The Green Claims Directive: Impact on companies and their marketing claims

The Green Claims Directive: Everything companies need to know about the impact on their marketing claims. Find out how the directive prevents greenwashing and why it's important to comply with it.

Table of contents

What is the Green Claims Directive?

The Green Claims Directive, also known as the Green Claims Directive, is a European Commission directive that deals with the regulation of environmental claims in advertising. It aims to prevent so-called "greenwashing", where companies make misleading or exaggerated environmental claims for their products or services.

In future, this will be regulated as follows:

• Claims must be substantiated with scientific evidence that is generally accepted(Life Cycle Assessment (LCA)), identifying the relevant environmental impacts and possible trade-offs between them.
• If products or organizations are compared with other products and organizations, these comparisons must be fair and based on equivalent information and data.
• Claims or labels that use an aggregated assessment of the overall environmental impact of the product, for example on biodiversity, climate, water use, soil, etc., must not be allowed unless specified in EU legislation.
• Environmental labeling schemes should be reputable and reliable. EU-wide schemes are encouraged, new public schemes, unless developed at EU level, are not allowed, and new private schemes are only allowed if they have a higher environmental ambition than existing ones and are pre-approved.
• Environmental labels must be transparent, verified by a third party and regularly audited.

This involves green claims such as the following:

• Packaging consists of 20% recycled plastic.
• The company's environmental footprint has been reduced by 20% since 2016
• The CO2 emissions associated with this product have halved compared to 2021.
• Bee-friendly cultivation.
• More examples here.

The focus is on life cycle assessments (LCA) as an evaluation tool. Up to now, the "Product Environmental Footprint" (PEF) developed by the EU has mainly been discussed. However, PEF is not to be the sole assessment tool. It has not yet been finally determined which other standards can be used.

Definition of the Green Claims Directive

The Green Claims Directive stipulates that all environmental claims in marketing materials for products and services of companies must be clear, precise and verifiable. This means that companies must provide accurate information and data to support their environmental claims.

Aim and purpose of the Directive

The main aim of the Green Claims Directive is to protect consumers from misleading advertising while ensuring fair competition between companies. The Directive aims to ensure that environmental claims in advertising reflect the actual impact of products or services on the environment. A study conducted by the EU Commission in 2020 found that

Timetable for the Green Claims Directive

The vote in the joint committee is planned for mid-February 2024. The dossier will then be submitted to the plenary in March 2024. In the Council, discussions began in the Environment Working Group and the Consumer Protection and Information Working Group in April.

Once adopted by the EU, the member states have 24 months to transpose the directive into national law. A probable start date is therefore 2026.

Why the directive is important

The Green Claims Directive is crucial for companies as it ensures that their marketing claims are in line with reality. There is already a strong trend for companies to greenwash for fear of being accused of greenwashing. By complying with the directive, companies can (re)gain consumer trust and at the same time minimize the risk of legal consequences due to misleading advertising.

The race for the most audacious environmental lie will become a competition for the most sustainable products. And that is good news.

Impact of the Green Claims Directive on businesses

How will the proposal affect small and medium-sized enterprises?

The proposal protects small and medium-sized enterprises (SMEs) by exempting companies with fewer than 10 employees and less than €2 million turnover from the new requirements, unless they voluntarily choose to comply.

However, in order to motivate SMEs to participate in the green transition and support genuine environmental claims, Member States are to help EU SMEs to implement the requirements more easily by offering financial, organizational and technical support. The Commission will also help by providing funding for the provision of data and the development of calculation tools for SMEs.

What does the Directive mean for international companies not based in the EU?

Companies from outside the EU that make environmental claims to EU consumers will also have to comply with the new rules. This encourages participation in the green transition worldwide, especially for companies operating in the EU single market.

New eco-labels from private operators inside or outside the EU are prohibited unless they prove their usefulness to the EU market. These must be approved by the Commission.

Changes in marketing claims

The Green Claims Directive requires companies to review and, if necessary, adapt their marketing claims to ensure that they comply with the requirements of the Directive. This may require a revision of promotional materials and a reassessment of the environmental terms used. Life cycle assessments will also become part of every company's repertoire. - if they want to use "green claims".

Advertising platforms such as Meta have long operated with their own category for advertising, which considers and evaluates political or social issues separately.

"The days of inaccurate claims like 'environmentally friendly' are over," says Jonny White in an interview with the British Guardian, senior business director at AMV BBDO, an advertising agency that works with companies such as Diageo, Unilever and Bupa. "Misleading environmental claims are the focus of advertising regulators, consumer protection organizations and even governments. The risks of making mistakes here are enormous. Brands are publicly exposed if they are found to be misleading the public," he says.

Marketing departments and advertising agencies should therefore work closely with their legal departments when advising clients on their climate claims. In the UK, for example, the Ad Net Zero program was launched in 2020 with the aim of reducing the advertising industry's carbon footprint to net zero by 2030. Meanwhile, many agencies are forming internal teams to focus on campaigns that prioritize sustainability.

There is often a big disconnect between the marketing and sustainability teams within companies. These teams have different, sometimes conflicting goals and report their performance in very different ways. This is due to an "inherent tension" between the need to impress target groups with exaggerated storytelling and the sustainability teams' need to rely on the facts.

Risks of non-compliance with the directive

Companies that fail to comply with the requirements of the Green Claims Directive risk legal consequences, including fines and the withdrawal of advertising licenses. They can also damage their image and consumer confidence.

"Qualified organizations", such as consumer organizations, will namely be legally able to take legal action to protect the collective interests of consumers from greenwashing.

Benefits of compliance with the Directive for businesses

Compliance with the Green Claims Directive can help companies to strengthen their image as environmentally conscious and responsible actors. This can lead to a positive perception by consumers and increase brand reputation and sales in the long term.

The directive will also create a level playing field for all and companies that already operate in a truly sustainable way will also receive the marketing benefits they deserve for their efforts to preserve our livelihoods.

After all, if all brands can claim to be environmentally friendly, the incentive to attract consumers with superior environmental commitments will be removed. This will make it all the more worthwhile for companies to be or build an environmentally responsible brand.

How companies can implement the Green Claims Directive

Review and adapt marketing claims

Companies should carefully review their marketing claims and ensure that they comply with the requirements of the Green Claims Directive. If necessary, they must adapt their claims to provide accurate and verifiable environmental information.

Supply chains have been in a constant state of flux since Corona, which means that the social and environmental impacts of products are changing. In addition, scientific understanding and consumer expectations are also changing daily, so it makes sense to establish appropriate reporting mechanisms and data flows between marketing and sustainability.

Software will be an important part of the solution to help these teams work together: Dedicated software will allow brands to update data in one place to ensure they are properly and accurately sharing their latest sustainability progress across all channels. Because every word counts.

Companies should also train employees internally to understand and correctly use life cycle assessments (LCA) and other sustainability management methods such as the corporate carbon footprint or product carbon footprint.

The internal legal departments can also be helpful here, as they are familiar with the details of case law and can assess which statements a company is venturing onto the slippery slope with.

Use of certified environmental labels and logos

The use of officially certified environmental labels and logos can help companies to strengthen their environmental claims and gain consumer confidence. These labels and logos serve as proof of the environmental friendliness of products or services.

These logos will also need to be verifiable in the future, which will thin out the field and likely result in higher costs for valid logos and labels. Cheap reforestation projects will no longer be enough to label oneself "climate neutral".

Conclusion and outlook

Summary of the most important points

The Green Claims Directive is an important European Commission directive that obliges companies to make their environmental claims in advertising clear, precise and verifiable. Compliance with this directive is crucial to gain consumer trust and avoid legal consequences.

Outlook for future developments in the area of the Green Claims Directive

It is expected that the importance of the Green Claims Directive will continue to grow in the future as consumers and regulators pay increasing attention to environmentally friendly and sustainable practices. Companies should therefore keep up to date with the latest developments. And as is so often the case, the well-known wisdom of ice hockey player Wayne Gretzky, who once said:

"I skate to where the puck is going to be, not where it has been."

Recommendations for companies to implement the directive effectively

Companies should review their marketing claims, train employees and use officially certified environmental labels to meet the requirements of the Green Claims Directive and at the same time strengthen their image as environmentally conscious players. They should also strengthen their own sustainability skills and put them on a firm footing.

If you have any questions, suggestions or further information on the Green Claims Directive, pleasefeel free to contact me at any time. As an expert, I am at your disposal and happy to help. Together, we can ensure that your company meets the requirements, that your image as an environmentally conscious player is strengthened and that you benefit from the advantages in the long term.