EU clamps down on misleading ecolabels with penalties against greenwashing

Published on March 28, 2023

The European Commission tabled new legislation on 22 March 2023 to tackle misleading environmental claims by introducing penalties against greenwashing and tighter rules for the approval of new ecolabels. 

The proposed Green Claims Directive aims to reduce greenwashing and enable consumers to make informed purchasing decisions based on reliable information about the sustainability of the products they buy.

“We believe this proposal will bring real change and will empower all people who truly want to choose products based on their reduced impact on our planet,” said Environment Commissioner Virginijus Sinkevičius, who presented the proposal. 

Offending companies will be subject to penalties ranging from fines to confiscation of revenues, and temporary exclusion from public procurement processes and public funding. 

Penalties will be enforced by national authorities, which have to regularly control green claims, publicly disclose their findings, and fine companies who mislead consumers.

The move was applauded by The European Consumer Organisation (BEUC), which praised the Commission for “raising their game to fight greenwashing” and “putting an end to the wild west of unsubstantiated green claims.”

Yet, the EU’s future green claims law will only be as good as its enforcement, BEUC warned, saying national authorities “will have to heavily fine companies to clean up the market from misleading green claims and labels once and for all.”

40% of green claims ‘completely unsubstantiated’

A Commission study published in 2020 found that 40% of green claims made by companies were “completely unsubstantiated”, with 53.3% of them making environmental claims that are “vague, misleading or unfounded”.

In almost half of the cases, these claims were false or deceptive, according to another study assessing 344 sustainability claims made online. Additionally, in 57.5% of cases, the trader did not provide enough information to assess the claim’s accuracy. 

“When consumers see those claims, it’s extremely difficult to separate truth from fiction,” Sinkevičius said. 

“Many of you have probably seen the T-shirts made out of plastic bottles, which is great. Unfortunately, very often only 1% or even less of the material is made from recycled bottles. More than half of the claims we see in the European market are weak, misleading, or even based on nothing at all,” he added. 

To address this, the proposal seeks to ensure that environmental claims are validated with “credible and proportionate substantiation that is backed by scientific evidence, takes into account international standards and demonstrates that the claim which is being made is significant from a lifecycle perspective,” a senior Commission official explained in a press briefing on Tuesday. 

The proposal covers only explicit claims made voluntarily by businesses for consumers, which relate to the environmental impact, aspect, or performance of a product or the trader itself, and adopt a “life-cycle” approach, from raw materials to end-of-life.

“We need to make sure that companies who are doing well, who are really substantiating their claims, are given an advantage in these marketing practices and do not compete with companies who are not really solid in the claims they make,” the official said, adding that the information will have to be transparent and easily accessible to consumers through a web link or a QR code. 

Micro enterprises, companies with fewer than 10 employees or a turnover of under €2 million, will be exempt.

Stricter rules on ecolabelling

More than 200 environmental labels are currently found across the EU, with more than 450 of them active worldwide. 

To fight the proliferation of new labels and reinforce trust in existing ones, the Commission proposes tightening controls and enforcement based on certification with independent verifiers. 

New public labelling schemes will not be allowed after the directive kicks in. And new ones will be allowed only under EU law: Should a member state feel the need for a new certification, it can turn to the European Union to develop it.

For private schemes, new ones will be allowed but only if added value can be demonstrated to the national authorities in charge of approving them. 

Public and private schemes from third countries will need to be submitted for an approval procedure before being admitted to the EU market. 

Additionally, labels with aggregated scores will no longer be allowed. 

“Aggregated score means that you are piling up a number of environmental impacts together and you’re communicating this aggregated score to the consumer,” the Commission official explained. “We consider that this could be misleading because you don’t see the full picture behind this.”