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  • Writer's pictureCaspar van der Winden

Green Claims Directive - A path towards transparent environmental claims in the EU

Green trees - article about the EU Green Claims Directive

The European Council is set to commence negotiations with the European Parliament on the Green Claims Directive, an initiative aimed at curbing greenwashing and enhancing the credibility of environmental claims made by companies within the EU. This directive is part of the broader European Green Deal and the Circular Economy Action Plan, which seek to foster sustainable consumer practices and transparency.


Background


Proposed by the European Commission in March 2023, the Green Claims Directive aims to standardize how companies substantiate and communicate their environmental claims. This initiative addresses the growing concern over greenwashing, where businesses exaggerate their environmental efforts to appeal to eco-conscious consumers without substantial proof.


Key Provisions of the Green Claims Directive


  1. Verification and substantiation: Companies will be required to have their environmental claims verified by independent third-party auditors within 30 days. Simpler claims may benefit from a streamlined verification process.

  2. Transparency in carbon credits: The directive sets stringent rules on the use of carbon credits. Companies must clearly distinguish between carbon credits used for emissions reductions and those used for emissions removals. Only residual emissions, those that cannot be further reduced, may be offset using carbon credits, which must be certified under the EU's Carbon Removal Certification Framework.

  3. Environmental labelling: New requirements will ensure that any environmental labels used must be free from conflicts of interest, reasonably priced, and regularly reviewed based on the latest scientific data. This move is intended to prevent misleading labels that could deceive consumers.

  4. Enforcement and compliance: Member States will have to implement the directive into national legislation within two years, with full compliance required within three years. This includes a one-year grace period for small and medium-sized enterprises (SMEs), while micro-enterprises are exempt.

Controversies and challenges


Despite its ambitious goals, the directive faces criticism and challenges. One of the major points of contention is the allowance for the use of carbon credits. Critics argue that this could lead to double standards, where companies might rely excessively on carbon offsetting rather than making genuine reductions in their greenhouse gas emissions.


Furthermore, there are concerns over the administrative burden on businesses, especially SMEs, which might struggle with the cost and complexity of compliance. However, proponents argue that these measures are necessary to ensure that consumers can trust the green claims made by businesses, thereby fostering a more sustainable market environment.


Next steps


The upcoming negotiations between the European Council and the European Parliament will be crucial in finalizing the Green Claims Directive's details. If an agreement is reached, this Green Claims Directive could set a precedent for environmental legislation worldwide, promoting greater accountability and transparency in corporate environmental claims.

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