New EU Directive Strengthens Consumer Protection Laws on Greenwashing and Circularity

On March 26, 2024, the Directive (EU) 2024/825 on empowering consumers for the green transition (Empowering Consumers Directive or ECD) entered into force. The Directive must be transposed into national law by March 27, 2026, and applied from September 27, 2026. The ECD aims to protect consumers from being misled by communications relating to the environmental, social, or circularity aspects of a product, including goods and services.

More specifically, the ECD amends the provisions of the Unfair Commercial Practices Directive (UCPD) and the Consumer Rights Directive (CRD) to introduce obligations to provide clear and relevant information concerning environmental or social claims and circularity aspects of the products. The ECD will operate alongside the Green Claims Directive (GCD), which will create a specialized regime to govern environmental claims, and is currently in the early stages of the legislative process (see our summary of the GCD proposal here).

The ECD covers business-to-consumer commercial practices, and national laws can extend its scope to business-to-business commercial practices. The key elements of the ECD are:

• Broad definition of “environmental claim.” Any non-mandatory message or representation in any form (e.g., text, pictorial, symbolic) stating or implying that a product/brand/trader has (i) a “positive or zero impact” on the environment, (ii) is “less damaging” than its competitors, or (iii) has “improved its impact” over time.
• Expanded list of prohibited commercial practices. The ECD identifies the following practices as necessarily unfair, without a case-by-case assessment:
  •  Making a generic environmental claim in the absence of recognized excellent environmental performance: A “generic environmental claim” is an environmental claim lacking clarity and specification on the medium where it is made. It includes phrases such as “environmentally/climate/carbon friendly,” “green,” “energy efficient,” and “biodegradable”, or colors that imply excellent environmental performance. The prohibition is lifted only if recognized excellent environmental performance can be shown by compliance with relevant laws, such as the EU Ecolabel Regulation or recognized ecolabeling schemes in EU Member States.
  • Overstating an environmental claim: An environmental claim cannot mislead with respect to its scope. In particular, a business cannot make environmental claims about the entire product/business when the claim relates only to a specific aspect. As examples, the ECD highlights that a product cannot be advertized as “made with recycled material” when the claim applies only to the product’s packaging; nor can a business give the impression of using only renewable energy when its facilities rely primarily on fossil fuels.
  • Making claims about a product’s neutral, reduced or positive impact on the environment based on carbon offsets: Phrases such as “climate neutral,” “CO2 neutral certified,” “carbon positive,” “climate net zero,” etc., can falsely imply that the consumption of the products does not have an environmental impact. Such claims are allowed only when a product’s actual lifecycle impact is climate neutral (or net zero). Such claims cannot be based on the offsetting of emissions outside the product’s own value chain.
  • Displaying a sustainability label not based on a certification scheme or directions of public authorities: A sustainability label refers to any voluntary quality mark that promotes a product/process/business by referring to its environmental and/or social characteristics. The sustainability label can be used only if it is based on a certification scheme that is (i) transparent and open to all businesses, (ii) developed in consultation with experts and stakeholders, (iii) monitored by an independent third party, and (iv) specifies non-compliance procedures.
  • Presenting legally mandated requirements as distinctive features: Businesses cannot claim that their product is distinctive simply because it meets legal requirements imposed on all products within a category (e.g., claims that a product does not contain a chemical substance that is generally prohibited).
  • Making false claims or omitting information on the durability of goods: It includes false claims on the functionality and repairability of goods. For digital goods, withholding information on the functionality of software updates or falsely presenting them to be necessary is also prohibited.
• Expansion of commercial practices that are not deemed misleading, but may be misleading on a case-by-case basis.
  • False information on a product’s circularity or environmental or social characteristics: Aspects of circularity include durability, reparability or recyclability. Environmental or climate-related claims relate to carbon or climate neutrality. Claims on the social aspects include labor conditions, workplace safety, respect for human rights, and gender equality.
  • Environmental claims of future performance: Claims about future environmental performance must be supported by a transparent implementation plan based on, inter alia, measurable, verifiable, and time-bound targets, and independent third party verification. This includes climate transition plans.
  • Omission of material information in comparative marketing: When comparing environmental/social/circularity aspects of products, the comparison must be objective, and the consumers must be informed about the method and objects of comparison.
• Harmonization of information on durability.
  • Provision of pre-contractual information on a product’s durability and repairability: For a consumer to take an informed decision before concluding a contract, the consumer must receive information on, inter alia, the commercial guarantee of durability, after-sales services, including repair services, and the repairability score of the goods, as applicable.
  • The consumer should be informed of environmentally friendly delivery options, such as bundled shipping options or delivery by electric delivery vehicles, as applicable.
  • Harmonized label and notice on guarantees: To remind the consumers of their rights, a harmonized label should be used to provide information on the commercial guarantee of durability, when offered for a period longer than two years. A harmonized notice should also be used to inform the consumers of the legal guarantee of conformity. The consumer should not incur any additional cost for these services.