In March 2023, the European Commission adopted the Proposal for a Directive on substantiation and communication of explicit environmental claims (Green Claims Directive). The proposal is one of the most influential additions to the European Green Deal. It is the direct follow-up to a proposal for a directive on empowering consumers for the green transition. The main aim is to tackle unfair and unclear practices in communication to consumers on environmental performance. But what does it mean for a company’s sustainability strategy and marketing practice?
Does the Green Claims Directive apply to me and my claims?
The Green Claims Directive applies to explicit environmental claims made by traders in business-to-consumer commercial practices. Any claim in the form of a text, label, or sign, implying positive impact on the environment or reduced negative environmental impact, and targeting a consumer, would fall under the Green Claims Directive. Claims based on the existing regulations (e.g. energy labels), or existing labelling schemes compliant with the directive, are exempted from the scope.
As for the scope of organisations, the directive applies to those selling products to consumers directly, excluding SMEs. Thus, manufacturers not supplying products directly to consumer markets do not fall under its scope. However, it is reasonable to assume that if manufacturers wish to promote a green product in their portfolio, they have better positions if they supply traders with the substantiations in the first place.
What I can and cannot claim?
In short, the rules for the claims themselves are pretty straightforward:
- Cover only aspects, impacts, and performance that are identified and verified as significant
- Specify if the claim is related to the whole product, part of a product, or certain aspects of a product
- If the use stage is relevant to the performance, you shall provide use information to achieve the claimed performance
- If the claim relates to the future, it has to have a time-bound commitment
- The expression of different types of impacts in a single score (such as points, starts, etc.) is not allowed unless the applied scheme is under the European Union law rules
- All claims shall be verified by an accredited verifier, and have a certificate of compliance before placing the product with the claim on the market
- Claims shall provide the necessary background information for substantiation. Admittedly, as it is a lot of information, a link or a QR code can be used
- Comparison with a product not on the consumer market or a company’s own product is not allowed unless proven that the improvement is significant and was realised in the last 5 years
How should I approach the substantiation?
The main point: you must substantiate any and all of your environmental claims. That means conducting a fair, accurate, scientifically solid study and a comprehensive report on it. The study and the report have to examine and validate that you:
- take into account all significant environmental aspects or impacts
- demonstrate that the impacts, aspects, or performance in the claim are indeed significant
- demonstrate that what you claim goes beyond mere regulatory requirements
- provide information on whether claimed performance is significantly better than what is common practice
- Identify if and how they achieved better performance in the claimed aspect and increased harm in other aspects
- Include necessary primary information or, when not possible – relevant secondary information
- In claims on greenhouse gas (GHG) emissions: separate any offsets from GHG reductions, describe the reliability and correctness of the offsets and if they relate to reductions or removals
- for comparative claims: prove that the two products compared are assessed on equivalent data sources, data quality, scopes and coverages, and assumptions.
In general, all the aspects of substantiation hint at the application of life cycle approaches in the respective study. The widely renowned method to analyse the environmental impact of products is Life Cycle Assessment (LCA). Although not all environmental aspects can be analysed with LCA, it is clear that one needs to adopt life cycle thinking in order to meet the requirements of the Green Claims Directive. This means getting familiar with considering impacts, stages of a product’s life-cycle, and processes as an interdependent system. A specific example is that the majority of the claims on the market concern carbon footprint, which will undoubtedly require the substantiation of a verified LCA study and report, with consideration of all relevant life cycle stages and additional impact categories.
Who will check green claims?
Before being put on the market, the claims and the substantiating studies will have to be verified by an accredited independent third-party reviewer. A certificate, recognised across the EU, will be publicly available, and include information about the reviewer. At the moment, it is not clear which bodies will take on accreditation (this will be decided by the member states), and the pool of potential reviewers is unknown.
When a claim is published on the market, adherence to the Green Claims Directive will be monitored by the member states, the EC, and the public. Anyone would be able to submit a substantiated complaint about a claim, which would then be investigated by the authorities assigned by the states. If found breaching the directive, the trader putting out the claim can face serious consequences, including fines, confiscations of revenues, and exclusion from public procurement.
What about labelling schemes?
The existing labels can stay, as long as they comply with the requirements:
- On the claims (see above);
- On the organisation and management of the labelling scheme.
Any new labelling scheme shall be:
- Approved by the Commission (public) or Member state(s) (private);
- Meet the requirements on the claims quality, scheme organisation, and management;
- Certified by an independent reviewer;
- Proven to have added value, e.g. specific coverage of a certain product group or sector.
The proposal for the Green Claims Directive is on its way for approval by the Parliament and the Council. When that is done, member states will have 18 months to transpose the directive, and 24 months to launch it full-force. After that, the Commission will start a 5-year run in monitoring the effectiveness of the directive. If found that the claims and labels are still misleading or incomparable, additional and more detailed rules can be expected.