New EU Anti-Greenwashing Requirements Slated to Take Effect Later This Month – Are You Compliant?

EU member state measures implementing the Empowering Consumers for the Green Transition Directive, or EmpCo, are required to take effect on September 27. EmpCo regulates environmental, social and product circularity claims made to consumers. It raises new compliance considerations for marketing materials, product labels, packaging and other sustainability communications. This post provides an overview of EmpCo for legal, sustainability and product compliance personnel at US-based multinationals that are gearing up for compliance. 

A 50,000-foot View of EmpCo

EmpCo is an EU-level legislative response to greenwashing concerns in consumer-facing communications. EmpCo amends and expands upon two existing pieces of EU consumer protection legislation: the Unfair Commercial Practices Directive (UCPD) and the Consumer Rights Directive (CRD). It prohibits some consumer-facing sustainability-related claims outright, while requiring that others meet specific requirements, as further discussed in this post.

EmpCo is a Directive. As such, its requirements must be transposed into national law by each EU member state, which was required by March 27. On May 28, the European Commission launched infringement proceedings against the 20 tardy member states that failed to fully transpose EmpCo by that date. 

The pace has picked up since then, with 18 of the 27 EU member states having communicated national transposition measures to the Commission. The member states that had not reported transposition measures as of earlier this week were Bulgaria, Hungary, Malta, the Netherlands, Poland, Portugal, Slovenia,  Spain and Sweden.

Subject Companies

EmpCo applies broadly, to any trader engaging in commercial practices directed at EU consumers. Therefore, every consumer-facing US-based multinational doing business in the European Union must be mindful of EmpCo and have appropriate compliance procedures in place for identifying, assessing and approving relevant claims.

Covered Claims

EmpCo applies to sustainability claims in business-to-consumer (B2C) communications that relate to the advertising, marketing, promotion, sale or supply of a product, service, company or brand. Communications can be via any medium and can consist of text, pictures, graphics and/or symbols.

Under EmpCo, sustainability claims can include both environmental or “green” claims, as well as social characteristic claims, although only some of the new EmpCo prohibitions are tied to these categories.

• An environmental claim is any commercial message or representation that is not mandatory under EU or member state national law that states or implies that a product, product category, brand or trader has a positive or zero impact on the environment, is less damaging to the environment than other products, product categories, brands or traders or has improved its impact over time. 

• A social characteristic claim can, for example, relate to the quality and fairness of working conditions, such as adequate wages, social protection and workplace safety. Social characteristic claims also can relate to respect for human rights, equal treatment and opportunities (including gender equality, inclusion and diversity), contributions to social initiatives or ethical commitments, such as animal welfare.

However, EmpCo does not require that goods or companies meet particular characteristics, standards or requirements. That is left to myriad other EU and national requirements. EmpCo is instead focused exclusively on claims made to consumers.

As noted above, EmpCo is limited to B2C communications. Business-to-business (B2B) communications fall outside its scope, although EU member states may also may regulate these communications through  EmpCo “gold plating” or other means. B2B communications also are already addressed under other member state and EU-level requirements and prohibitions.

Prohibited Practices – the Expanded “Blacklist”

The UCPD prohibits unfair commercial practices. Annex I to the UCPD—often referred to as the “blacklist”—lists the commercial practices that are regarded as unfair without having to demonstrate the negative impact of the practice on the average consumer’s transactional decision. EmpCo adds 12 new prohibited commercial practices to the blacklist.

Generic Environmental Claims 

• Making a generic environmental claim for which the trader is not able to demonstrate recognized excellent environmental performance. 

  • A generic environmental claim is an environmental claim made in written or oral form (including through audiovisual media) other than on a sustainability label, where the specification of the claim is not provided in clear and prominent terms on the same medium.

    Examples of generic environmental claims include: “environmentally friendly;” “eco-friendly;” “green;” “nature’s friend;” “environmentally correct;” “climate friendly;” “gentle on the environment;” “carbon friendly;” “energy efficient;” “biodegradable;” “biobased;” and other similar statements that suggest positive environmental performance. 

    The Commission’s Q&A indicates that implicit claims alone, such as colors (e.g., green) or images (e.g., trees, raindrops) without text, are not generic environmental claims. However, a written or oral statement combined with an implicit claim could be a generic environmental claim.

    EmpCo does not prohibit environmental claims that have specificity, although these may be captured by other prongs of EmpCo. They also need to be considered under other EU and member state laws.

  • According to the Commission Q&A, a trader can demonstrate recognized excellent environmental performance by (1) the EU Ecolabel, (2) a national or regional EN ISO 14024 type I ecolabeling scheme officially recognized in EU member states or (3) meeting top environmental performance requirements for a specific environmental characteristic in accordance with another applicable EU law.

Sustainability Labels

• Displaying a sustainability label that is not based on a certification scheme or established by an EU or member state public authority.

  • A sustainability label is any voluntary trust mark, quality mark or the equivalent, whether public or private, that aims to set apart and promote a product, a process or a business by reference to either or both its environmental or social characteristics. A mandatory label required under EU or member state national law is excluded from the prohibition.

  • A certification scheme is a third-party verification scheme (1) that certifies that a product, process or business complies with certain requirements, (2) that allows for the use of a corresponding sustainability label and (3) the terms of which, including its requirements, are publicly available and meets specified criteria relating to transparency, availability, development, consultation, monitoring and addressing non-compliance.

Greenhouse Gas Emissions Claims

• Claiming, based on the use of offsets, that a product has a neutral, reduced or positive impact on the environment in respect of GHG emissions.

  This prohibition does not apply to a climate neutral, reduction or positive claim based on the actual emissions footprint of the product. In addition, the Commission’s Q&A notes that the prohibition does not preclude companies from advertising investments in carbon credit projects, so long as they do so in a way that is not misleading and that complies with other EU requirements.

Overly Broad Environmental Claims

• Making an environmental claim about an entire product or the trader’s entire business when it concerns only a part of the product or a specific activity of the trader’s business.

Presenting Legal Requirements as Claims 

• Presenting requirements imposed by law on all products within the relevant product category that are on the EU market as a distinctive feature of the trader’s offer.

Durability, Repair and Replacement

• Falsely claiming that under normal use conditions a good meets particular usage time or intensity thresholds.

• Not communicating that a good has a feature that limits its durability when that information is available to the trader.

• Presenting a good as repairable when it is not.

• Inducing the consumer to replace or replenish a good’s consumables before it is necessary to do so for technical reasons.

• Withholding information about the impairment of a good’s functionality when third-party consumables, spare parts or accessories are used, or falsely claiming that impairment will occur.

Software Updates

• Withholding from the consumer that a software update will negatively impact the functioning of goods with digital elements or the use of digital content or digital services.

• Presenting a software update as necessary when it only enhances functionality features.

Misleading Actions and Omissions

In addition to the expanded blacklist prohibitions, EmpCo prohibits the following misleading actions and omissions if they cause, or are likely to cause, a consumer to make a transactional decision they would not have otherwise made:

• Providing false information relating to the main characteristics of a product, including relating to environmental and social characteristics and circularity.

• Making a future environmental performance claim that is not (1) supported by clear, objective, publicly available and verifiable commitments, including reference to an implementation plan with measurable time-bound targets, and (2) regularly verified by an independent third-party expert.

• Advertising irrelevant benefits that do not result from a feature of the product or business.

• Omitting material information that the average consumer needs, according to the context, to make an informed transactional decision. When comparing the environmental or social characteristics or circularity aspects of a product with that of a competitor, the comparison method, specific products and suppliers being compared and how comparison information is maintained and updated is considered to be material.

Consumer Contract Information

EmpCo also amends the CRD to require the trader to provide certain new information to a consumer in a clear and comprehensible manner before the consumer is bound. The information depends on whether the transaction is on-premises, off-premises or a distance transaction. Generally and where applicable to the specific consumer good, this information pertains to the legal guarantee of conformity, the commercial guarantee of durability, repairability score, spare parts and repairs and software updates. 

EmpCo also introduces a harmonized notice for the legal guarantee of conformity and a harmonized label for the commercial guarantee of durability.

EmpCo and Commission implementing acts provide further detail on these requirements. 

Enforcement and Penalties

EmpCo does not create a new enforcement regime. It operates through the existing UCPD and CRD enforcement frameworks at the EU member state level. 

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