Everything you need to know about the EU Green Claims Directive proposal
Key takeaways, how to back up green claims and a quick lesson on claims that might get you in trouble in the future.
Welcome to the first issue of our anti-greenwashing newsletter The Crisps! This time we’re diving into the proposal for a EU Green Claims Directive (GCD) that was published by the European Commission last week. Read on for the key takeaways from the proposal, the information needed to back up green claims, and a quick analysis of claims that might get you in trouble in the future.
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There was a lot of buzz about the EUs proposal on a Green Claims Directive (GCD) over the last few days. Chances are, you’ve read the following numbers already, but we will repeat them anyways. Because all of us have to let them sink in and up our content game in the future.
In 2021 the Consumer Protection Cooperation Network (CPC) screening1 assessed 344 sustainability claims with upsetting results: “53% of environmental claims are vague, misleading or unfounded.” And in “42% of cases the claims were exaggerated, false, or deceptive.” As part of the European Green Deal the Commission wants to ensure that consumers can make better-informed choices and play an active role in the ecological transition. The Green Claims Directive is one step in that direction.
Top 3 myths debunked:
You cannot communicate anything regarding sustainability in the EU anymore. You still can! But there are two golden rules. Firstly: Don’t communicate anything you don’t do. Secondly: Have reliable, comparable and verifiable data to back up whatever you do communicate.
Climate-related terms like “climate neutral” or “net zero” are not allowed anymore. Climate claims are not banned but have to be substantiated. For example, companies can only claim future climate goals such as “We will be carbon neutral by 2030“ if they have detailed information about the methodology and its implementation. So if you don’t have it, don’t advertise it!
The Green Claims Directive only covers European businesses. Nope! Businesses that are based outside the EU and make voluntary environmental claims directed at EU consumers will also have to respect the requirements set out in the proposed directive.
Who will have to follow the GCD?
If the Green Claims Directive is approved, all companies making statements about the impact their product or service has on the environment will have to follow the rules of the GCD. With two exceptions:
→ Small companies with less than 10 employees and a maximum of 2 Mio. EUR annual revenue won’t have to follow the proposed regulations. If that’s you and you want to have robust claims, you can follow the GCD rules voluntarily. And keep in mind: Your communication is still covered by the Unfair Commercial Practices Directive. So don’t go too wild on your green claims anyways!
→ Small and medium-sized companies are supposed to get an “ease of access to information and data for the assessment”. But it is not yet clear how far they have to follow the GCD requirements and if a claim really needs to be backed up by primary data.
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What will it cost?
First up the most important aspect: What consequences are there if you don’t follow along with the GCD (when it’s accepted)? It will be a big financial risk as companies will have to pay fines of at least 4 percent of annual revenue in the offending market2 for making unsubstantiated green claims.
And what about the adoption of communication tools? Most businesses will have to adapt all of their content–from the webshop to the product and packaging as well as the marketing and communication channels. These one-time costs for updating content will have to be covered by the brands themselves.
Businesses will also have to cover the costs for the substantiation of claims. Depending on the type of environmental claim and the number of claims you want to communicate, it can add up quickly. Here’s a short overview:
To encourage small and medium-sized companies to follow the GCD voluntarily, the proposal asks the Member States to provide financial and technical support as well as staff training.
Key takeaways from the Green Claims Directive proposal:
Clear, unambiguous, and accurate: Under the proposed directive green claims have to contain reliable, comparable, and verifiable information that is substantiated through an approved methodology.
Substantiation by a third party: Before a claim can be used in marketing and communication, it has to be checked by an independent third party. The party will draw up a certificate of conformity that will have to be linked with the claim.
Claims can’t only focus on the positive: If a product has both a positive and negative environmental impact, you will have to communicate both sides clearly and understandably. That would be the case when a company reduces its water consumption and this effort leads to an increase in greenhouse gas emissions. Or when a company achieves greenhouse gas savings at the stage of manufacturing which also leads to a notable increase in greenhouse gas emissions at the use phase.
Accuracy of environmental claims: All claims and their substantiation will have to be reviewed at least once every five years from the date of the underlying studies or calculations. They should be edited immediately in case there are updates in the scientific methodology substantiating the claim.
Milestones for targets: Specify and commit to time frames for future goals. This is important so that you and your stakeholders can monitor the development, follow through on environmental promises and honestly communicate challenges when they arrive.
Baselines for targets: If you communicate an environmental target, include a baseline year. So instead of saying “50% reduction of greenhouse gas emissions“ add a baseline like “50% reduction of greenhouse gas emissions compared to 2015”.
„Climate-neutral“ and its equivalence: First off, companies should focus on reducing emissions in their own organization and value chain–known as insetting3. But when your company is compensating carbon emissions by offsetting4 and you want to talk about it, keep this in mind. Be transparent about what part of the claim concerns your own operations, and what part relies on buying offsets. (We will dedicate an entire issue on this topic soon!)
Note: Environmental labels in form of a trust mark or quality mark are part of environmental claims and are also covered under the GCD. As the topic is quite complex, we will publish an entire issue of The Crisps on environmental labels soon.
Further reading on the GCD:
→ To read the entire proposal, head on over to the draft of the Green Claims Directive. → There’s also a great explanation of the GCD on the Business of Fashion.
→ A quick round-up can also be found on Eurocrativ.
Time for a crisp analysis!
US denim brand Wrangler talked about saving water and their “chemical-free finish”. We investigated two claims and will explain what’s problematic about them (following the proposal of the GCD).
What’s wrong with this claim?5 It’s not specific enough about what products the ad refers to and does not give information on the assessment. Therefore the claim is not substantiated.
And how about this one?6 Again, there is no information on the assessment given and this claim only takes one manufacturing process step into account. It also touches upon a topic that is communicated poorly quite often: chemicals. Everything we hear, see, smell, taste and touch involves chemistry and chemicals. So claiming something is “chemical-free” is simply incorrect.
→ Want to know how Wrangler could have done it better? We will share tips on these examples in the pro version next Thursday. Upgrade to a paid plan and get 30% off your annual subscription with our Launch Discount.
What’s next?
In the next free issue dropping on April, 13th, we will focus on the Product Environmental Footprint (PEF) methodology. That’s why it’s important: The PEF aims to calculate the environmental impact of a product over its lifetime. There are more than 200 active ecolabels currently used in the EU. Each relies on different measurements and methodologies, some of which have been contested because they do not always reflect all aspects of the environmental impact. We look at the ones significant for the textile industry.
So don’t miss out on this deep dive.
All the best,
Tanita & Lavinia
Have a topic or question in mind we should include in one of our issues? Drop us a mail (thecrisps@substack.com) and tell us all about it.
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European Commission, Directorate-General for Environment, (2021) Screening of websites for ‘greenwashing': half of green claims lack evidence. https://ec.europa.eu/commission/presscorner/detail/en/ip_21_269, (accessed 29.03.2023).
European Commission, Directorate-General for Environment, (2023) Proposal for a Directive on green claims. https://environment.ec.europa.eu/publications/proposal-directive-green-claims_en, (accessed 22.03.2023).
Insetting is the implementation of “nature-based solutions” such as reforestation, agroforestry, renewable energy and regenerative agriculture. For example, a company on its insetting journey would first evaluate its own supply chain to identify where the major chunks of their GHG emissions are embedded. Conventionally, the first and foremost hotspot is often their source of energy – investing in renewable energy technologies such as solar or wind would be an effective solution, therefore. Explanation from World Economic Forum (2022) CLIMATE CHANGE Explainer: Carbon insetting vs offsetting https://www.weforum.org/agenda/2022/03/carbon-insetting-vs-offsetting-an-explainer/ (accessed 30.03.2023).
Offsetting is the activity of supporting a renewable energy source such as wind or solar or by funding activities like planting trees. These offsetting activities can be bought from companies specialized in offsets, so one can buy into an offsetting scheme to neutralize the effects of remaining GHG emissions. Therein also lies the problem with carbon offsetting – on its own, it won’t do much to reduce the volume of emissions being generated. Explanation from World Economic Forum (2019) What is carbon offsetting?https://www.weforum.org/agenda/2019/06/what-is-carbon-offsetting/ (accessed 30.03.2023).
Wrangler Corporate Online Shop EN, https://eu.wrangler.com/uk-en/indigood-sustainable-denim.html, (accessed 29.03.2023)
Wrangler Corporate Online Shop EN, https://eu.wrangler.com/uk-en/shop/indigood-icons-11mwz-western-slim-jeans-in-dust-bowl-W1MZUH37G.html, (accessed 29.03.2023)