Pros and Cons of the EU Directive on Green Claims (aka “Greenwashing Law”)

Update

The EU Parliament and Council have reached a provisional agreement on new rules to ban misleading advertisements and provide consumers with better product information.

The agreement updates the existing EU list of banned commercial practices and adds to it several problematic marketing habits related to greenwashing and early obsolescence of goods. The aim of the new rules is to protect consumers from misleading practices and help them make better purchasing choices.

What will be banned?

Negotiators from Parliament and Council agreed to proscribe the following:

• generic environmental claims, e.g. “environmentally friendly”, “natural”, “biodegradable”, “climate neutral” or “eco”, without proof of recognised excellent environmental performance relevant to the claim;

• commercial communications about a good with a feature that limits its durability if information is available on the feature and its effects on the durability;

• claims based on emissions offsetting schemes that a product has neutral, reduced or positive impact on the environment;

• sustainability labels not based on approved certification schemes or established by public authorities;

• durability claims in terms of usage time or intensity under normal conditions, if not proven;

• prompting the consumer to replace consumables, such as printer ink cartridges, earlier than strictly necessary;

• presenting software updates as necessary even if they only enhance functionality features;

• presenting goods as repairable when they are not.

Our view

We welcome the EU Greenwashing law. For far too long consumers have been tricked, cheated, lied to, fooled, and robbed by manufacturers, producers, companies and most of all sales and marketing functions that optimize profit at the cost of trust and fairness.

Markets across the global are inundated with absolutely nonsense labels like “Natural”, “Pure”, “Clean”, and other terms that make consumers believe they are buying a product that has minimal or now chemical interventions. Such labels trick us into believe we are paying a green premium or extra money for materials that either simple, unalterted, easy to process or just non-toxic. This is often far from the reality.

These misleading labels often themselves with toxic marketing slogans that overpromise and underdeliver on claims or impact. We use the word “toxic” because such marketing erodes consumer trust and lulls society into believing they are doing the right thing.

Pros and Cons

Pros:

1. Increased Consumer Trust:

   • Pro: The directive helps build trust between consumers and businesses by ensuring that environmental claims are accurate and transparent. This can empower consumers to make more informed choices, knowing that the information they receive is reliable.

2. Environmental Protection:

   • Pro: The law encourages businesses to adopt more sustainable practices and products by discouraging greenwashing. This can contribute to a reduction in environmental harm and the promotion of genuine efforts to protect the planet.

3. Market Fairness:

   • Pro: The directive levels the playing field by preventing companies from gaining a competitive advantage through misleading green claims. All businesses must adhere to the same standards, promoting fair competition.

4. Clarity and Standardization:

   • Pro: It provides clear guidelines and criteria for green claims, ensuring a standardized approach across the EU. This clarity can help both businesses and consumers understand what constitutes a legitimate environmental claim.

5. Reduced Greenwashing:

   • Pro: The directive's strict enforcement and penalties for greenwashing discourage companies from making false or exaggerated environmental claims. This can help reduce the prevalence of misleading advertising.

Cons:

1. Compliance Costs:

   • Con: Implementing the directive's requirements may be costly for businesses, especially smaller ones. This includes expenses related to verifying claims and adjusting marketing materials.

2. Subjectivity:

   • Con: Determining whether a claim is genuinely environmentally friendly can be subjective. There may be disagreements over interpretations of the directive's guidelines, leading to potential legal disputes.

3. Innovation Impact:

   • Con: Some argue that the strict criteria may discourage innovation by imposing too many constraints on businesses. Companies might be hesitant to develop and promote new, environmentally friendly technologies and products.

4. Administrative Burden:

   • Con: The directive adds administrative burdens on companies to prove the accuracy of their green claims. This could be particularly challenging for small businesses with limited resources.

5. Global Competitiveness:

   • Con: Critics argue that stringent EU regulations may put European companies at a competitive disadvantage compared to businesses in regions with less strict environmental advertising regulations. This could potentially affect international trade dynamics.

Looking ahead

It's essential to note that while the directive has both pros and cons, its ultimate impact will depend on how effectively it is implemented, enforced, and how businesses adapt to the new regulations. The aim is to strike a balance between protecting consumers and fostering sustainable practices without stifling innovation or burdening businesses excessively.