Greenwashing has become part of our everyday language and allegations of greenwashing appear to be made so frequently that some businesses are becoming afraid of making green claims at all for fear of backlash.
As there have been very few agreed definitions or methodologies, even well referenced and supported claims were at risk. Even more so when people considered all of the activities of a business when assessing its specific claim on a specific topic. While some Member States have guidance similar to that issued by the CMA which provides a limited degree of assistance, all parties have been desperate for clarity. On 22 March 2023 the EU took its first steps towards providing that clarity by introducing a proposal on the Green Claims Directive ('GCD').
What does the GCD do?
The GCD regulates explicit environmental claims and puts in place mandatory substantiation requirements and also requirements for environmental labelling schemes.
While at the beginning of its journey through the legislative process and a Directive which will be implemented differently across the EU, the GCD marks a very significant step forward. It is clear that the days of making quick and easy environmental claims about a product are over.
While it will attract negative commentary, it is positive to have clarity around what is required. We will cover a few of the key elements in this briefing.
What is an Environmental Claim?
The GCD will pick up the broad definitions in the proposed amendment of the Unfair Commercial Practices Directive for 'Environmental Claim'; 'Explicit Environmental Claims (EEC)' and 'Generic Environmental Claim'. ‘Environmental Claim’ has a very broad definition and means:
any message or representation, which is not mandatory under Union law or national law, including text, pictorial, graphic or symbolic representation, in any form, including labels, brand names, company names or product names, in the context of a commercial communication, which states or implies that a product or trader has a positive or no impact on the environment or is less damaging to the environment than other products or traders, respectively, or has improved their impact over time.
The GCD proposes to primarily regulate EEC, which are a subset of Environmental Claims covering 'an environmental claim that is in textual form or contained in an environmental label'.
What exactly is meant by the EEC definition, particularly 'textual form' (as environmental label is defined) will be interesting to see develop and perhaps get amended as the legislation makes its way through the legislative process – as the Environmental Claim definition uses the word 'text' and then also gives examples such as brand names and product names, whereas the EEC definition is more stark. It's not difficult to imagine marketing teams finding creative ways to make claims without words in an impactful manner, perhaps unforeseen by the EU.
What is required to substantiate?
Gone are the days where the business can decided what evidence it would hold to substantiate a claim. To make an EEC, traders with 10 or more employees with a turnover of €2 million or above, must carry out an assessment made up of 10 criteria, including:
- demonstrating that environmental impacts, environmental aspects or environmental performance that are considerations subject to the claim are significant from a life-cycle perspective;
- separating any greenhouse gas emissions offsets used from greenhouse gas emissions as additional environmental information, and providing specific information regarding those offsets;
- where a claim is made on environmental performance, take into account all environmental aspects or environmental impacts which are significant to assessing the environmental performance;
- provide information whether the product or trader which is subject to the claim performs significantly better regarding environmental impacts, environmental aspects or environmental performance which is subject to the claim than what is common practice for products in the relevant product group or traders in the relevant sector; and
- include relevant secondary information for environmental impacts, environmental aspects, or environmental performance which is representative of the specific value chain of the product or the trader on which a claim is made, in cases where no primary information is available.
In addition, there is the mandatory requirement that information on the product or the trader that is the subject of the explicit environmental claim and the substantiation for the claim be made available together with the claim in a physical form or in the form of a weblink, QR code. Whether "together with" will be taken to mean "somewhere on the packaging" or "immediately after" will remain to be seen.