The end of greenwashing in the EU?
Nearly two years after publication of the European Commission’s proposal, the Greenwashing Directive came into force on 26 March 2024. The main objective of the changes is to protect consumers from deceptive commercial practices.
Time for a change?
Adoption of the new provisions was justified by the steadily increasing number of situations where traders tout the (allegedly) positive environmental impact of their products, when the actual positive impact is less than claimed or non-existent.
The term “greenwashing” includes direct claims of a product’s positive impact on the environment, as well as terms only indirectly implying such an impact, or indicating that the product or service has no harmful impact on the environment. But this doesn’t involve only claims, but also vague or misleading labelling, such as a green leaf. In a broader sense, not only communication about environmental performance is included, but also information about the social features of products or services or the seller’s activities.
The essence of greenwashing is when such statements and suggestions are misleading about the sustainability of a company’s products, services or activity, because they don’t match reality and the company often has no evidence to back such statements.
Thus the Commission launched a legislative initiative with the main aim of eliminating these dubious practices. The process was completed in February with adoption of the Greenwashing Directive (Directive (EU) 2024/825 of the European Parliament and of the Council of 28 February 2024 amending Directives 2005/29/EC and 2011/83/EU as regards empowering consumers for the green transition through better protection against unfair practices and through better information).
The primary objectives of the new directive are to protect consumers, accelerate the green transition, and enable consumers to make informed purchasing decisions, thereby promoting more sustainable consumption patterns. In principle, the responsibility for raising consumer awareness falls on traders, who will have to provide clear, relevant and reliable information about their products. In practice, this means that traders must carefully consider how to describe and advertise their products and services. The key will be communication based on solid evidence, using terms that can be shown to regulators to be true.
The amendments
The directive expands the catalogue of features to which deceptive practices may apply. It also articulates a ban on disseminating false information, or disseminating information that is true, but in a way that may be misleading concerning the environmental and social characteristics of the product and “circular” aspects such as durability, repairability or recyclability.
The amendment introduces a broad definition of an “environmental claim” to mean “any message or representation which is not mandatory under Union or national law, in any form, including text, pictorial, graphic or symbolic representation, such as labels, brand names, company names or product names, in the context of a commercial communication, and which states or implies that a product, product category, brand or trader has a positive or zero impact on the environment or is less damaging to the environment than other products, product categories, brands or traders, or has improved its impact over time.”
The list of business practices deemed unfair under all circumstances has also been expanded, thus banning:
- Displaying a sustainability label not based on a certification system or established by public authorities
- Making a general claim of environmental performance, even though the trader is unable to demonstrate recognised high environmental performance relevant to the claim
- Making claims of environmental performance with respect to the entire product or the trader’s entire business, if the performance actually relates only to a specific aspect of the product or a specific type of activity by the trader
- Claims that a product has a neutral, limited or positive environmental impact in terms of greenhouse gas emissions, simply due to offsets of greenhouse gas emissions
- Presenting compliance with legal requirements imposed on all products in a category on the EU market as a distinguishing feature of the trader’s goods.
In other words, the use of proprietary, non-certification-based labels that may suggest that a product has a beneficial effect on the environment will not be permitted. Rather, the directive is intended to create a clear legal framework for certifying goods and services as contributing positively to the environment. And as a rule, any general claim promoting a product for its relationship with the environment will require adequate substantiation, based on specific evidence. As a result, consumers are expected to obtain transparent information about a product’s actual sustainability.
The directive also introduces a number of other changes, for example in relation to practices such as planned obsolescence, repair of products, and commercial durability guarantees.
Sanctions
The Greenwashing Directive does not introduce new sanctions, but clarifies the liability for actions bearing the hallmarks of greenwashing by expanding the catalogue of unfair market practices. In turn, this significantly increases the risk of greenwashing being punished as a practice violating the collective interests of consumers. Indeed, a practice violating the collective interests of consumers is defined as a trader’s conduct contrary to law or good practice, in particular violation of the obligation to provide consumers reliable, true and complete information, or the use of unfair market practices or acts of unfair competition. The fine for violating the collective interests of consumers can amount to up to 10% of the violator’s turnover in the fiscal year preceding the year when the fine is imposed.
The Polish competition authority (the president of the Office of Competition and Consumer Protection—UOKiK) has already taken steps to investigate practices that may bear the hallmarks of greenwashing, in relation to businesses selling or marketing products (as we discussed in the article “Greenwashing: How to communicate without misleading?”). The new regulations should lead UOKiK to step up its enforcement in this area. Meanwhile businesses will have to adopt and maintain higher standards in their sustainability practices and communications.
From when?
As an EU member state, Poland is obliged to adopt the relevant national provisions implementing the directive by 27 March 2026. In particular, this means amendments to the Act on Combatting Unfair Market Practices and the Consumer Rights Act will be adopted in the near future. The new regulations must apply as of 27 September 2026 at the latest. By that date, traders should take appropriate measures to meet the obligations foreseen in the new law. It may be necessary to review their labelling and the information now appearing on products or targeted to consumers in the course of providing various services. Regulators will gain an important new tool to counter all kinds of practices that fall under the notion of greenwashing.
Before advertising a product or service as, for example, “environment-friendly,” traders should obtain reliable evidence for this claim. This may mean, for example, conducting research or obtaining relevant certificates. Only this approach will allow them to avoid heavy fines. From a business perspective, it will be crucial to take advantage of the two-year grace period foreseen for the new regulations.
Conclusion
The amendments to EU law under the Greenwashing Directive appear necessary, as under previous regulations it was difficult to hold companies accountable when they misled consumers into falsely believing that goods or services have a beneficial effect on climate or environment. Suffice it to say that even in the case against KLM, extensively covered in the media, where the Dutch court found the airline liable for greenwashing, no fines were issued and the existing ad campaigns were allowed to remain in the public space.
It should also be noted that dubious practice by some traders also infringes the principles of fair competition. Companies that have taken the cost and effort of implementing adequate measures to reduce the climate and environment impact of their operations are disadvantaged compared to green posers.
But assessment of these rules should wait until they are implemented by the Polish parliament. The success of this approach will be determined in the practice of the coming years.
Weronika Nalbert, adwokat, Competition & Consumer Protection practice, ESG & Sustainability practice, Wardyński & Partners
Karol Maćkowiak, Environment practice, Wardyński & Partners
