Stricter EU Rules on Greenwashing: The Directive on Empowering Consumers for the Green Transition Has Been Officially Approved

Authors: Laura Sainio (Associate) and Lucianna Liemola (Associate Trainee)

Sustainability and environmental protection are in the spotlight, and the EU continues to develop its regulations around these topics. On 30 March 2022, the Commission put forth a proposal to update the EU consumer rules to empower consumers for the green transition as part of the initiatives of the Commission’s 2020 consumer agenda and 2020 circular economy action plan. On 20 February 2024, the last step of the decision-making procedure was concluded, when the Council adopted the Directive on Empowering Consumers for the Green Transition (ECGT). The final directive is now signed and will be published in the EU’s Official Journal. It will enter into force on the twentieth day following its publication. The member states will have 24 months to integrate the new rules into their national laws and 30 months to start applying them.

ECGT in Short

The ECGT aims to better involve consumers in the green transition by e.g. protecting them from companies’ misleading or inaccurate information and marketing practices regarding environment and sustainability (greenwashing), enabling consumers to adopt more sustainable and environment-friendly consumption habits. New rules also include stricter requirements for companies to provide information on the durability and reparability of the products.

The ECGT amends two existing directives: the Unfair Commercial Practices Directive (UCPD) and the Consumer Rights Directive (CRD).

Amendments to the Unfair Commercial Practices Directive

The amendments to the UCPD aim to strengthen the protection of consumers against greenwashing, which is the practice of making unsubstantiated or exaggerated claims about the environmental benefits or characteristics of products or services.

The amendments introduce a new general prohibition of greenwashing, which states that companies shall not mislead consumers by giving the impression that a product or service has a positive or no impact on the environment, or by omitting or hiding information that is relevant for assessing the environmental impact of a product or service. The amendments also provide a list of specific examples of greenwashing practices that are considered unfair, such as using vague or ambiguous terms (e.g. “eco-friendly”, “green”, “sustainable”), using environmental labels or certifications that are not based on verifiable and objective criteria, or making comparative claims that are not supported by reliable and representative data.

The amendments also aim to enhance the enforcement of the UCPD by introducing a new mechanism for collective redress, which allows qualified entities (such as consumer organisations or public authorities) to bring actions on behalf of consumers who have been harmed by unfair commercial practices. The collective redress mechanism will enable consumers to obtain compensation, restitution, or injunctions against companies who have engaged in greenwashing or other unfair practices.

Amendments to the Consumer Rights Directive

The amendments to the CRD aim, for example, to improve the transparency and comparability of information on the environmental and social aspects of products and services and to extend the legal guarantee period for certain durable goods.

The amendments require companies to provide consumers with clear and accurate information on the environmental and social impacts of the products and services they offer, such as the carbon footprint, the water footprint, the use of hazardous substances, the durability, the reparability, the recyclability, or the social conditions of production. The information should be based on reliable and verifiable methods and standards and should be presented in a standardised and comparable format, such as a label or a QR code. The purpose is also to empower the Commission to adopt delegated acts to specify the content and format of the information to be provided for different product categories or sectors.

Furthermore, the amendments extend the legal guarantee period for certain durable goods, such as electronic devices, appliances, or furniture, from two to three years. This means that consumers would have the right to request the repair or replacement of defective products, or to obtain a price reduction or a contract termination, within three years from the delivery of the product. It is worth noting, however, that this does not change the situation in Finland, where the duration of liability may be longer if the expected usage time of the good is also longer. In addition, a new right is introduced for consumers: consumers can request the repair or replacement of products that become defective within one year after the end of the legal guarantee period, if the defect is due to a lack of conformity that existed at the time of delivery.

What Do Companies Need to Know?

The ECGT has significant implications for companies that operate in the EU market, as it introduces new obligations and responsibilities for companies, as well as new rights and remedies for consumers. Companies need to adapt their business practices and comply with the new rules. Companies need to be aware, for example, of the following aspects:

• The ECGT applies to all companies who offer products or services to consumers in the EU, regardless of their place of establishment or the law applicable to the contract. Thus, also companies who are based outside the EU, but who target or reach consumers in the EU, are subject to the rules.
• The ECGT requires companies to review and revise their marketing and advertising strategies, as well as their product information and labelling practices, to ensure that they comply with the new rules on green claims and environmental and social information. Companies should avoid making vague or unsubstantiated claims about the environmental benefits or characteristics of their products or services and should provide clear and accurate information that is based on reliable and verifiable methods and standards.
• The new rules also require companies to ensure that their products meet the quality and durability standards that are expected by consumers and that they provide effective after-sales services and support. Companies should be prepared to handle consumer complaints and requests for repair or replacement of defective products and to cooperate with qualified entities or authorities that may initiate collective redress actions against them.

Conclusion and Next Steps

The EU is committed to empowering consumers for the green transition and ensuring that consumers have the information, the choice, and the protection they need to make sustainable consumption decisions. The ECGT is an important step in this direction, as it aims to prevent greenwashing, to improve transparency and comparability of environmental and social information, and to extend the legal guarantee period for certain durable goods.

In addition, there is more to come. The Commission has proposed a “Directive on Green Claims” which will complement the ECGT by especially protecting consumers from greenwashing.  At the moment, the Directive on Green Claims is awaiting the Parliament’s position in the first reading. The Directive on Green Claims will, for example, establish rules requiring companies to substantiate and verify their environmental claims and labels. These new regulations will have a significant impact on the EU consumer law framework and are a major contribution to the EU’s climate and environmental goals.