Time’s up on making unsubstantiated green claims
As a well-known saying goes, “Put your money where your mouth is.” As more brands dive into the heady waters of sustainability and ESG reporting, there’s a temptation to paint everything green. In recent years, brands make green claims about their company or products as a competitive advantage. But as a 2020 study by the European Commission found, more than 50% of green claims examined were vague, unfounded or misleading. A full 40% were completely unsubstantiated. And as far as the EU is concerned, time’s up on cleaning up green claims.
The European Commission recently introduced a “Consumer Package”, which comes out against greenwashing and the problem of making unsubstantiated green claims. Along with the Right to Repair legislative initiative, the proposal for a Directive on Green Claims exists primarily to empower consumers. The EC wants to give consumers the information they need to make sustainable choices. Consumers want to contribute to a more circular economy with or without EC directives. The EC also wants to foster consumer clarity, confidence and trust in green claims.
This is just good business. A joint McKinsey-Nielsen IQ study shows that consumers care whether the products they buy are environmentally and socially responsible. They are also willing to pay more for them. “Consumers walk the walk when it comes to spending on products that are backed by environmental, social, and governance (ESG) claims,” the study reports. At the same time, not all consumers trust green claims about eco-friendly products. And the EU wants to change this with the Green Claims proposal.
Giving consumers a green leg up
The proposal’s scope is broad. It covers the evidence and communication of voluntary environmental claims and labeling in business-to-consumer commercial practices.
When a brand makes an environmental claim, such as stating that a product is “climate neutral” or “biobased”, these will need to be fact-based. The EU’s proposal expects these claims to be assessed using a standard methodology before the product (and claim) reach the market. The hope is that these requirements will:
- Protect consumers and companies from greenwashing and misleading environmental claims.
- Enable consumers to contribute to accelerating the green transition.
- Create a level playing field for companies to advertise the environmental performance and properties of their products.
Everything’s gone green: Proposed measures
The Green Claims directive proposes a number of specific measures, including:
- Rules on labeling schemes aim at limiting the number of existing labels. New public labeling schemes will not be allowed, unless developed at the EU level, while new private schemes will have to meet additional requirements.
- Substantiating environmental claims. Companies that make environmental claims about their products will have to carry out assessments that rely on recognized scientific evidence, identifying potential harmful environmental impact (e.g., resource consumption and circularity).
- Certification and verification of environmental claims. Before using a claim in commercial communication, an independent third-party verifier (appointed by Member States) will have to check and issue an EU-recognized certificate of compliance.
- Communicating environmental claims. The proposal aims to ensure that consumers have easy access to information concerning environmental claims. Companies will have to make information available in a physical form or in the form of a weblink, QR code or equivalent. It will have to include such information as:
- (a) environmental aspects, environmental impacts or environmental performance covered by the claim
- (b) the relevant Union or the relevant international standards, where appropriate
- (c) the underlying studies or calculations used to assess, measure and monitor the environmental impacts
- (d) a brief explanation on how to achieve the improvements subject to the claim
- (e) the certificate of conformity regarding the substantiation of the claim and the contact information of the verifier that carried out the assessment
- (f) a summary of the assessment provided in at least one of the official languages of the Member State where the claim comes from.
Taming green claims
The Green Claims proposal is under discussion in the European Parliament and the Council of the European Union. The trend in wider society, however, encourages consumer-facing brands to pursue verifiable sustainability and clean up green claims regardless of what the law requires.
Taming green claims means backing claims with facts, verifying by independent third parties, and sharing evidence with information-hungry and skeptical consumers. While the Green Claims initiative provides guidelines on the kinds of information required for Green Claims compliance, there are no mandates as to how to share this information. Most products will be moving toward digital product passports, which can carry all the necessary information and more. Traceability technology will play an essential role in achieving this compliance.
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