How the EU plans to redress ‘greenwashing’

The proposed rules for the “Green Claims Directive” would require firms to substantiate their green claims with scientific evidence.

Published : May 23, 2023 15:59 IST - 5 MINS READ

The European Commission has proposed rules to crack down on false green claims made by companies.

The European Commission has proposed rules to crack down on false green claims made by companies. | Photo Credit: Gabriel Nikias

In an effort to prevent greenwashing and improve transparency for consumers, the European Commission introduced a proposal for a directive titled “Green Claims Directive”, in March.

Greenwashing is an organisation’s practice of spreading false or misleading information to present an environmentally positive image of itself.

A recent study by the European Commission looked at 150 environmental claims and found that 53.3 per cent of them provided “vague, misleading or unfounded information on products’ environmental characteristics”. Currently, unverifiable claims in the EU can be penalised under the Unfair Commercial Practices Directive.

But according to Blanca Morales, senior coordinator for EU Ecolabel at the European Environmental Bureau, the existing legislation is not sufficient. “It’s an end-of-the-pipe solution,” Morales told DW, adding that when authorities challenge a company’s claims, the process involves an investigation which can take years. “In the meantime, the harm is done because the claim is on the market and the companies are benefiting from their marketing argument,” Morales said.

How will companies make legitimate green claims?

Under the Green Claims Directive, all claims about a product’s sustainability would need to be substantiated by evidence. “No data, no claim,” Morales said. An independent claims verifier would be tasked with checking companies’ green claims, seeing that they have supporting evidence and that the claims properly reflect the full life cycle of products. Additionally, companies would be required to provide a QR code on their packaging where consumers could see details about the claims along with the evidence for them.

Setting a unified standard

Until now, the majority of the bigger legal challenges to greenwashing in Europe have come from individual member states. Last year, separate cases in Norway and the Netherlands both found claims about the sustainability of H&M products to be misleading. Under the Green Claims Directive, all companies would be held to the same standards across the European Union regardless of which member country they are marketing in.

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Michael Wagemans, head of environmental, social, governance, and sustainability at KPMG, a consultancy firm in Belgium, says the directive will have a positive influence on business. “The directive must be seen as an opportunity for companies,” Wagemans said. “By being transparent with consumers, businesses can build trust and loyalty with their customers.” While the current directive is still at least a couple of years away from becoming law, companies that would be directly impacted have already begun to take notice. “We are studying the proposal carefully and remain committed to working with governments, civil society, and other businesses,” a spokesperson for energy giant Shell told DW.

H&M’s ‘water saving denim’

To better understand how the Green Claims Directive would impact businesses, DW found a few green claims on the market and asked Blanca Morales for her opinion on whether or not they meet the directive’s requirements.

On one of its labels, H&M claims that its product is manufactured in a way that uses less water. Morales noted that the specificity of the claim would ensure that it holds up if the company produces evidentiary support. But Morales also expects that the phrase “conscious choice” wouldn’t make the cut. “It’s a confusing and generic claim to use ‘conscious’,” Morales said. “It gives the impression that the entire product is sustainable. Even though the only guarantee here is the recycled content of the cotton.”

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Regarding this label, an H&M spokesperson said the company had “taken the decision to remove H&M’s ‘Conscious Choice’ indicator from our online shop worldwide”. This decision followed a case brought against H&M and Decathlon by a Dutch regulator.

Breitsamer’s CO2-neutral honey

Regarding the label used by Breitsamer’s honey, Morales was quick to point out that the Green Claims Directive does not cover claims about fair trade business practices. In this case, only the claim that the product is carbon dioxide (CO2) neutral would need to be verifiable. According to the label, “All Breitsamer Imker Gold Honeys are CO2 neutral—from the beekeepers to enjoying it at home.” But it also notes that the product comes from Chile and Uruguay, whereas it was found on a shelf in Germany, leading one to question the company’s way of accounting for carbon emissions that arise from the shipping process.

Under the Green Claims Directive, “they will need to be transparent, and to clarify what part of this corresponds to a reduction of emissions, and what part of the emissions are compensated for,” Morales said.

If this product’s CO2 neutrality is based on buying carbon offsets, for example, this would need to be specified. Today, companies can buy carbon offsets to justify neutrality claims. But many carbon offset schemes fail to offset carbon in the long term.

Shell’s ‘respecting nature’ webpage

Shell is one of the largest oil companies in the world in terms of market value and is among the top contributors to climate change, but its website comprises an entire section called “powering progress”, which consists of green claims, including bullet points that highlight some of the company’s environmental goals. “I think these claims would fail to pass under the Green Claims Directive,” said Morales, “because the company needs to demonstrate that the environmental impacts for which they’re making claims are significant to the full life cycle of their product.”

Also Read | Are corporate net zero pledges greenwashing or genuine climate action?

The claims here are focussed on relatively minor aspects of Shell’s business while completely ignoring its direct contribution to climate change.

In a comment provided to DW, a Shell spokesperson said: “It’s also important that Shell, like other energy companies whose oil and gas businesses are well known, is able to provide information to the public about our less widely known activities.”

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