The European Green Deal is a pact that looks to improve the well-being and health of citizens and future generations by providing a range of basic necessities, such as fresh air, clean water, healthy soil, healthy and affordable food, cleaner energy, future-proof jobs, and much more.
It bases much of this on the European Union (EU) becoming greener. Recently, the European Commission released a series of new rules focused on corporate responsibility that aims to strengthen the path toward its carbon-neutral goal.
How will these changes affect life in the EU? We review the upcoming EU rules on green claims and greenwashing and what they mean.
What Is the European Green Deal policy?
The European Union (EU) and European Parliament recognize that climate change and environmental degradation threaten all life in Europe and worldwide. To help get past these challenges and improve the chances of a clean, safe world for future generations, all 27 EU Member States agreed to the European Green Deal.
This environmental agreement will help convert the EU into a modern, resource-efficient, and competitive economy by ensuring:
- A reduction in net greenhouse gas emissions by 55% of 1990 levels by 2030
- Zero greenhouse gas emissions (GHG emissions) by 2050
- Economic growth becomes decoupled from resource use
- No person or place is left behind economically or ecologically
- EU’s energy independence
- Job creation and growth
- An improvement in the overall health and well-being of EU citizens
Financing for the European Green Deal will come from dipping into one-third of the 1.8 trillion euro ($2.022 trillion) investments from the NextGenerationEU Recovery Plan and the EU’s seven-year budget.
What Is the New EU Environmental Legislation?
Newly proposed legislation for the European Green Deal focuses heavily on green claims. Green claims are any claim an organization makes that it’s taking action to combat GHG emissions and to help slow climate change.
Currently, EU laws don’t regulate environmental claims, which leads to inconsistencies with regard to the handling of these claims among Member States.
The changes would also better define green claims. They would be defined as: “any message or representation, which is not mandatory under Union 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.”
This is all in an attempt to prevent greenwashing — when an organization focuses more on marketing itself as environmentally friendly than minimizing its environmental impact.
Let’s review the main proposed changes.
Rules for Methodology
To help ensure all green claims are valid and harmonious across the EU, EU Member States must validate environmental claims through science-based methodologies.
Accepted methodologies are expected to have to follow these basic guidelines:
- They must be based on widely recognized scientific evidence and state-of-the-art technical knowledge and account for relevant international standards. Claims are not allowed if no recognized scientific method exists or there’s insufficient evidence to assess environmental impacts and aspects.
- They must assess environmental impact throughout the product’s life cycle.
- They must account for the composition of products, the materials they use when producing products, the amount of emissions created during production, the use of the product, and the product’s durability, reparability, and end-of-life aspects.
- They must assess if achieving positive environmental impacts, aspects, or performance significantly increases any other negative environmental impact.
- They must be third-party accessible with a reasonable access fee, if applicable.
- They require regular review from a third party that can account for technical and scientific progress and the development of relevant international standards.
Rules on Green Claims
source
So, what will be considered valid green claims under these proposed rules? While nothing is official yet, the green claims directives will be as follows:
- They can only make environmental claims substantiated through an approved methodology that meets specific criteria, which we’ll cover later.
- They cannot make positive environmental claims if a product has a positive and negative environmental impact. They may publicize the positive claim, but they must also communicate the negative impact clearly and understandably.
- They must make the information on the assessment on which the environmental claim is based available
With regard to the final bullet point, the information on the assessment that should be made available includes:
- Information about the product or activities of the trader subject to the claim; Environmental aspects, environmental impacts, or environmental performance the claim covers
- Methodology used
- Underlying studies or calculations they used to analyze, measure, and monitor the claim’s environmental impact
- A brief explanation of how they improved environmental performance via a weblink, QR code, or equivalent
There also needs to be a review of the accuracy of their environmental claims every five years at minimum.
Rules on Comparative Environmental Claims
Organizations can make comparative environmental claims as a part of marketing efforts, but experts anticipate the new rules to crack down on such claims. Some of the proposals include:
- Organizations must utilize the identical methodology as the products or traders they compare themselves to.
- Organizations must generate or source the data to substantiate comparative claims equivalently to ensure comparability.
- Organizations must account for the most significant stages along the value chain for all products and traders compared.
Rules on Forward-Looking Claims
Organizations may also claim anticipated environmental benefits under the newly proposed green claims directive. However, authorities would require these future-looking claims to follow specific guidelines, including:
- They must include commitments and milestones that they need to achieve within clearly specified time frames.
- They must indicate a baseline year for all targets, the desired result compared to the baseline year, and the target year to achieve the claim. For example, they might say something like, “We commit to making a 50% reduction in emissions by 2035 compared to our 1990 levels.”
- They cannot include previously achieved targets.
Rules on Enforcement
The proposed rules will also include how they will expose non-compliant organizations. In the proposed rules, public authorities would require Member States to perform compliance monitoring:
- As part of their regular checks
- In cases where they have sufficient reason to believe an environmental claim may infringe upon the rules
- If complaints arise
If an organization makes non-compliant environmental claims, the proposed rule changes would require it to fix the issues quickly. Once the organization receives a non-compliance notification, it would have 10 business days to respond with substantiation.
If the organization doesn’t provide a timely or satisfactory answer, regulatory officials will require it to modify the offending claim or cease all communication of it immediately as consumer protection. The trader will have 30 business days to implement corrective actions.
This enforcement aims to ensure all environmental labels and claims are credible and trustworthy, allowing consumers to make more educated purchasing decisions.
What Are the Current EU Environmental Policies?
The current European Green Deal may not be as extensive as the proposed regulation changes. However, it still looks to take on climate change and help prevent the potential global existential crisis it causes.
To help with this, the European Commission has adopted many climate-focused initiatives and policies, such as:
- Reducing car emissions by 55% by 2030
- Reducing van emissions by 50% by 2030
- Reducing all new-car emissions to 0% by 2035
- Performing energy-efficiency-improving renovations on 35 million buildings by 2030
- Reaching 40% renewable energy by 2030
- Reaching 36% to 39% energy efficiency by 2030
- Restoring Europe’s forests, soils, wetlands, and peatlands to increase carbon absorption to 310 megatonnes (Mt)
What Is the New EU Sustainability Directive?
The EU requires large companies and all listed companies — listed micro-enterprises are excluded — to disclose what they view as risks and opportunities associated with social and environmental issues. They must also disclose their activities’ impact on people and the environment.
This disclosure helps investors, civil society organizations, consumers, and other stakeholders evaluate companies’ sustainability performance as part of the European Green Deal.
In January 2023, the new Corporate Sustainability Reporting Directive (CSRD) was enacted. This new directive modernizes and strengthens the social and environmental information companies must report. A broader set of large companies and listed SMEs — approximately 50,000 companies — must now report on sustainability.
To be affected by this new reporting directive, a company must meet at least two of the three following criteria: employ 250-plus people, have assets totaling at least 20 million euros, and have turnover totaling at least 40 million euros.
Companies will begin applying the new reporting rules in the 2024 financial year for reports published in 2025. Until then, the current Non-Financial Reporting Directive (NFRD) national law will remain in force, requiring affected organizations to report on environmental protection (Scope 3 emissions included), social responsibility, the treatment of employees, human rights, anti-bribery and anti-corruption, and company board diversity.
Once the Corporate Sustainability Reporting Directive (CSRD) begins in 2024, corporations will have to report on all information in the current NFRD plus:
- Double materiality, including the company’s sustainability and climate risk, and the impact the company has on society and the environment
- Material-topic-selection process for stakeholders
- More forward-looking information, including organizational climate targets and its progress toward the targets
- Information regarding intangible items, including social, human, and intellectual matters
- Reports aligning with the Sustainable Finance Disclosure Regulation (SFDR) and European Union’s Taxonomy Regulation
Upcoming EU Rules on Green Claims Seek to Elevate Corporate Responsibility
To accelerate the battle against climate change and global warming, the EU continues updating policies and proposals to the existing European Green Deal. The latest proposals focus on empowering European organizations to improve their climate-neutral reporting and to make this a common practice among more European companies.
These upcoming EU rules on green claims and greenwashing may help Europe get on track and remain on a path to help reverse climate change. You can also do your part to help this process by offsetting your carbon footprint by purchasing voluntary carbon credit from Terrapass. We offer a wide range of options for businesses and individuals.
Choose the right option for you, and start offsetting your carbon footprint today.
Brought to you by terrapass.com
