Green Claims Directive guidance: in this article will cover the proposal for a directive on green claims (‘Green Claims Directive’ – ‘GCD’), providing practical guidance for operators.
Preliminary remarks: the “Empowering Consumers Directive”
The Green Claims Directive should be read in the light of the proposal for a Directive that aims to strengthen consumer protection against unfair practices and misleading information in view of the green transition by amending directive 2005/29/EC (on unfair business-to-consumer commercial practices) and directive 2011/83/EU (on consumer rights).
This directive, which has been approved by the trilogue (19 September 2023), is particularly important because it provides for the first time the definition of ‘environmental claims’ (i.e., green claims) [Article 1(1)], which are claims about the positive impact of a product or trader on the environment, and prohibits generic environmental claims (e.g. ‘ecofriendly’) unless there is a proven excellence in environmental performance and claims based on emissions offsetting schemes that a product has neutral, reduced or positive impact on the environment (Annex 1).
Scope of the Green Claims Directive
The GCD only applies to business-to-consumer (B2C) communication and covers only environmental claims. Social and economic sustainability claims, on the other hand, are not covered by the GCD unless they are related to environmental sustainability.
Furthermore, the GCD only regulates explicit claims, i.e., claims that appear in text form or are contained in environmental labels [Article 2(2)].
It should be noted that if a trader uses a claim that refers to aspects specifically covered by another, more specific piece of legislation, that legislation applies (‘lex specialis principle’). For example, if the advertisement refers to the eco-design of a product, the “Proposal for a Regulation on Ecodesign for Sustainable Products” must be taken into account.
Brief guide on the GCD
The GCD overhauls the previous (i.e., current) system based on free, self-certified and certified green claims by requiring that all explicit environmental claims, in whatever form they may occur, must first undergo a substantiation process by the trader who intends to use them, and then be certified by accredited third-party verifiers. Furthermore, a document containing the summary of the substantiation and the certificate of conformity must be made available to the public physically, via a link or QR code.
Thus, self-certified and free claims are no longer an option.
The Directive establishes a series of very precise duties related to the correct use of environmental claims:
- substantiation (Articles 3 and 4)
- communication (Articles 5 and 6)
- review (Article 9)
- verification and certification (Article 10).
Substantiation of green claims
In order to be certified, environmental claims must undergo an internal evaluation process conducted by the trader concerned, aimed at substantiating that the claims are:
- precise
- scientifically based and accurate
- significant from a product life-cycle perspective
- honest, taking into consideration all significant environmental aspects or impacts of the operator/product; for example, it will be considered non-compliant with the GDC to highlight improvements in some environmental aspects if, at the same time, the operator/product causes significant damage in other aspects (e.g. climate change)
- non-obvious, i.e., not claiming compliance with legal obligations.
For comparative claims, i.e., claims that state or imply that a product or trader has less or more environmental impacts or performs better or worse regarding environmental aspects than other products or traders, there are additional requirements to ensure the fairness of the comparison. In particular, equivalence is required in the data and information used, the methods of extrapolation of such data/information, and the aspects of the trader/product being compared.
Communication of green claims
An innovative aspect of the GCD is that environmental claims must be accompanied by a document in physical format or publicly accessible via a link or QR code or equivalent system including [Article 5(6)]:
- information on the trader/product covered by the claim
- the certificate of conformity and contact details of the verifier who drafted it
- a summary of the assessment clearly understandable for consumers and provided in at least one of the official languages of the Member State where the claim is made.
Review of green claims
The GCD requires operators to review the assessment of their green claims whenever data relevant to their validity comes to light; in any case, operators shall review their green claims at least once every 5 years since the document mentioned in the previous paragraph was provided. At the end of the review, a new verification (and certification) by the third verifier will be required.
Certification of green claims
As already mentioned, the cornerstone of the GCD is the obligation for operators to have their assessment and claim verified (i.e., certified). The verification must be carried out by a third-party verifier, accredited in accordance with Regulation (EC) No. 765/2008. The verifier, in the event of a positive outcome, will issue a certificate of conformity that is recognised by the competent authorities of all EU Member States.
Environmental labels
Environmental labels are a special group of explicit environmental claims (and, therefore, must fulfil the requirements listed above) and take the form of trust or quality marks highlighting a certain positive environmental aspect. Sometimes these labels are issued after a special certification process, called an ‘environmental labelling scheme’.
As there are (too many) private and public environmental labelling schemes, some of them with rather loose requirements, the GCD aims at harmonising them and establishing stricter rules (Articles 7 and 8).
Without going into too much detail, it is sufficient to point out that, from the date of transposition of the directive (18 months after its entry into force), national and regional public schemes from Member States and third countries that have already been established will only be able to award environmental labels if they comply with the GCD. New compliant schemes, on the other hand, can only be approved by the competent authorities of the Member States (in the case of private schemes) or by the European Commission (in the case of third-country public schemes) and only if they provide added value compared to existing schemes. New Member States’ national/regional schemes are not allowed.
It is important to note that only these new schemes are allowed to present an environmental rating/score based on an aggregate indicator calculated according to an EU-proven method.
Finally, the EU Commission will publish and constantly update the list of environmental labels (public and private) that can be used in the EU and that comply with the GCD.
Controls and penalties
Official controls on green claims will be conducted by the competent authorities of Member States (Articles 13-16).
Controls may be planned or follow the acquisition of information on violations of the relevant provisions by traders. The authorities’ intervention may also be prompted by well-founded and substantiated complaints submitted by natural or legal persons or organisations (legitimised under EU or national law).
The penalties for offenders, which are also set at Member State level, must be effective, dissuasive and proportionate, taking into account the financial strength of the natural or legal person held liable, the nature and gravity of the infringement and the economic benefits derived from such infringement (Article 17). Like almost all new EU legislation, the GCD requires that the maximum amount of the fines must be at least 4% of the trader’s annual turnover in the Member State(s) concerned. Other sanctions to be provided for in the national implementing rules are the confiscation of revenues gained by the trader from a transaction with the relevant products concerned and the temporary exclusion, for a maximum period of 12 months, from public procurement processes and access to public funding.
Interestingly, the GCD introduces a ‘warning mechanism‘ whereby, when competent authorities detect a non-compliance, they notify their findings to the responsible trader and require him to take all appropriate corrective measures within 30 days (note that these are not working days).
Exclusion for micro-enterprises and facilitation for SMEs
An important exclusion from the obligations of the GCD (i.e., verification and certification requirements) is provided for micro-enterprises defined by Commission Recommendation 2003/361/EC as companies with fewer than 10 employees and an annual turnover or annual balance sheet total not exceeding EUR 2 million. However, micro-enterprises are subject to the GCD if they voluntarily choose to certify their green claims [Article 10(3)].
As far as medium-sized and small enterprises are concerned, on the other hand, no exemptions are envisaged, but Member States will have to take specific measures to assist them, including, necessarily, the issuing of guidelines and, optionally, economic and technical-organisational aid (Article 12).
Entry into force and transposition
The proposal has been discussed in the Council of the European Union and in the European parliament in spring 2023.
The proposal will therefore have to be negotiated in the ‘trilogue’ (Commission, Parliament, Council of the EU) before being formally voted on by the European parliament in its final version and endorsed by the Council.
We believe that the Directive will not enter into force until the end of 2024 / early 2025, which means that, at best, the national implementing provisions will not be applicable until (late) 2026 / early 2027.
