May 30, 2024
Green Claims Directive: Leveraging the New Regulation for Business Success and Positive Impact
In today's market, it's all too common for "green" claims, such as “carbon-neutral” or “green”, to be more about a marketing message than a genuine commitment to environmental responsibility.
With the EU Commission's Green Claims Directive taking the lead in combating misleading sustainability statements, it becomes apparent that transparency and reliability will shape the future of corporate communications. Read this article to understand why the regulation is crucial for your business and how to implement this new standard of accountability. Take advantage of the opportunity to enhance brand trust and customer loyalty by ensuring your buyers can access reliable, comparable, and evidence-backed information.
Why do we need a regulation on Green Claims?
In 2020, the Commission conducted two assessments of environmental claims, examining 150 claims across various products. This is what the 2020 study revealed.
What are Green Claims?
Green claims are assertions made by companies about the environmental benefits or sustainability of their products, services, or practices. These claims often highlight aspects such as energy efficiency, reduced carbon footprint, use of renewable resources, recyclability, biodegradability, or overall environmental impact reduction. Green claims are intended to convey to consumers that products or services are environmentally friendly or aligned with sustainability principles.
The problem? The claims are often misleading, sometimes even wrong, or do not sustain enough information and therefore promote greenwashing. Thus, consumers are increasingly losing sight of which sustainability messages they can trust. According to research conducted by PWC in 2023, 44% of consumers are not buying sustainable products because they do not trust the sustainability claims communicated.
Here are some examples of green claims:
"80% recycled material" - This claim is highly questionable when linked only to a part of the product, like the packaging.
"30% less CO2" - The comparability is not given because the consumer does not know if the claim refers to a former product or the market average.
"Sustainably sourced wood" - While this claim implies responsible forestry practices, it may not specify the exact criteria for sustainability or the extent of environmental impact.
Requirements of the Green Claims Directive
The proposed EU Green Claims Directive encompasses a comprehensive set of measures aimed at ensuring that customers are provided with reliable, comparable, and verifiable environmental information on products:
Accuracy and specificity: Green claims must be precise and accurate in their representation of environmental benefits.
Scientific basis: Green claims must be supported by widely recognised scientific evidence, ensuring they are grounded in sound scientific principles.
External validation: Every environmental assertion must undergo rigorous external validation and be verified by an independent third party.
Substantial environmental impact: The environmental impacts promoted must be significant and relevant throughout the entire lifespan of the product. Any claims that pertain only to specific stages or components of the product must be clearly communicated to consumers.
Accessibility of information: Consumers should have easy access to supplementary information regarding environmental statements, whether physically, through a link, or via a QR code. This information should include details substantiating the claim and providing further context for consumers' understanding.
Governance regulations: The introduction of new governance regulations for environmental labelling schemes seeks to uphold the integrity, transparency, and reliability of green claims. This includes prioritising EU-level schemes, limiting new public schemes not developed at the EU level, and allowing new private schemes only if they demonstrate superior environmental standards and obtain pre-approval.
Which companies are affected and when?
The directive impacts all companies, except for microenterprises with fewer than 10 employees and less than €2 million in turnover, which are exempt from its obligations. Companies that make false or misleading statements about their sustainability practices can be fined up to four percent of their global annual turnover.
What does that mean for your company?
The cornerstone of sustainable and trustworthy communication lies in data transparency. However, building trust is a gradual process, requiring a long-term strategy that should begin today.
“The directive sets a level playing field for all market participants and is a great opportunity to integrate sustainability into all relevant business units like sourcing, production, and communications. Only with a robust compliance strategy that centres around primary data collection and collaboration, long-lasting competitiveness will be ensured.” Ana Selina Haberbosch (CEO and Co-Founder of Seedtrace)
Providing consumers with reliable, comparable, and verifiable information
The primary goal of the Green Claims Directive is to protect consumers from greenwashing by establishing clear and transparent standards for the comparability and verifiability of environmentally related advertising statements. The directive regulates that claims can only be made if they can be backed up by scientific evidence. This initiative guarantees improved information quality and guidance for consumers, facilitating informed decisions regarding eco-friendly products and services.
Here is how Seedtrace makes a difference
Our platform does not only help you gather data from all steps in your supply chain, including primary data from the origin of your product’s components. It also comes with sleek automation workflows for your data collection processes and collaboration features to invite your suppliers onto the platform for uploading data and proof documents. Granular privacy settings support you in sharing selected information with the relevant stakeholders along the chain, including your buyers and end-consumers. Our tool empowers you to analyse data in actionable dashboards and act upon social and environmental threats throughout your operations.
With Seedtrace, you can build a solid foundation for evidence-backed communications. Make sure that your sustainability efforts are proven, not just buzzwords.
Your benefits at a glance
Economic stability: The resources you invest in fulfilling regulatory requirements are well allocated because you avoid fines and lay the ground for a long-term compliance strategy.
Risk mitigation: Implementing durable sustainability practices builds your resilience to economic and environmental risks.
Continuous improvement: By regularly re-evaluating and improving your sustainability practices, ultimately everyone benefits: the planet, the people, and your business.
Customer loyalty: Ensuring your buyers receive reliable, comparable, and evidence-backed information will strengthen brand trust.
Sources
https://environment.ec.europa.eu/topics/circular-economy/green-claims_en
https://ec.europa.eu/commission/presscorner/detail/en/qanda_23_1693
https://ec.europa.eu/commission/presscorner/detail/en/ip_23_1692
https://saim.de/content-hub/blog/die-eu-green-claims-directive-9-fragen-antworten-fuer-unternehmen/
https://saim.de/content-hub/blog/eu-green-claims-directive-unternehmen-nachhaltigkeitskommunikation/
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