Current status of EU regulatory projects in connection with green claims

We would like to take this opportunity to thank Sarah Lena Mines, who joined us during her legal clerkship, for her great support with this article.

Under the slogan “protection against greenwashing”, the European legislative bodies are currently endeavouring to further tighten the legal framework for environment-related advertising claims. We provide you with an overview of the current status of the main legislative projects and their main content.

1. Current Legal Situation

German and European unfair competition law does not yet contain any specific legal regulations for environment-related advertising claims (so-called “green claims”). These are subject to the general rules of the UCP Directive and the Directive on Comparative Advertising as well as the prohibition of misleading advertising pursuant to Sections 5, 5a German Unfair Competition Act. Advertising claims such as “environmentally friendly”, “climate-neutral” or “CO2-reduced” are therefore subject to the same standards and requirements as other advertising claims.

According to an EU study in November 2020, more than half of environment-related claims were not sufficiently substantiated or verified. The fact that such environment-related advertising claims and signs are relevant to consumers’ purchasing decisions is exemplified by the results of the Eurobarometer 2020: 94% of respondents stated that environmental protection is important to them personally and 68% of respondents agreed that their consumer behaviour has a negative impact on the environment.

The European Commission is currently taking this as an opportunity to introduce binding standards for advertising with green claims at EU level. It is pursuing this objective essentially with two new proposals of directives:

2. Overview of the EmpCo Directive

The “Directive amending Directives 2005/29/EC as regards empowering consumers for the green transition through better protection against unfair practices and better information” (“Empowering Consumers Directive” or “EmpCo Directive“) was already proposed by the Commission on 31 March 2022. On 19 September 2023, the European Parliament and the Council reached a provisional agreement.

The central aim of the EmpCo Directive is to strengthen consumer rights in the context of sustainable consumption decisions. Among other things, it requires companies to provide transparent and easily understandable information about the environmental impact of their products and services. To this end, it provides for amendments to the UCP Directive, amongst others:

• In Art. 2 lit. o of the UCP Directive, the “environment-related claim” is to be legally defined. This should include any representation that “a product or trader has a positive or no impact on the environment or is less harmful to the environment than other products or traders”. The definition of “general environment-related claim” includes, in particular, claims such as “environmentally friendly”, “environmentally friendly”, “CO2-neutral” or “biodegradable”.
• The provisions on misleading acts pursuant to Art. 6 of the UCP Directive are supplemented by environment-related claims “about future environmental performance without clear, objective and verifiable commitments and targets and an independent monitoring system” and “advertising with benefits for consumers that are considered common practice in the market concerned”.
• The use of sustainability labels shall also only be permitted if this is based on a certification system or has been issued by government bodies.
• The “blacklist” in the Annex to the UCP Directive will also be expanded. In particular, it shall be unfair in the legal sense to make a general environment-related claim “where the trader cannot provide evidence of the recognised outstanding environmental performance to which the claim relates”. It is also illegal to “make an environment-related claim about the entire product if it actually only relates to a specific aspect of the product.”

The directive has yet to be formally adopted by the European Parliament and the Council, but is expected to be promulgated in spring 2024.

3. Overview of the Green Claims Directive

The “Directive on the substantiation and communication of explicit environment-related claims” (“Green Claims Directive“) was proposed by the European Commission on 22 March 2023. It provides for significantly stricter requirements for the substantiation, communication, labelling and verification of “green claims”.

The Directive’s scope of application is the “explicit environment-related claim”, for which it is lex specialis compared to the UCP Directive. This includes all commercial statements that are not required by EU or national law and that portray a product or company as environmentally friendly or less harmful to the environment than others. These statements can take the form of texts or environmental labels; the “expressiveness” is therefore determined by the form of presentation, not by the content.

The core provision of the directive is that explicit environment-related claims shall require mandatory pre-certification by an “accredited independent conformity assessment body”. Evidence to substantiate the planned environment-related claim must be submitted to this body. It then carries out a conformity assessment, whereby all environmental impacts relevant to the environment-related claim are examined. Only after the body has issued a certificate of conformity, the environment-related claim may be included in the advertising communication.

The ex-ante certification requirements can be costly: In the impact assessment of the draft directive, the Commission itself estimates the cost of calculating the environmental footprint of a product at around EUR 8,000, and EUR 54,000 for the company’s footprint.

The content requirements for the justification of the environment-related claim are set out in Art. 3 of the Green Claims Directive:

• Every environmental statement must be supported by current, generally recognised scientific findings.
• It must be stated whether the environment-related claim relates to the product as a whole or only to a specific aspect.
• All environmental impacts over the entire life cycle of the product must be included.
• Possible negative environmental impacts of the product, such as increased plastic consumption with an improved carbon footprint, must also be recorded.
• Advertising should not be based on self-evident facts, such as the fulfilment of legal requirements or compliance with common practice.
• In the event that the environment-related claim is made in comparison with another product or another company, all data and information relevant to the comparison that has been obtained in an equivalent manner must be provided (Art. 4 Green Claims Directive).

According to Art. 8 of the Green Claims Directive, ecolabels will also require certification. No new national or regional eco-labelling schemes are to be introduced by the authorities of the member states. Private eco-labelling schemes will require approval from the EU Commission, which will only be granted if they offer added value compared to existing eco-labelling schemes.

However, even a certified environment-related claim may not be used in advertising without restriction, but must be communicated in accordance with the requirements of Art. 5 of the Green Claims Directive. It must not be limited to general and imprecise terms such as “climate-friendly”, “environmentally friendly” or “climate-neutral”, but must refer to specific aspects. In addition, all relevant information on the environment-related claim (in physical form or via a QR code/weblink etc.) must be made publicly available, including the justification or substantiation and the certificate of conformity.

Special requirements also apply to the compensation of greenhouse gases, as it must be stated whether the compensation is based on a reduction in emissions or the removal of greenhouse gases and to what extent the compensation takes place.

Micro-enterprises, i.e. those with fewer than 10 employees and a turnover of less than EUR 2 million, are exempt from all these requirements.

The directive is currently still being discussed in the European Parliament and the Council. It is expected to be submitted to the parliamentary plenary in March 2024. If the directive is adopted in the legislative period that runs until next June, it could still come into force in 2024.

4. Conclusions for Your Company

As soon as the directives enter into force, they must be transposed into national law by the member states within 18 months and applied after a further six months. Environment-related advertising claims and sustainability labels are already regularly the subject of legal disputes. It is to be expected that this will continue in the future with the upcoming tightening of the legal requirements. Even though the directives have not yet come into force, it is already foreseeable that advertising with green claims and sustainability labels will only be permitted under very strict conditions.

We would like to make the following recommendations:

1. Review of green claims: Have your current and planned environment-related claims legally reviewed now in order to participate in “green competition” with legal certainty.
2. Advice on future requirements: Obtain information and advice on the specific requirements of the new EU directives at an early stage. Until the directives are fully implemented, it is important to ensure that your environment-related claims are sufficiently substantiated. This requires a considerable period of time, as the environmental impact of the entire production and life cycle of your products must be analysed and documented. Only then can the conformity assessment process be started so that the environment-related claim can also be used in the future.
3. Strategic advice: Get strategic advice on developing sustainable and legally compliant marketing strategies to effectively leverage the benefits of environment-related advertising while minimising legal risks. Implement compliance structures to ensure adherence to current and future legal regulations.
4. Training and awareness-raising: Train your marketing and compliance teams to ensure a thorough understanding of the legal framework of environment-related advertising. This will sensitise your employees to the importance and impact of green claims on your corporate image and customer relationships.
5. Representation and legal assistance: Should legal disputes arise in connection with Green Claims or disputes with the responsible authorities, we can provide you with competent advice and representation.

External legal advice is essential in order to continue to operate legally in the “green area”. We are happy to assist you with these challenges in order to organise your marketing in a legally secure manner or to represent your interests in and out of court.