EU Council Agrees on New Rules to Tackle Greenwashing in Product Green Claims

The European Council announced that it has reached an agreement on a series of proposals aimed at protecting consumers from greenwashing, setting requirements for companies to substantiate and verify claims and labels regarding the environmental attributes of products and services.

The agreement establishes the Council’s position for negotiation with the EU Parliament on the European Commission’s Green Claims Directive. The Commission introduced the directive in March 2023, aimed at addressing a need for reliable and verifiable information for consumers, in light of a recent study by finding that more than half of green claims by companies in the EU were vague or misleading, and 40% were completely unsubstantiated.

The Commission’s proposal included minimum requirements for businesses to substantiate, communicate and verify their green claims, obligating companies to ensure the reliability of their voluntary environmental claims with independent verification and proven with scientific evidence. The directive also targeted the proliferation of private environmental labels, requiring them to be reliable, transparent, independently verified and regularly reviewed, and allowing new labels only if developed at the EU level, and approved only if they demonstrate greater environmental ambition than existing label schemes.

The directive forms part of a package of consumer-oriented environmental and circular economy-focused proposals by the EU Commission, which also includes the ecodesign regulation, updates to the EU’s unfair commercial practices directive (UCPD) and consumer rights directive (CRD) to include green transition and circular economy-related aspects, and promoting repair (right to repair).

One of the key changes to the directive proposed by Council’s position relates to the use of offsetting through carbon credits in making climate-related claims, such as “carbon neutral,” or “net zero.” While the Commission’s proposal required the separation of offsets used from greenhouse gas emissions reductions, and a specification of whether the offsets relate to emission reductions or removals, Council’s position distinguishes between “offset claims” that use carbon credits to balance  out an emissions share to reach net zero, and “contribution claims” that use carbon credits to contribute to climate action, requiring only offset claims to prove a net zero target, show progress towards decarbonization, and disclose the percentage of total greenhouse gas emissions that have been offset.

Notably, Parliament’s position, adopted in March 2024, takes a more stringent stance, banning green claims based entirely on the use of carbon offsetting schemes, but allowing companies to mention offsetting and carbon removal schemes in their advertisements if they have reduced emissions as much as possible and use the schemes only for residual emissions.

Council’s position also provides more flexibility than the Commission’s proposals that would require green claims to be verified by third-party independent experts, including introducing a new procedure to exempt certain types of explicit environmental claims from third-party verification with eligible companies proving compliance with the new rules by completing a technical document, as well as exempting labelling schemes regulated by EU or national law from third-party verification, provided that they meet EU standards. Additionally, ecolabeling schemes would be exempt from verification across the whole EU market if they are officially recognized in a member state and comply with the new rules, under Council’s position.