Policy landscape continues to change, companies and consumers have a say in their choices, and the Green Claims Directive is primed to assist consumers in choosing a green and sustainable way of life.
The EU Green Deal is a bold initiative by the European Union aimed at achieving climate neutrality by 2050. This comprehensive strategy envisions a sustainable economy driven by green energy, innovative circular economy practices, enhanced biodiversity protection, and significant pollution reduction.
Its ambitions are transdisciplinary, requiring transformative change at the macro level (policies and regulations), the meso level (production and consumer markets), and the micro level (individual consumers). Achieving these crucial goals for our planet’s future demands coordinated action across sectors and stakeholders.
Green Claims Directive – making ‘green’ more trustworthy
The Green Deal acts as the umbrella arching over the broad arsenal of policies the EU has implemented to engine the green transition in the 2020s. The Green Claims Directive is one of the latest additions to this pool.
As a component of the Circular Economy Action Plan, the proposed directive targets the issue of greenwashing, providing a regulatory framework to safeguard the credibility of claims made about the sustainability of a product or service and its entire life cycle. Thus, this concerns the claims that companies make about their products being, for example, carbon neutral, organic, eco-friendly, biodegradable or 100% natural.
In a nutshell, the directive works to control promoting and marketing practices, to ensure that when businesses profit from claiming to operate sustainably, they are truly offering products and services and promoting the green transition as they promise. It works to reinforce the goals of the Directive on Empowering Consumers for the Green Transition.
The proposed directive is closely aligned with many other policies of the Green Deal, but also works hand in hand with the EU Taxonomy and the Directives on Corporate Sustainability Reporting and Corporate Sustainability Due Diligence.
These policies can be seen as the backbone of the European green transition, providing concrete, quantified instruments for the implementation of the EU Green Deal and monitoring the policy outcomes within European market structures. This is necessary because the landscape in which businesses operate engages varying loopholes that make these policy outcomes difficult to assess.
The landscape: evolution and challenges
Achieving sustainability and climate neutrality goals requires the active engagement of the production and consumption markets – not just the traditional supply-demand mechanisms, but also trust between the incumbent actors.
Simply speaking, companies and consumers must trust that the other is fully committed to delivering services and products aligned with global calls for sustainable and climate-friendly options. This trust has been affected in the recent past due to greenwashing – the practice of misleading consumers about the environmental benefits of a product.
Greenwashing is a globally prevalent problem. A 2020 European Commission study [1] found that 53% of examined environmental claims were vague, misleading, or unfounded, and 40% lacked supporting evidence.
This is a crucial issue for the sustainability ecosystem for multiple reasons, apart from consumers’ loss of trust. For instance, while the sustainability market boomed, multiple companies genuinely made efforts to engage in green product innovation and uphauling their production systems to create climate-friendly products and services. Such companies faced unfair disadvantages against those making unverified claims of being green and sustainable without engaging in due diligence.
For example, Zalando has been in the limelight after being scrutinised for greenwashing claims. The company committed to removing misleading information and unverified information from their website [2], but the ex-post action shows how much greenwashing is affecting consumers and businesses.
Another reason is the price premium commanded by alleged green products. Such premiums create significant financial burdens on consumers committed to purchasing green and sustainable products, which is especially relevant in the current economic climate fueled by inflation and rising costs of living [3].
Even so, a recent survey found consumers to be willing to spend around 9.7% more on average [4] which shows their keen awareness of, and appreciation for sustainable and green products.
The action: shifting the winds to green
Taking stock of such issues and acknowledging their severity, the Commission proposed the Green Claims Directive to serve as a crucial legislative tool to combat greenwashing. It prohibits claims that do not fulfil a minimum criterion and mandates companies to substantiate their environmental claims with recognised scientific evidence.
Referring to existing Environmental Footprint (EF) methods (Commission Recommendation (EU) 2021/2279) and requirements stemming from the Taxonomy Regulation, the directive calls for standardised scientific approaches to providing the evidence, such as accepted life-cycle assessment (LCA) processes.
Businesses must deliver clear, comparable, and verifiable information when promoting their products with green claims. By requiring rigorous life-cycle analysis and third-party verification, this directive seeks to ensure that consumers are not misled.
The central aim is to build consumer trust by mandating evidence to increase transparency and accountability, although the benefits may be reaped by other stakeholders involved in a product’s value chain.
It can be said that policy, regulation and market are three interdependent forces that will shape the way sustainable products are produced and marketed in the future. The Green Claims Directive is essential to level the playing field for companies genuinely investing in sustainability while protecting consumers from deceptive marketing.
This directive, however, can also aid the development and growth of such companies. It ensures transparency, comparability, and accountability, which protects consumers and rewards businesses that are truly committed to sustainability.
At the meso level, this directive, as part of the broader EU Green Deal policy kit, brings together centralised regulatory tools, businesses, and consumers. As such, it works to foster a more accountable ecosystem for green communications. Once the directive is implemented within national guidelines, the market (at the macro level) will have to adapt in two phases that may overlap.
In the first phase, producers will have to uphold the policy and its regulations to avoid consequences of non-compliance and making false claims. For this purpose, such producers will have to actively fund production overhauls and invest in green technologies and processes to account for natural resource use in a responsible manner. This regulatory push would also amplify existing pressures from suppliers and customers (both organisational or B2B and end consumers) to adopt green and sustainable practices at the core of a product’s lifecycle.
In the second phase, the directive’s implementation is envisioned to make sustainable and green products the ‘new normal’, which could nullify the price premiums that such products currently command, thus also making them an economically attractive purchase choice for end consumers at the micro level.
Moreover, the scientific, evidence-backed nature of products falling under this directive’s scope would, over time, repair consumers’ trust in companies and brands marketing themselves under the ‘green and sustainable’ umbrella.
These phases may look deceptively simple. But, it will take a long time for the market to evolve fully to adapt to the Green Claims Directive. Even so, this directive is expected to act as a catalyst – a solid nudge – that could make sustainability a cornerstone for companies to operate on, and a foremost consideration for consumers while making purchase decisions.
This continuing evolution of the companies’ operating conditions, political, social and market landscape for supporting sustainability is going to lay the path forward for espousing the increasingly green economy of the future.
Importance for the future
The emphasis given in the EU for green transition has been revisited in the priorities of the new European Commission (2024-2029), including a Clean Industrial Deal. Safeguarding and improving Europe’s competitiveness gains core attention in the turbulent geopolitical situation. Simplification of rules and reduction of regulatory burden are means to enhance the environment for businesses.
This will also affect the sustainability reporting requirements. Thus, businesses that have already invested in improving their processes toward the environment and making more solid green claims throughout the whole value chain need to navigate another transition challenge, for example, how to report the impact of their activities on halting biodiversity loss.
Although the policy landscape continues to change, companies and consumers have a say in their choices, and the Green Claims Directive is primed to assist consumers in choosing a green and sustainable way of life.
References
[1] McGuinn, J. et al. 2020. Environmental claims in the EU: Inventory and reliability assessment – draft final report. Available at: https://circabc.europa.eu/ui/group/44278090-3fae-4515-bcc2-44fd57c1d0d1/library/b11ba10b-5049-4564-b47a-51a9bc9003c8/details?download=true
[2] European Commission. 2024. Zalando commits to provide clearer information for consumer following EU action. Available at: https://ec.europa.eu/commission/presscorner/detail/en/ip_24_948
[3] Pieters, L. et al. 2022. The cost of sustainable products. Deloitte Insights. Available at: https://www2.deloitte.com/us/en/insights/industry/retail-distribution/consumer-behavior-trends-state-of-the-consumer-tracker/sustainable-products-and-practices-for-green-living.html
[4] PwC. 2024. Voice of the consumer survey 2024. PwC. Available at: https://www.pwc.com/gx/en/issues/c-suite-insights/voice-of-the-consumer-survey.html
Additional Reading
de Freitas Netto, S.V. et al. 2020. Concepts and forms of greenwashing: a systematic review. Environ Sci Eur 32, 19. https://doi.org/10.1186/s12302-020-0300-3
Rubino, V. 2024. The New EU Regulatory Framework on Environmental Information in Product Labelling. Remarks from the Consumer Perspective. European Food and Feed Law Review, 19(2), 77–86.
Wipper, A.-K., & Meyer, M. 2025. What the Green Claims Directive means for companies – an overview. KPMG Law. Available: https://kpmg-law.de/en/what-the-green-claims-directive-means-for-companies-an-overview/