How to get ready for the EU’s greenwashing clampdown

How to get ready for the EU’s greenwashing clampdown

The new EU directive forces marketers to stop misleading buyers and do the hard work in becoming more sustainable.

Anyone who has made a serious attempt to lead a cleaner, greener life knows our purchasing choices are ultimately only as clean and green as the processes of the companies we buy from.

And although many companies are happy to reassure us that their conscience is clear, their carbon is offset and their chemicals are kind, there has always remained the unnerving sense that they could easily be saying all that just for our benefit. And, as consumers, how would we know if they were?

Now, across the EU, a new directive decrees that they no longer can.

On 17 January, the European parliament passed the directive on empowering consumers for the green transition, targeting the kind of misleading marketing practices commonly known as greenwashing.

The directive — due to come into force by 2026 at the latest — will ban B2C brands from making unproven claims about the greenness of their products.

In other words, it outlaws empty assertions that a product is “environmentally friendly”, “climate neutral”, “natural” or any other idle green boast that can’t be backed up with clear, accessible and independently validated data.

The legislation urges advertisers to move from generic to specific claims. For instance, “climate-friendly packaging” is out, but a statement that “100% of energy used to produce this packaging comes from renewable sources” is appropriate — if it’s demonstrably true.

In the name of transparency, the new rules also prevent companies from using emissions-offsetting schemes to claim a reduced environmental impact.

Returning power to people

This is a body blow to greenwashing. It means that if brands aren’t doing the real work, they can’t lay claim to the reassuring language of sustainability and environmental awareness.

That is important, because it rebuilds the bridge between green messaging and dependable truth, and returns power to consumers, who have long been bombarded with vague, disingenuous eco-bandwagon-jumping.

It forces marketers to stop misleading buyers, allows savvy consumers to identify sustainable products and puts pressure on businesses that don’t have solutions to step up faster. 

What brands does this affect?

Many more than you might think. We all know greenwashing is endemic, but it is still a shock to appreciate just how widespread it has become.

As many as three-quarters of retail products in the EU have been found to carry some form of green claim and, in 2020, the European Commission judged that 53% of examined environmental claims were vague, misleading or unfounded, while 40% were unsubstantiated.

This raises the possibility that, in a cleaned-up marketplace, consumers who want sustainable products may struggle to find them once all of the greenwashing is removed. Will companies respond fast enough with genuinely environmentally friendly propositions?

Many brands feel “greenhushed” already — too fearful to say what they are doing, in case it’s not enough for consumers. Hopefully, this move levels the marketplace and brands are able to open up about their journey in sustainability, even if they have not yet reached the final destination.    

The new rules do not apply directly in the UK, which operates its own voluntary code of conduct — the Green Claims Code — along similar, albeit less stringent, lines. The Advertising Standards Authority, too, has targeted greenwashing, making enforcement actions against companies including Lufthansa, Etihad Airways and HSBC.

But the EU directive will affect all operators placing products and services for sale in the EU, with the exception of micro-enterprises (those with fewer than 10 employees and €2m turnover). And as many UK-based businesses sell to EU markets, the directive is expected to have a knock-on effect on the product messaging we see in Britain.

What actions should brands be taking?

Retrain your marketers on the new laws. The directive is awaiting the approval of the EU Council, after which EU member states will have two years to implement the rules. Each member state will choose, or create from scratch, a “national competent authority” to oversee its Ecolabel requirements.

At the heart of all such enforcement will be the need for audited data to back up any environmental claims — estimates are no longer enough.

Create a review process to avoid breaches. Moving forward, green claims will require substantiation by an independent third party and the consequences for breaches are becoming stiffer too.

Such penalties could include fines up to 4% of annual turnover, as well as confiscation of revenue and temporary exclusion from public procurement processes and public funding.

All the more reason why advertisers need to factor in a workflow to their marketing process to check all claims meet the criteria.

Use the opportunity to drive greater sustainability practices that help your business stay relevant. New legislation is rarely popular among businesses, but this is an overdue legislation that demands a shift towards a more sustainable, responsible and transparent business environment. 

For brands, there is work to do, but there is also great opportunity for those working hard and investing in better processes and deserve to be recognised for it.

Driving meaningful change

Overall, this is vital legislation in a good cause — shining a light on grey areas, discouraging companies and their advertising partners from gravitating towards comforting language where they have no right to use it and, above all, improving the value of the information at our disposal.

Promoting accuracy and reliability puts consumers in control and puts advertisers on notice. Ordinary people’s spending power makes them our best drivers of meaningful business change; they need to know the truth about what they are buying so they can support the most environmentally sustainable products, rather than the most credible massagers of the truth.

Hannah Mirza is founder and CEO of Responsible Marketing Agency

Media Jobs