Greenwashing

In recent years, ever-increasing consumer awareness of climate and environmental protection has led to the growing importance and spread of sustainability statements in advertising, the so-called green claims. Sometimes catchphrases such as "100 % CO2-neutral", vague expressions such as "climate friendly" or various seals of quality are used. This often makes it difficult for consumers to verify the veracity of such advertising claims. Exaggerated, inaccurate or euphemistic sustainability claims (“greenwashing”) are not only considered socially frowned upon, but sometimes also cross the boundaries of what is legally permissible. In Austria, this limit has so far been the Fair Trade Act with a general prohibition of deceptive business practices in accordance with § 2 of the Federal Act against Unfair Competition (UWG). There are currently no specific rules for environmental claims in Austria. (Mag. David Konrath, Mag. Christian Zimmer, more at lexology.com)

EIOPA issued its final report on 4 June 2024, which contained its recommendation to the European Commission on the risks of greenwashing and the supervision of sustainable financial policies. The report was issued following the Commission's call for advice in May 2022, which in summary consisted of three parts:

1. input information from European supervisory authorities ( ESA ) on occurrences, cases and complaints of greenwashing practices combined with ESA's assessment of the extent and frequency of greenwashing;
2. supervision of greenwashing by national competent authorities ( NCA ); a
3. proposals to provide ESA to improve the current regulatory framework.

The report serves as EIOPA's final contribution to the call for advice and addresses the first and second parts of the Commission's requests. EIOPA addressed the first part in its Greenwashing Progress Report of 31 May 2023. (Eoin Caulfield, Ian Murray, Catherine Carrigy, more at lexology.com)

Greenwashing is back on the agenda after the Council of the European Union, after various discussions and exchanges of views, adopted on 17 June its position ("general approach") on the Green Claims Directive, which aims to tackle greenwashing and help consumers make truly greener decisions when purchasing a product or using the service.

This is the last attempt to influence to some extent the course of the next legislative phase, which will be managed by the newly elected parliament.

The guidelines are approved by the Council and the European Parliament on a proposal from the Commission, and in this case the Council decided to issue "general guidelines" to give the newly elected Parliament an idea of its position on the legislative proposal submitted by the Commission. . This should speed up the legislative process and make it easier to reach an agreement. (Guolo Elisabetta, more at lexology.com)

Green claims are ubiquitous and have almost become standard across industries. However, many approach green advertising critically, often linking it with the term "greenwashing". Associations for consumer protection (more…)

Regulation (EU) 2019/2088 " on the disclosure of information related to sustainability in the financial services sector ” imposes requirements on the disclosure of the environmental and social effects of transactions on financial markets when creating financial products for their participants and on financial advisors when providing investments or insurance. consulting for end investors. Such disclosures relate to the integration of sustainability risks, the consideration of adverse sustainability impacts and sustainable investment objectives, or the promotion of environmental or social considerations in investment decision-making and advisory processes. Regulation 2019/2088 aims to prevent greenwashing and increase transparency by a) reducing information asymmetries in the relationships between principal agents regarding the integration of sustainability risks and b) taking into account adverse sustainability impacts and promoting environmental or social characteristics that require financial market participants and financial operators to take into account pre-contractual advisors and ongoing disclosure of information to end investors. (Dimitris Chatzimichael, more at lexology.com)

In today's business environment, sustainability and environmental awareness have become paramount. However, it is crucial for businesses to avoid misleading or exaggerated claims about their green initiatives, a practice known as greenwashing.

How can businesses navigate the complex world of sustainability claims and maintain their credibility?

To shed light on this important topic, the company's intellectual property team recently hosted a multi-jurisdictional Lexology webinar masterclass on preventing greenwashing and navigating sustainability claims. This article aims to highlight some of the key points discussed during the webinar and provide valuable information for businesses seeking to maintain credibility and transparency in their sustainability efforts. ( Dan Smith, Miray Kavruk, Alexis Augustín, more at lexology.com)

The European Council announced today that it has reached agreement on a series of proposals to protect consumers from greenwashing, introducing requirements that force companies (more…)

The Green Claims Directive is a proposal of the European Commission. Its aim is to limit the effects of greenwashing and increase the control of producers. The Green Claims Directive (GCD), officially (more…)

Misleading claims that exaggerate how environmentally friendly a product is, known as "greenwashing", have made it difficult for consumers to identify genuine green products.

That's according to new research from the Economic and Social Research Institute (ESRI) and the Environmental Protection Agency (EPA), which also found that consumers who are informed about greenwashing are better able to identify it.

The research bodies' experiment echoes previous EU calls for better education about the environmental durability of products and suggests that companies that greenwash their products are spoiling the competition for genuine eco-friendly brands. (More on thejournal.ie)

The European Commission and EU consumer authorities have sent letters to 20 airlines "identifying several types of potentially misleading environmental claims", focusing on "claims by airlines that CO2 emissions from flying could be offset by climate projects or the use of sustainable fuels". In particular, the authorities stressed that "airlines have yet to clarify whether such claims can be supported by reliable scientific evidence". (Jacob H. Hupart, more at lexology.com)

Greenwashing is likely to damage a company's reputation when deceptive activity is discovered. Under the term " green washing ” is commonly understood when a company engages in practices to mislead or exploit the desire for environmentally friendly products or services. This is done by creating a false impression that its actions, goals or products are more environmentally friendly than they actually are. We explore how auditors and financial boards can measure best practice in an area of increasing regulatory focus.

Greenwashing can mislead investors and consumers, who may forgo savings on similar products and services by paying a premium for what they perceive to be a "greener" product. Ultimately, this practice poses a serious business risk. This is particularly worrying as a recent worldwide review of randomly selected Competition and Markets Authority websites found that 40 % green claims made online could be misleading. (Aoiffe Moran, Joanne O'Rourke, more at lexology.com)

EU regulators have launched investigations into 20 airlines over their use of potentially "misleading greenwashing practices", reports the Financial Times. The European Commission has written to airlines and national consumer protection authorities "identifying several types of potentially misleading environmental claims," it continues. Although the airlines involved have not been named, the national regulatory authorities involved are Belgian, Dutch, Norwegian and Spanish, the FT adds. A key concern for regulators is that airlines have argued that carbon emissions from flying can be offset either by investing in environmental projects or by using more sustainable aviation fuels, which still emit carbon when burned but are less polluting than the kerosene currently used. , he explains. (For more, see Carbon Brief's carbon offset explainer .) In addition, the bloc called on companies to bring their practices into line with EU consumer law within 30 days, Al Jazeera reports . The article quotes European Commissioner for Values and Transparency Vera Jourova as saying that "if we want responsible consumers, we need to provide them with accurate information", adding that consumers "deserve accurate and scientific answers, not vague or false claims". (Philip Georgiadis and Kenza Bryan, Financial Times, ft. com)

On March 6, 2024, a new Directive was published in the Official Journal of the European Union, which strengthens the position of consumers in the framework of the green transformation through better protection against unfair practices and through better information.

This Directive was adopted in the framework of the fight against greenwashing - an umbrella term for misleading environmental claims. The aim of the Directive is to introduce special rules into consumer law to deal with business practices that mislead consumers and prevent them from making decisions representing sustainable consumption.

Such practices are, for example, practices associated with premature obsolescence of goods, deceptive claims regarding the environment, misleading information about the social characteristics of products or traders' businesses, or non-transparent and untrustworthy sustainability labels. (Katarína Brath Liebscherová, more at odpady-portal.sk)

On 30 March 2023, a draft directive was published amending the Unfair Commercial Practices Directive and the Consumer Rights Directive with the aim of empowering consumers in the green transition through better protection against unfair commercial practices and better information (the "Eco-laundering Directive" ). Directive ^[1] formally signed on 28 February 2024 by the Presidents of the European Parliament and of the Council and published in the Official Journal of the European Parliament on 6 March 2024. The aim of the directive is to provide consumers with additional information on the environmental impact of specific products and to protect them from misleading commercial practices regarding the sustainability aspects of said products. The countdown has now begun: from the entry into force of the directive on 26 March 2024, EU member states must transpose the measures contained in the directive into their national legislation within 24 months (ie by 27 March 2026) and apply the provisions as from 27 September 2026. (Francesca Biebuyck, more at lexology.com)

Regulations implemented for this purpose – from the EU's Sustainable Finance Disclosure Regulation (SFDR) 2021, which governs disclosures through Articles 6, 8 and 9 of financial products, to the UK Financial Conduct Authority's forthcoming anti-greening rule (FCA) Authority and requirements for disclosure and sustainability labeling Regime — comes with the responsibility of fund managers.

Below, we delve into the regulations and how fund managers can navigate the complex, multi-jurisdictional regulatory framework shaping ESG investing in Europe. (Oliver Rochman, Carl A. Valenstein, Chris Warren-Smith, more at lexology.com)

It entered into force on March 26, 2024 Directive (EU) 2024/825 on the empowerment of consumers for the ecological transition (Empowering Consumers Directive or ECD). The directive must be transposed into national legislation by 27 March 2026 and applied from 27 September 2026. The aim of the ECD is to protect consumers from being misled by communications relating to the environmental, social or circular 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 regarding environmental or social claims and aspects of product circulation. ECD will work along with the Environmental Claims Directive (GCD), which will create a specialized regime for managing environmental claims, is currently in its early stages. (Katherine Connolly, Dominic Coppens, Nicolas JS Lockhart, more at lexology.com)

In March 2022, the Commission proposed an update of Union consumer law to ensure consumer protection and enable consumers to actively contribute to the green transition. This proposal is part of one of the initiatives of the New Consumer Agenda 2020 and the Commission's 2020 Action Plan for the Circular Economy, in addition to ensuring the continuity of the European Green Deal. On February 20, the Council approved the proposal of the European Parliament, thus definitively approving the Directive on ecological money laundering. The Presidents of the European Parliament and the Council signed the Directive, it was published in the Official Journal of the European Union on March 6 and will enter into force 20 days after its publication, i.e. on March 26, 2024. Member States will have 24 months from publication to transpose them and their respective provisions will enter into force 30 months after said publication. (Augusta Lawyers, More at lexology.com)

If you regularly consume product ads or news from shoppers, you've most likely come across the word "sustainability." As a result, depending on your news intake, you may also have come across the word "greenwashing" and seen brands you know and love accused of it. If you're not sure what these terms mean or how they're relevant to consumers - here's a guide!

What is greenwashing? 

Greenwashing occurs when products or practices are falsely promoted as ecological or "green." Companies can invest money in looking green without actually making their products more sustainable. When this happens, consumers may think they are making an environmentally conscious decision, when in fact they are being deceived. (More on www.earthday.org)

The so-called directive on ecological claims supplements the already approved EU ban on greenwashing . It defines what kind of information companies must provide to justify their environmental marketing claims in the future. It also creates a framework and timelines for reviewing evidence and approving claims, and specifies what will happen to companies that break the law.

Verification system and sanctions

MEPs agreed with the Commission that companies should submit any future environmental marketing claims for approval before they are used. According to the received text, the claims would be assessed by accredited verifiers within 30 days. Companies that break the rules can be excluded from procurement, lose their income and face a fine of at least 4 % of their annual turnover. (More on europarl.europa.eu)