How the Proposed EU Green Claims Directive Will Impact on Eco Claims

Editorial TeamEditorial Team
December 28th, 2023
2:43 PM

The European Commission introduced the Green Claims Directive on March 22, 2023, in response to increased consumer demand for eco-conscious products, aiming to combat greenwashing and promote transparency in environmental claims.

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In recent years, heightened consumer awareness and concerns regarding climate change and environmental sustainability have prompted individuals to seek products and services that align with their eco-conscious values. This surge in demand, however, has led to an influx of environmental claims made by businesses, giving rise to the deceptive practice of greenwashing. In response to this challenge, the European Commission unveiled the Green Claims Directive on March 22, 2023, aimed at curbing greenwashing and fostering transparency in environmental claims.


Addressing Greenwashing

Greenwashing, characterized by misleading or exaggerated environmental claims, undermines consumers' ability to make genuinely eco-conscious choices. Acknowledging the detrimental impact of greenwashing, the European Commission is taking significant steps to combat this issue through the Green Claims Directive. The directive's primary objective is to establish clear guidelines for companies, necessitating them to substantiate their environmental claims with comprehensive assessments. This stringent requirement ensures that businesses provide credible evidence, thereby preventing consumer deception.


Stricter Rules for Environmental Labels

In addition to demanding substantiated claims, the directive introduces stricter rules for the approval of new environmental labels. Recognizing the value of these labels as tools for consumers seeking eco-friendly products and services, the directive enhances the approval process. The goal is to ensure that environmental labels serve as reliable indicators of a product's environmental performance, empowering consumers to make well-informed choices and rewarding businesses genuinely committed to sustainability.

On May 3, 2023, the Council adopted its negotiating position on the Directive on empowering consumers for the green transition. Notably, the Council proposed extending the implementation period to 24 months from the original 18, recognizing the complexity of implementing comprehensive reforms. This extension provides businesses with the necessary time to adapt to the new requirements, facilitating a smoother transition.


The Road Ahead

The next critical step involves negotiations between the Council and the European Parliament, which will commence once the Parliament adopts its position. The outcome of these discussions will shape the final directive, holding far-reaching implications for businesses operating within the European Union.

Adding momentum against greenwashing, on June 1, 2023, the European Supervisory Authorities (ESAs) published progress reports on greenwashing in the financial sector. These reports establish a common high-level understanding of greenwashing, applicable to market participants in financial markets, banking, insurance, and pensions. This collective approach aims to ensure that the financial sector adheres to transparent and sustainable practices.



Anticipating Litigation

While awaiting the formal issuance of the directive and its transposition into each member country, it is worth noting a significant increase in greenwashing disputes. In the EU, particularly in Italy, signs indicate that litigation on these issues, possibly through class action procedures, may experience a noteworthy surge in the short term. Leading rating companies have already observed a rise in litigations across various sectors, indicating a growing impact of environmental lawsuits against companies, with a double-digit upward trend.

The proposed Green Claims Directive represents a pivotal step forward in addressing greenwashing and promoting transparency in environmental claims. As negotiations progress, the EU's commitment to environmental responsibility becomes increasingly evident. Despite the transformative impact anticipated by the directive, the rise in litigation signals the urgency of its implementation to counter greenwashing effectively. The future of environmental claims in the EU looks poised to become clearer and more trustworthy, aligning with the overarching goal of fostering a sustainable and responsible business environment.


Which Fashion Companies Are Taking Strides to Combat Greenwashing?

Here are examples of fashion companies known for their transparency initiatives:

  • Veja: Veja is a footwear brand that focuses on using sustainable materials, including ethically sourced and environmentally friendly materials for its sneakers. The company places a strong emphasis on transparency in its supply chain.

  • Allbirds: Allbirds is a shoe brand that prioritizes sustainability, using materials like merino wool, eucalyptus fibers, and recycled materials. The company is known for its commitment to reducing its carbon footprint and ensuring transparency in its production processes.

  • Outerknown: Founded by professional surfer Kelly Slater, Outerknown is a sustainable clothing brand that emphasizes fair labor practices and the use of eco-friendly materials. The company is transparent about its supply chain and works to minimize its environmental impact.

  • Amour Vert: Amour Vert is a fashion brand that focuses on sustainability, using organic and recycled materials in its clothing. The company is committed to zero-waste manufacturing and planting a tree for every T-shirt sold.

  • People Tree: People Tree is a Fair Trade fashion brand that prioritizes ethical and sustainable practices. The company collaborates with artisans and farmers to create clothing using environmentally friendly materials and fair labor practices.