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Greenwashing Policy & Regulation Sustainability

The problem with the EU’s new greenwashing crackdown

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By Ellen Ormesher, Senior Reporter

March 24, 2023 | 7 min read

The EU commission unveiled its highly anticipated proposed directive on green marketing this week.

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Around 53% of environmental claims made by companies contain misleading information / Unsplash

On Wednesday (March 22) The European Commission proposed new rules to crack down on companies advertising themselves as sustainable without qualification in a bid to prevent consumers from being misled over unsubstantiated marketing tactics.

According to estimates released by the commission, around 53% of environmental claims made by companies contain “vague, misleading or unfounded" information, while 40% are “completely unsubstantiated.”

The proposal seeks to establish an EU-wide methodology to regulate how businesses label goods and communicate about their impact on the planet.

Brands wishing to advertise their environmental claims will now have to have them verified through a third party. And the information backing up those claims will now have to be easily accessible to consumers via a QR or website link.

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Those found to be making unsubstantiated claims could face penalties amounting to at least 4% of their annual revenue.

“We want, first of all, consumers to get trustworthy information, which is consistent and verifiable,” Virginijus Sinkevičius, the European commissioner for environment, said while presenting the plans.

“We want environmental labels that are more transparent and, of course, easier to understand.”

However, campaign groups say that the presented bill has been watered down from its original draft following lobbying from industry bodies. Crucially they say, it doesn’t go far enough in banning the use of carbon offsetting in companies’ net-zero or carbon-neutral strategies.

To a certain extent, industry lobbying “was a bit of an own-goal,” according to Solitaire Townsend, co-founder of agency Futerra. She also sits on the UN’s sustainable lifestyles taskforce.

“For many good-faith businesses, their claims are undermined in consumers' eyes by greenwashing in their sector and overall. In trying to reduce the regulatory risk of greenwashing, the lobbyists have damaged the overall value of green claims in the market. Considering the growing value of sustainability (McKinsey did a five-year study revealing the 1.7% disproportionate growth for products with ESG claims), that market should be protected rather than diluted,” she says.

Within the rules around offsetting, she adds, there are some helpful firmer lines around net-zero claims and the use of offsetting. “That’s been a wild-west of unsubstantiated and misleading claims… offsetting has just become much less valuable as a marketing tool.”

But Johnny White, climate lawyer at environmental law firm Client Earth, says crucially, the directive fails to confirm that offsetting claims are unlawful.

“The simple fact is greenhouse gas emissions can’t be balanced out with carbon credits,” he says. “Businesses should be reporting on these credits for what they are – and that is a contribution towards environmental projects, not invalid ‘compensation’ for emissions. Companies that focus on credible climate communications already do this.

“Carbon offsetting as it is commonly marketed is a fiction that should be expressly banned. These rules miss an opportunity to clear this up for good. Instead, they look likely to add further complexity when companies are making offsetting claims.”

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He adds that the EU’s overall proposition “heralds a new normal for green advertising,” but there is still work to be done. “Under the new rules, a verified science-based assessment must be done before any claim sees the light of day, not when and if a regulator challenges you. However, the Commission neglected to set out a standard methodology for measuring environmental impacts, meaning this area will remain contested.”

Environmental group Greenpeace also told The Drum that, while it welcomes the progress made by the EU commission, “destructive products should not be on the shelves in the first place and consumers, especially while already faced by the impacts of the cost of living crisis, cannot once again be made to bear the burden.”

“Fiddling with wording and labels is only addressing a fraction of a problem that is now growing out of proportion. The role of fossil fuel companies in the climate crisis has been made once again painfully clear by the latest IPCC report: new labels will not stop them, these companies should simply not be allowed to advertise at all.”

Putting a stop to greenwashing has become an increasing priority for policymakers and advertising regulators alike, as companies respond to demand from consumers for environmentally friendly products by making vague or unqualified statements such as ‘100% vegan’ or ‘zero emissions.’

Back in January, the UK’s Competition and Markets Authority (CMA) announced it would launch an investigation into the FMCG category after it found that over 90% of all dishwashing items and 100% of toilet products were marketed as green or environmentally friendly.

Want to learn more about the most important issue of our time? Senior reporter Ellen Ormesher will explore the role of advertising and marketing in the climate crisis. Case studies, tips, interviews and more. Register your interest here.

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