According to a study conducted by the European Consumer Organisation BEUC1, a third of surveyed consumers are unable to distinguish between false and valid claims while half agreed to prefer buying a product with an environmental label than without one. While the survey also showed that consumers increasingly value sustainability as a criterion in their purchase decisions, they are also increasingly confused by the wide variety of green labels and green claims made on products. With sustainability becoming a common concern for consumers and businesses, EU and UK regulators are trying to fight against the prevalence of misleading claims using disparate approaches to greenwashing. So, what are the latest in terms of legislation in both blocks?
Investigating business practice – a UK’s approach to greenwashing
The UK does not have anti-greenwashing legislation as such; however, the UK Competition and Markets Authority (CMA) has made it clear that it will investigate businesses that are found to be misleading. In 2021, the CMA launched the Green Claims Code to help businesses review their environmental claims but also to ensure that businesses making vague or misleading claims were not giving an unfair advantage in comparison to those investing in genuine environmentally positive solutions. It also launched an investigation into a list of companies accused of greenwashing in the last few years which has continued and expanded through 2023. The most recent investigation concluded in December 2023. The investigations were particularly conducted on fast-moving consumer goods, including food and drink, cleaning products, toiletries, and personal care items, as well as on retail brands. While at the end of December 2023 the CMA has not opened official investigations into new additional companies, its work is ongoing and new investigations may follow. This approach allows for greater flexibility in producing green claims, but it could be argued that it is too vague for the industry to follow and falls short of the goal of providing clear guidance to the industry on how to prove sustainability credentials to consumers.
Regulating green claims – an EU’s approach to raising consumer protection
In the EU, policymakers agreed to formally ban the practice of greenwashing with penalties for non-compliant businesses, updating EU consumer protection rules through the Empowering Consumers in the Green Transition Directive. The final text was agreed upon by the European Parliament, European Commission and Council of the EU in September 2023 and will ban the use of “climate neutral” and “carbon neutral” claims, among others, which are thought to be generally misleading and rather transparent.
The ban on greenwashing is being supplemented by the new set of rules proposed by the European Commission on how to substantiate and communicate green claims. To ensure that all green claims are evidence-based, the European Commission proposed, in March 2023, new rules to set out minimum criteria for green claims.
While the principle behind the Green Claims Directive is widely supported by policymakers across all political groups, liberal and right-leaning policymakers have displayed clear resistance against adding red tape for businesses wishing to advertise their environmental advances. For instance, the proposed text is contested in the European Parliament for potentially “punishing the good guys” with a heavy administrative burden coming with the necessity to verify green claims by a third-party officially accredited body. Some warned that it could end up limiting innovation and disincentivising companies which are genuinely investing in the green transition.
Additionally, a lack of clarity on what scientific evidence must be provided to substantiate green claims is also highlighted as an issue by both Members of the European Parliament and industry representatives. The European Commission will need to provide clear guidance for a wide range of sectors, where different criteria must be accounted for. For instance, to measure the environmental impact of a food product, critics have pointed out that a food product with a low carbon footprint does not necessarily equate with a low impact on water usage, soil health, land-use change, animal welfare, etc. Products with a worldwide supply chain may also encounter difficulties to gather environmental data on their product when these are scattered around the world. The difficulty of finding green criteria that matches all sectors was also highlighted. While businesses are eager to gain more clarity on how to measure the environmental impact of their product, the European Commission will likely need the input of experts to assess what makes a product sustainable and how to evaluate environmental claims in a smooth, fair and efficient way.
Engagement with policymakers: bringing expertise on complex topics
With the European Parliament expected to adopt its position on the proposed Green Claims Directive in March 2024, and interinstitutional negotiations between co-legislators to follow, the voice of experts becomes increasingly important in developing enabling regulations that efficiently guide industry players in their green transition. With only a few months to go before Members of the European Parliament start campaigning ahead of the June 2024 elections, organisations need to have a say on how this legislation will be implemented and will enter into force. Drawing from the team’s extensive experience in environmental matters that are at the forefront of the EU’s political agenda, the EU public affairs team at Whitehouse provides public affairs advice and political analysis to a wide range of clients who seek to engage with policymakers and member states of the European Union and beyond.
For more information on how to engage with policymakers in the EU, please contact our Associate Director for European Affairs, Laura Contin (email@example.com).