Will a new EU Directive end greenwashing?
The European Commission is cracking down on "greenwashing". The proposed Directive on substantiation and communication of explicit environmental claims (Green Claims Directive) was published on 22 March 2023.
The Commission claims the Directive aims to stop companies from making misleading claims about the environmental merits of their products and services. However, critics say the provisions have been watered down following lobbying by larger businesses.
According to the Commission, 53% of green claims give vague, misleading or unfounded information. A further 40% of claims have no supporting evidence and half of all green labels offer weak or non-existent verification. They note that there are 230 sustainability labels and 100 green energy labels in the EU, with vastly different levels of transparency.
Green Claims Directive
The proposal for a Directive on Green Claims complements the proposal for a Directive on empowering consumers in the green transition, which was published a year ago.
It requires companies that make green claims to respect minimum norms on how they substantiate these claims and how they communicate them. The Commission states:
“Before companies communicate any of the covered types of ‘green claims' to consumers, such claims will need to be independently verified and proven with scientific evidence. As part of the scientific analysis, companies will identify the environmental impacts that are actually relevant to their product, as well as identifying any possible trade-offs, to give a full and accurate picture.”
The proposal also foresees that groups such as consumer organisations will be able to bring legal actions to protect consumers’ interests.
In the case of widespread infringement, the Directive provides for fines of “at least” 4% of total annual turnover in the Member State(s) concerned, as well as other penalties. Microenterprises are exempt from the proposal and support will be available to SMEs.
What does this mean?
Legislation such as this is likely to be seen in various jurisdictions given the growing awareness of the urgency of tackling climate change, and concerns about unjustified or exaggerated green claims. However, the details remain contentious and the proposal may be modified as it is debated in the European Parliament and the Council.
Given the direction of travel, brand owners should now be considering how to substantiate and justify any green claims made on their products. We have already seen actions in the courts and advertising tribunals concerning greenwashing: adverse decisions can lead to significant reputational damage as well as fines or other penalties.
This is clearly an issue that in-house trademark/IP counsel are going to have to become increasingly expert in over the next few years. If you would like guidance on navigating the various laws and requirements, please contact us.
To find out more about the issues raised in this blog contact Rosie Burbidge, Intellectual Property Partner at Gunnercooke LLP in London - firstname.lastname@example.org