EU Commission proposes to improve consumer and environmental protection through stricter regulations on “greenwashing”

As consumers are becoming more environmentally aware, there has been a growing trend in recent years to advertise products with environmental claims. For many consumers, whether a product is “green”, “eco-friendly”, “energy efficient”, “carbon neutral” or “climate neutral”, is a decisive factor underlying their purchasing decision, and they will prefer products which (allegedly) have these characteristics as opposed to products that do not. Against this background it is not surprising that such “green” marketing is sometimes also deceptively used to persuade the public that a company’s products, aims, and policies are environmentally friendly.

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The EU Commission’s Sustainable Products Initiative

On 30 March 2022 as part of its Sustainable Products Initiative, the EU Commission (the “Commission”) published a proposal for amending the Unfair Commercial Practices Directive 2005/29/EC and the Consumer Rights Directive 2011/83/EU. The proposal aims to empower consumers through better protection against unfair practices, as well as provide better information to consumers, enhancing their rights.

Such unfair practices may include those associated with the early obsolescence of goods, false or misleading environmental claims (“greenwashing”), non-transparent and non-credible sustainability labels or sustainability information tools. The Commission is aiming instead to establish a circular, clean and green EU economy by enabling consumers to take informed purchasing decisions; reduce the risk of consumers being misled away from sustainable consumption choices; and therefore increase competition in favour of truly environmentally sustainable products. In turn, this should reduce the negative impact on the environment.

While many of the aspects contained in the Commission’s proposal reflect the current legal situation in some of the EU Member States, if it is implemented, it may ensure a better and more consistent application of EU consumer rules throughout the EU. It will therefore be important for all companies active in the EU market to keep an eye on further developments in the legislative process and to take this into account in any environment-related advertising measures in the EU.

Proposed amendments to the Unfair Commercial Practices Directive

The proposed amendments to the Unfair Commercial Practices Directive aim to protect consumers from “greenwashing”, misleading claims about the lifespan of a product, and to counteract premature obsolescence.

First, the proposal amends the Unfair Commercial Practices Directive by updating the list of product characteristics about which consumers must not be deceived; it now includes ‘environmental or social impact, ‘durability’ and ‘reparability’.

Second, the Commission has added two additional practices to the list of commercial practices that are considered misleading actions if they cause or are likely to cause the average consumers to take a transactional decision that they would not have otherwise taken. The proposal states that it would be misleading to make a claim related to a product’s future environmental performance (e.g. transition to carbon or climate neutrality, or a similar objective with a deadline of a specific year) without clear, objective and verifiable commitments and targets, or an independent monitoring system. It is vital that companies only make such statements when supported by a real commitment. Further, advertising benefits for consumers that are considered as a common practice in the relevant market shall also be misleading.

Third, the list of information to be regarded as ‘material’ when omitted in certain commercial practices, and which may cause the commercial practice in question to be regarded as misleading, should be extended. For instance, if a service compares products using a sustainability information tool, information about the method of the comparison, the products which are the object of the comparison, the suppliers of those products, and the measures to keep information up to date shall be regarded as material. If not provided, this may constitute a misleading commercial practice.

Fourth, the following ten commercial practices should also be considered unfair in all circumstances:

  • displaying a sustainability label which is not based on a certification scheme or not established by public authorities;
  • making a generic environmental claim for which no recognised excellent environmental performance relevant to the claim can be demonstrated;
  • making an environmental claim about the entire product when it actually concerns only a certain aspect of the product;
  • presenting requirements imposed by law on all products in the relevant product category on the EU market as a distinctive feature of an offer;
  • omitting to inform the consumer that a software update will negatively impact the use of goods with digital elements or certain feature of those goods even if the software update improves the function of other features;
  • omitting to inform the consumer about the existence of a feature of a good introduced to limit its durability;
  • claiming that a product has a certain durability in terms of usage time or intensity which it does not;
  • presenting products as allowing repair when they do not, or omitting to inform the consumer that goods do not allow repair in accordance with legal requirements;
  • inducing the consumer into replacing the consumables of a product earlier than for technical reasons is necessary; and
  • omitting to inform that a good is designed to limit its functionality when using consumables, spare parts or accessories that are not provided by the original producer.

Proposed amendments to the Consumer Rights Directive

The proposed amendments to the Consumer Rights Directive require retailers to provide consumers with information about the lifetime guaranteed by the manufacturer and about the reparability of products. Retailers must provide this information to consumers where a manufacturer gives a commercial guarantee for product’s service life of more than two years. For energy-using products, the retailer must also inform consumers if the manufacturer does not provide a warranty regarding the lifespan of its products.

In addition, the retailer shall provide consumers with information on the repairability of the product or other relevant repair information provided by the manufacturer, including information on the availability of spare parts or repair manuals.  With respect to smart devices and digital content and services, consumers must also be informed, in certain circumstances, of the period during which the manufacturer will provide software updates.

Outlook

While environmental claims in advertisements should generally be still allowed, the Commission’s proposal clearly aims to protect consumers against “greenwashing”. Companies advertising their products as “green” need to ensure that their statements are factually correct, accurate, and transparent, otherwise they may be liable for misleading commercial practice. Following the Commission’s proposal, we can likely expect that courts throughout the EU will look more carefully at environmental claims and whether or not they have been greenwashed.

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