoped that the upcoming tightening of EU law will not lead to companies restricting their environmental commitment or even greenwashing, i.e. no longer communicating publicly about their environmental commitment and the sustainability of their products.
And in the end, it remains to be seen whether EmpCo and the GCD will put an end to greenwashing. It would be desirable in any case, because every greenwashing claim also damages consumer trust in the valuable work of the many companies that communicate their commitment to sustainability honestly and transparently.
Note: This article does not constitute legal advice and is for information purposes only.
About the author
Lukasz Belza, 46, a self-employed lawyer from Berlin, has been advising start-ups, scale-ups, and large companies in the field of commercial law for 15 years, including as long-term legal counsel for large eCommerce companies. Since 2020, he has been the founder and CEO of ThankU, a platform that enables companies to introduce sustainability into their customer communications without the risk of greenwashing.
Meet Lukasz Belza in person with ThankU at ECommerce Expo 2024, booth M.3.5.
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