14 June 2024, 03:31
By Keith Hutchinson Feb 21, 2024

How the EU is tackling greenwashing

The European Commission has proposed a Green Claims Directive, which it believes will tackle greenwashing and help consumers make better-informed buying decisions – a development which any business selling or distributing product to the EU should take note of. Here Keith Hutchinson, business manager at testing, inspection and certification company SGS, and a member of the TIC Council Working Group on Product Sustainability, explores the reasons for (and potential impact of) the directive, which is expected to be voted on by the EU parliament later this year – and will become effective in 2027.

In its European Green Deal, the European Commission sets out to tackle false environmental claims and ensure that buyers can access reliable, comparable and verifiable information to reduce the risk of ‘greenwashing.’ 

The commission’s intention is to regulate the use of environmental claims by setting minimum requirements on the substantiation and communication of voluntary environmental claims and environmental labelling in B2C commercial practices. This will be achieved through the establishment of solid and harmonised calculation methods, verified by approved third parties, that cover the full value chain.

This is something to be applauded. As a market-leading TIC company, we are witness to the wide assortment of voluntary eco-labelling schemes that have appeared in recent years. Established to seemingly ‘help’ businesses meet consumer demand for more sustainable products and services, their variety and abundance is, however, more likely to increase consumer confusion and cynicism.

The EU Commission rightly recognises that environmental claims will only help consumers if they are consistent and based on scientific evidence that can be trusted.

Tackling consumer uncertainty

Empowering the public to take action to consume in a more sustainable way by preventing misleading practices such as greenwashing is a logical next step for industry. There exists a plethora of surveys that reflect that whilst consumers are becoming more environmentally conscious, they are also becoming more environmentally skeptical. 

The Global Consumer Insights Pulse Survey undertaken by PwC in June 2021revealed how 58% of core millennials (those aged 27-32) say they have become more eco-friendly. Core and young millennials (those aged 23-26) are the most likely to agree that they consciously consider sustainability while shopping. 

In addition, the Global Sustainability Study 2021 found that 85% of people indicate they have shifted their purchasing behaviour towards greater sustainability in the past five years.

Meanwhile, the GreenPrint Business of Sustainability Index survey, undertaken in 2022, revealed that: 64% of consumers are happy to pay more for sustainable products; 78% of consumers are more likely to buy products that are labelled as environmentally friendly; and 74% do not know how to identify eco-friendly products, with nearly half confessing that they seldom or never actually believe eco-claims.

This demonstrates that, in spite of consumers’ willingness to contribute to a greener and more circular economy in their everyday lives, their active role in this green transition is being hampered by a lack of trust in the credibility of environmental claims and the proliferation of misleading commercial practices related to the environmental sustainability of products. 

The need for industry action

In 2020, the European Commission carried out an inventory looking at a sample of 150 environmental claims for a wide range of products. Findings showed that over 53% of those claims provided vague, misleading or unfounded information about environmental characteristics across the EU and across a wide range of product categories. 

The 2020 inventory of environmental claims also analysed the extent to which the claims were substantiated with evidence that can be verified. The analysis found that 40% of claims were unsubstantiated. 

These results were supported by a sweep by the Consumer Protection Cooperation authorities in November 2020. Out of the 344 sustainability claims assessed, authorities considered that in over half of the cases (57.5%) the trader did not provide sufficient elements allowing for judgement of the claim’s accuracy. In many cases, authorities had difficulties identifying whether the claim covered the whole product or only one of its components (50%), whether it referred to the company or only certain products (36%), and which stage of the product’s lifecycle it covered (75%). 

This clearly needs addressing by governments and industries that aspire to support the growing number of consumers who want to be better informed on the environmental impacts of their consumption, and make better choices. 

What’s in the directive?

Applicable to large and transnational companies in the EU with more than €2m turnover and 10 employees, the directive sets out to create a level playing field by providing a legal framework that will underpin the credibility and transparency of voluntary environmental claims. It introduces minimum requirements for the substantiation and communication of environmental claims, which are subject to third-party verification. 

This robust and independent third-party certification process to verify claims and labelling should go a long way towards minimising, if not eradicating, the practice of greenwashing at any stage of the consumption journey – from advertising to purchasing and product use.

The approach is also likely to accelerate the move to a circular and climate-neutral economy and have a positive impact on global value chains involving production processes in third countries. As a result, I believe it could incentivise third-country companies to contribute to the green transition, particularly those businesses trading within the EU internal market. 

By introducing minimum criteria for all environmental labels, consumers will be more likely to trust that products holding a sustainability label will meet requirements on transparency and credibility. 

Supporting business and industry

The introduction of the EU’s proposed Green Claims directive is a logical next step on the road towards more sustainable consumption. I welcome the provision of a legal framework to improve the credibility and transparency of voluntary environmental claims. Day to day, I see how companies that offer truly sustainable products are disadvantaged compared to those that do not, and believe it’s vital that a level playing field is created for all.

At SGS, we’ve been encouraging companies to adopt sustainable practices and to integrate sustainability information into their reporting cycle for decades. In 2022 we launched the SGS Green Mark to support a diversity of businesses and brands who are striving to meet the escalating consumer demand for greener products and services. 

This independent, third-party certified and verified mark delivers analytical testing to support specific, quantifiable environmental attributes which cover the following claims: industrial compostable; biodegradability; biobased; hazardous substances assessed; recycled content; and PVC free.

Based on the ISO 17065/17029 framework, the Green Mark ensures products have passed all environmental claims/information as defined in: ISO 14021 Environmental labels and declarations – Self-declared environmental claims (Type II environmental labelling); ISO 14025 Environmental labels and declarations – Type III environmental declarations – Principles and procedures; ISO 14065 General principles and requirements for bodies validating and verifying environmental information; ISO 17067 Conformity assessment – Fundamentals of product certification and guidelines for product certification schemes; US Federal Trade Commission’s Green Guides; and relevant national requirements (to the best of our knowledge).

Grounded in testing, audit and evaluation within independent, approved laboratories brings third-party credibility to single-attribute environmental claims. In addition, each SGS Green Mark is fully traceable, providing a QR code to enable customers to easily access the details of the relevant information via their mobile phone.

Whilst we await the outcome of the EU parliament’s vote on the directive in mid-2024, there’s certainly many practical steps that organisations can take now to ensure a smoother alignment with any new legislation likely to come into force in 2027.

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