Half of green claims used to sell products in EU are misleading, Brussels finds

Half of the environmental claims used to advertise products in the EU are misleading or unfounded, Brussels has found as it prepares to introduce rules to prevent greenwashing claims.

In the latest draft of the proposals, seen by the Financial Times, the European Commission said it had found that 53 per cent of hundreds of claims assessed in 2020 gave “vague, misleading or unfounded information about products’ environmental characteristics”.

The new rules aim to provide a standardised framework to assess the environmental impacts of products and substantiate claims such as “100 per cent recycled” or made from “all natural” ingredients.

The initiative is part of a rapid rollout by the EU of legislation that includes regulations on packaging waste and the repairability of laptops and phones, to encourage more sustainable consumption within the bloc.

“By fighting greenwashing, the proposal will ensure a level playing field for businesses when marketing their greenness,” the draft said. “Climate-related claims have been shown to be particularly prone to being unclear and ambiguous and to mislead consumers, amounting to greenwashing.”

The commission declined to comment on the draft or when the rules might be introduced.

The new rules will apply to all products and services on sale in the EU single market, apart from financial services such as banking and investment products, which are regulated separately.

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They will include a requirement for companies to substantiate any carbon “offset” claims they make — when businesses say they have compensated for the polluting carbon emissions linked to the products they are selling. Companies will need to report whether and which types of carbon offsets they have used, according to the draft rules.

Greenwashing has risen up regulators’ agendas over the past 12 months, with the environmental and climate claims made by companies and financial institutions coming under increasing scrutiny.

The UK’s competition watchdog has started investigating fashion brands, including Asos and Boohoo, over their environmental statements following a review of “potentially misleading green claims” by some of the sector’s retailers.

Under the EU’s proposed rules, companies making green claims must assess their products using the so-called product environmental footprint (PEF) methodology, or using newly developed EU-approved alternative methodologies that meet certain requirements.

“The bar is pretty high,” said Margaux Le Gallou, programme manager at the Environmental Coalition on Standards, noting that any category not covered by PEF had to have an approved methodology. “If you don’t, you’re not allowed to make these claims. This is a big win.”

The PEF methodology covers 16 categories of impacts, including climate change, land use and water use, but not other areas such as reusability and recycled content. Companies could not make environmental claims about products that were not covered by an authorised methodology, according to the draft.

However, companies would also be allowed to use aggregate PEF scores, which Le Gallou said introduced the risk that they would hide a bad score in one of the 16 areas with a good score in another, and so be “misleading.” “This is something which we think is really problematic,” she said.

Businesses have become increasingly concerned by the amount of regulation being introduced by Brussels in support of its net zero targets, with executives saying the extra red tape will hamper EU industries’ competitiveness.

BusinessEurope, an industry trade body, said there were potential overlaps in the upcoming directive with existing legislation, such as over unfair commercial practices. “The EU should avoid unproductive regulatory fatigue and administrative burden and instead focus on making the requirements harmonised,” it said.

An EU official said greenwashing was “very serious” as it distorted fair trading within the internal market and put “genuinely sustainable” companies at a disadvantage. “The importance of the topic means we have to get it right,” they added.