03/07/2024

In March 2023, the European Commission presented a proposal for a directive called “Green Claims.” This directive regulates companies’ “Environmental Claims” so that they are based on recognized scientific evidence and monitored by national authorities. This directive aims to target greenwashing and help consumers make more informed and environmentally friendly decisions when purchasing a product or using a service.

On June 17, 2024, European environment ministers adopted their first formal position or “general approach” to the 2023 Green Claims Directive.

Consumers have a right and a need to have reliable, comparable, and verifiable information about the environmental value of the products they buy. The 2023 directive, now reconfirmed, establishes minimum requirements for communicating and verifying companies’ explicit environmental claims when selling and environmental labels that companies use voluntarily when marketing products.

Given the trend of companies increasing greenwashing, the new June 2024 proposal requires that environmental claims and labels be clear and easy to understand, adapted to the latest scientific evidence, and specific to environmental characteristics such as product durability, recyclability, or impact on biodiversity.

Independent third-party agencies must verify each environmental claim before publication, so these agencies will have to verify both the company’s explicit environmental claims and the environmental labels.

Small businesses will also be scrutinized and subject to prior verification, while micro-businesses, such as small farms, will have an extra eight months to comply with the new rules.

In addition, SMEs will benefit from practical support to comply with the new directive, in the form of guidelines, additional tools and measures to reduce administrative burdens, financial support, and training.

The simplified certification procedure will apply to four categories of “Green Claims”: those that exceed minimum legal requirements, claims based on existing environmental labels, claims related to the Common Agricultural Policy (CAP), and other specific Claims to be further defined by the Commission.

The text agreed by the Council introduces a distinction between “contribution credits,” which are defined as carbon credits that contribute to emission reductions, and “offset credits,” which serve to offset a certain amount of emissions produced by a company through decarbonization projects that serve to offset the emissions produced.

To apply for “offset credits,” companies must demonstrate actual, high-quality emission reductions and meet the requirements of the Green Claims Directive.

The European Union is currently processing the adoption of methodologies to certify different carbon removal activities included in the recently approved European Carbon Removal Certification Framework (CRCF). The first methodologies are expected to be approved by the summer of 2025.

The June 2024 Council decision also calls for making it mandatory for companies claiming to be carbon neutral to design decarbonization actions in line with the European Sustainability Reporting Standards (ESRS).

The Council’s agreement is an important step forward in the fight against greenwashing. It will give more credibility to not only end products but also production processes that must become increasingly sustainable and transparent. This agreement now provides for the start of talks between the Council and the European Parliament to finalize the law in the coming months.

 

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