The green claims directive has been published which means food and drink brands will need to substantiate what they say. By Dominic Watkins and Katherine Mason.
Greenwashing is the hot topic in Europe and the UK right now. Some question if it is actually food fraud, while others just roll their eyes at excitable marketers. But, for those trying to do the right thing and talk about the progress their product or business is making, navigating the rules on making green claims has become increasingly challenging.
As our colleague Anne Marie Taylor told Footprint earlier this year, the safe spaces for making environmental claims are shrinking – and fast. Publication of the draft green claims directive by the European Commission last week means things are about to become both more complicated and a little easier.
At its heart the directive regulates explicit environmental claims and puts in place mandatory substantiation requirements and also requirements for environmental labelling schemes. This means your marketing team is going to have to work much more closely with those in quality, R&D and governance to ensure claims are robust and properly substantiated.
There is some way to go before the proposals are formerly approved – by both the European Parliament and Council – but it’s worth looking at the direction of travel.
Let’s start with a topic lawyers love: definitions. The directive will pick up the broad definitions in the proposed amendment of the unfair commercial practices directive: ‘environmental claim’ ‘explicit environmental claims (EEC)’ and ‘generic environmental claim’. Environmental claim has a very broad definition and means: “any message or representation, which is not mandatory under EU law or national law, including text, pictorial, graphic or symbolic representation, in any form, including labels, brand names, company names or product names, in the context of a commercial communication, which states or implies that a product or trader has a positive or no impact on the environment or is less damaging to the environment than other products or traders, respectively, or has improved their impact over time”.
So, the directive proposes to primarily regulate EEC, a subset of environmental claims covering “an environmental claim that is in textual form or contained in an environmental label”. What exactly is meant by these definitions, particularly the scope of “textual form” (as environmental label is defined) will be interesting to see develop.
Those pioneering eco-labelling schemes on food products will certainly be picking through the directive to see what it means for them. It sets out specific rules for environmental labelling schemes. Any new scheme must be established by EU law, and a list of officially recognised environmental labels is set to be published in due course.
To make an EEC, traders with 10 or more employees with a turnover of €2m or above, must carry out an assessment made up of 10 criteria including: demonstrating that environmental impacts, environmental aspects or environmental performance that are considerations subject to the claim are significant from a life-cycle perspective; and separating any greenhouse gas emissions offsets used from greenhouse gas emissions as additional environmental information, and providing specific information regarding those offsets. The commission certainly has doubts about the use of both offsets and terms like carbon neutral.
Swotting up
So, brands need to do their homework – and a lot of it. Indeed, there is the mandatory requirement that information on the claim and the substantiation of it to be made available together, either in a physical form or a weblink or QR code. Whether “together with” will be taken to mean “somewhere on the packaging” or “immediately after” remains to be seen. But gone are the days of just having this information available: substantiation is going to need to be precise and publicly available.
In addition to this, member states are required to set up procedures to verify the substantiation and communication of EEC against the requirements of the directive. The “verifier” will be a third-party compliance assessment body accredited by the national accreditation body.
The commission states: “Before companies communicate any of the covered types of ‘green claims’ to consumers, such claims will need to be independently verifiedand proven with scientific evidence. As part of the scientific analysis, companies will identify the environmental impacts that are actually relevant to their product, as well as identifying any possible trade-offs, to give a full and accurate picture.”
And what if companies don’t follow the new rules? Penalties, which will be put in place by member states, need to be “effective, proportionate and dissuasive”. This includes the potential for fines. Caterers in particular should note that a conviction from greenwashing could in some locations result in temporary exclusion from public procurement processes and from access to public funding.
Consumers should be able to bring an action against dodgy claims too – the slow implementation of the group action directive around the EU would allow green claims to be subject to group litigation, or a class action as they are otherwise known. Campaigners will certainly spy an opportunity in this given that over 50% of the environmental claims the commission looked at in 2020 were found to be vague, misleading or unfounded, and 40% were unsubstantiated.
As with all directives, the green claims rules will need to be implemented into each EU member state’s law, so there will be 27 variants and some might adopt higher standards. Once law, member states will have 18 months from entry into force of the directive to adopt national laws which will apply six months after that. Nothing has changed, yet those safe spaces for making green claims are about to become smaller still. In the UK, too, the digital markets, competition and consumer bill should soon be published, which will give the Competition and Markets Authority the powers to impose penalties on companies for misleading green claims.
The result of all this regulation should be less greenwashing. Whether it will also put the brakes on brands making any green claims at all – and what that means for progress on sustainability and shifting consumer buying patterns – remains to be seen.
Dominic Watkins is partner and global lead (consumer sector) and Katharine Mason is senior associate (global regulatory, compliance and investigations) at DWF law.
