The EU Green Deal announces the circular economy goal, which can only be achieved with the full mobilization of society and industry through the implementation of an integral EU policy for sustainability. Products and services should progressively become more “sustainable”, “environmentally friendly” and “green” and, ultimately, more respectful to the environment and society.

In line with this new trend, more and more companies advertise their products using a wide variety of “sustainability” and “green claims” (we note that the two terms do not have the same meaning, but will not focus on this distinction in the present short overview). Consumers often report being lost when navigating among all these numerous ecological labels, sustainability certification schemes and various self-made claims. Inevitably, this difficulty has a negative impact on brand credibility, the level playing field among the operators on the market and the overall level of consumer trust.

In such context, the European Commission has announced that companies will soon have to substantiate any sustainability or green claims they use in line with new harmonized EU rules and, most likely, a standard EU methodology capable of assessing, in a uniform manner, the impacts of products and services on the environment. These rules may also be accompanied by specific EU measures against “greenwashing”, possibly including sanctions. The forthcoming legislation should ensure fair competition on the EU market and boost the consumers’ trust.

In this Blog Post, we discuss important considerations for any company advertising sustainability or green claims, as well as the coming EU regulation in this space.

“Green Claim” Is A Broad Term

Green claims are commercial messages used in advertising that state, suggest or imply that products or services have a positive or no impact on the environment, or are less damaging than competing products and services. They can relate to various characteristics of the advertised products or services, such as their composition, manufacture and/or disposal, or the way that a service is performed. They are not necessarily verbal messages, but could also be symbols, logos, graphics, names and even interplays with colors (in particular, green).

There are many examples of what could constitute a green claim. Today, products are often advertised as “fully recyclable” or manufactured “with recycled materials”. These messages should be assessed taking into account general product safety legislation and any applicable sector-specific legislation, as well as rules on the use of recycled content claims. Other examples are more subtle. For instance, when the color that is traditionally associated with a given product is replaced by the color green, this can be understood as a claim suggesting a new environmentally-friendly version of the original product. Such claim should also comply with the applicable rules.

Green claims should be used carefully as, if they are untrue or insufficiently substantiated, the practice could be considered illegal greenwashing. Companies should also not put in question the compliance of their products with applicable product-safety rules and sector-specific legislation.

Green Claims Should Not Be “Misleading”

At present, the EU does not have specific, harmonized legislation on the use of environmental labelling and green claims. These messages are subject to the generic EU rules on misleading and comparative advertising, as implemented at the national level in individual EU Member States. In particular, the Unfair Commercial Practices Directive (UCPD) protects consumers from commercial practices, including claims, that can materially distort their economic behavior. Additionally, the Comparative Advertising Directive (CAD) protects both consumers and professionals against deceptive comparative advertising.

There are two main consequences of the above. First, the “misleading” nature of the claims is subject to interpretation and can vary from one Member State to another. This is often addressed by national or industry guidance documents and, sometimes, in relevant case-law at the national level. This makes it difficult for global companies to set an EU-wide strategy for green advertising. Second, green claims are only subject to a control a posteriori, if there is an action against a professional using a claim, that should be brought in national courts in the EU. As a result, many cases of greenwashing are actually not addressed and green claims are not always sufficiently trusted.

New Rules On The Use And Substantiation Of Green Claims Are Expected This Year

New legislation regulating the use and substantiation of green claims in the EU is expected to be proposed, and possibly adopted, later this year.

First, a legislative proposal on the substantiation of green claims should be published in June. It is likely to build on the so-called “EU Product and Organization Environmental Footprint” (PEF and OEF) methods. Several sectors are currently involved with the Commission to develop sector-specific PEF or OEF rules. The proposal could also seek an alignment with the current “EU Ecolabel” rules and/or other officially recognized ISO 14024-type ecolabels. This proposal is expected to be a real game-changer in the field.

Second, a legislative proposal on consumer empowerment for the green transition, also expected in June, should establish rules to combat greenwashing. The proposal could establish minimum requirements on the governance aspects of the labels, including accessibility to participants, compliance monitoring (e.g., third party verification), dispute resolution, sanctioning for non-compliance and transparency toward the consumer (regarding the identity of the organization running the label, its objectives or functioning). This will boost the new possibilities for enforcement and control already offered to consumers by the Collective Redress Directive adopted in 2019.

Finally, several sustainable products initiatives are being also discussed. For example, a sustainable products initiative should be issued before the end of the year building upon the “Eco-design Directive”. This may implement a mandatory sustainability labelling and/or disclosure of information requirement to market along value chains in the form of a “digital product passport” for some products.

How Can We Help ?

The Mayer Brown regulatory team is ready to help companies throughout the legislative labyrinth of green claims requirements. We have already assisted various companies from the chemicals and detergents, products, textile and cosmetics sectors with how to use green and sustainable labelling and advertising.

We have extensive experience with product safety legislation, advertising and claims, as well as with the EU chemicals legislation and REACH, the environmental law. This gives us a holistic understanding of the various issues to the best possible extent, which we can put in service of our clients.

The post Advertising “Sustainability” and “Green Claims” in Products and Services in the EU: Fancy Commercial Practice Can Be a Real Legal Challenge appeared first on Eye on ESG.