New EU Directive empowering consumers for the green transition

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On January 17th, 2024, the European Parliament officially approved its provisional agreement with the Council regarding the Proposal for a directive on empowering consumers for the green transition through better protection against unfair practices and better information (the "Directive"). The Council is anticipated to soon ratify the provisional agreement, paving the way for the Directive's publication in the EU Official Journal and its subsequent enforcement by Member States.

1/ Context

In order to have the best eco-credentials, the majority of companies are today compelled to promote their products as sustainable : “eco-friendly t-shirt”, “responsible product”, “100% recycled fabrics” – without having to provide any evidence for these often deceptive claims. As a result, whether it be multinationals or small businesses, an increasing number of reputable companies are accused of “greenwashing” by advertising their products as green despite their activities causing significant environmental harm.

2/ What happened?

While the European Union and most Member States did have consumer laws in place to sanction misleading marketing practices, there lacked both preventative mechanisms to regulate the use of environmental claims specifically as well as per se prohibitions of certain conducts. Consequently, the European Commission established in March a proposal for a Directive amending current consumer rights directives at the EU level (Directives 2005/29/EC and 2011/83/EU).

On the 17th of January 2024, the Parliament adopted a favorable position at first reading and instructed the President to forward its position to the Council, the Commission and the national parliaments so they may also endorse the Directive.

While the Directive includes provisions relating to the repairability of products or the obsolescence of goods, the primary aim of the Directive remains to fight “misleading environmental claims” in the absence of binding international law on this issue.

3/ Significance

The Directive is the first of its kind. It allows consumers to make informed purchasing decisions and avoid unfounded and potentially misleading claims regarding the sustainability of products.

To do this, the Directive introduces two commercial activities to the catalog of practices deemed deceptive if they induce or are apt to induce the typical consumer to make a transactional choice they otherwise wouldn’t have made:

Promoting an ecological assertion concerning the forthcoming environmental efficiency lacking transparent, objective, and openly accessible and confirmable commitments outlined in a comprehensive and practical execution strategy, comprising quantifiable and time-bound objectives and other pertinent components essential to bolster its execution (such as resource allocation) and subject to regular verification by an impartial third-party specialist, whose conclusions are disclosed to consumers to prevent ‘auto-verification’.
Publicizing advantages to consumers that are immaterial and do not stem from any aspect of the product or service.

It also prohibits certain activities not on a case by case basis but in all circumstances. These include:

Making an environmental claim about the entire product or the trader’s entire business when it concerns only a certain aspect of the product or a specific activity of the trader’s business.
Presenting a sustainability label lacking certification or endorsement from public entities.
Asserting a vague environmental statement without evidence of substantial environmental achievements aligned with the claim.
Alleging environmental neutrality, reduction, or positivity based on greenhouse gas emissions offsetting without sufficient substantiation.

4/ What’s next?

This Directive should be read within the wider context of the EU’s and member states’ recent crackdown on greenwashing. Another proposed directive, the Proposal for a Directive on substantiation and communication of explicit environmental claims (the “Green Claims” directive) specifies how firms can validate their environmental claims. The joint committee of the European Parliament is planned to vote on this complementary directive in mid-February.

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