EU Cracks Down on Greenwashing: What You Need to Know

What lies beyond the horizon when it comes to the EU law aimed at combating “greenwashing”? Whom does it affect, when does it take effect, and what can no longer be stated?

In March 2022, the EU introduced the Empowering Consumers for the Green Transition directive, with the goal of prohibiting the promotion of deceptive claims about the sustainability of products. Now, an agreement has been reached to turn this proposal into law, which should effectively ban greenwashing in the region.

The objective is to eliminate the irresponsible use of generic environmental claims that have flooded the market across various categories, from food to textiles. Consumers are struggling to navigate the multitude of modified claims and have no idea which ones to trust. A 2021 survey conducted in four EU countries found that 53% of consumers cannot recognize such claims on product packaging. Earlier research revealed that 53.3% of environmental claims made by companies were unclear, misleading, or unsubstantiated, and 40% were entirely baseless. According to the new rules, companies will have to substantiate and prove why a product is environmentally friendly if they have labeled it as such.

Whom does the proposed EU ban on greenwashing affect?

It will primarily impact food and beverage manufacturers, travel organizers (including aviation), fashion and clothing brands, as well as technology companies and appliance manufacturers. For example, airlines that offer carbon offset options for passengers who pay a small fee will no longer be allowed to claim “Carbon-neutral” flying. In reality, there is no such thing as “Carbon-neutral” or “CO2-neutral” cheese, plastic bottles, flights, or bank accounts. In simple terms, claims of carbon neutrality are deceptive and create the impression that companies are taking responsible action regarding their climate impact.

What can no longer be stated on packaging?

The new EU law includes a list of terms that companies are no longer allowed to use on product labels. Perhaps the most prominent among them is “Carbon-neutral,” a widely used term in various industries. A survey of 2000 people found that even though 40% of consumers are confident in interpreting “Carbon-neutral” labels, the majority still don’t understand what the term means.

According to the agreement reached by the European Parliament and the Council, the prohibitions apply to terms such as:

  • Carbon-neutral
  • Climate-neutral
  • Environmentally friendly
  • Eco-friendly
  • Eco
  • Green
  • Natural
  • Biodegradable
  • Carbon-friendly
  • Carbon-positive
  • Energy-efficient
  • Bio-based
  • Nature’s friend
  • Ecological
  • Environmentally correct
  • Gentle on the environment
  • Broader statements including the words “conscious” and “responsive.”

While this list is not exhaustive, the idea is to ban generic environmental claims, unless companies can provide “proof of recognized excellent environmental performance relevant to the claim,” which could include compliance with official EU regulations or recognized green labeling schemes.

The EU also emphasizes that companies cannot make an environmental claim about the entire product when it actually pertains to only a specific aspect. For instance, when a product is marketed as “made with recycled material,” creating the impression that the entire product is made of recycled material, while, in fact, only the packaging is made from recycled material.

When does it take effect?

To become law, the proposal will need final approval from the European Parliament and the EU Council, expected by the end of the year. While theoretically possible to be rejected, it goes against the usual process and is rarely seen.

If and when the directive is approved, EU member states will have 24 months to implement changes and incorporate the new rules into their legislation. This means that if given the green light, many forms of greenwashing will effectively be banned in the EU by 2026.