Can the EU’s new regulations end greenwashing?

“Green”. “Eco”. “Good for the planet.” From the supermarket to billboards and websites, we are bombarded with claims about the green credentials of businesses and products. But how do you know which claims and which labels you can trust? In this blog we reflect on the EU’s renewed efforts to ensure reliable consumer information on sustainability and how these connect to ISEAL’s work.

If consumers can confidently choose products that are better for the environment, this rewards companies that are doing the right thing, drives competition around greener products and can shift whole sectors and markets toward sustainability. Misleading claims, dubious labelling schemes and other forms of greenwashing undermine these efforts.  

Through our two decades of work on defining credible practices for sustainability systems, ISEAL has had a longstanding focus on the need for clear, accurate and relevant sustainability claims. The importance of truthful claims is reflected in our Credibility Principles and our 2015 campaign Challenge the Label. We are encouraged to see the EU addressing these issues as part of the European Green Deal through a new proposal to empower consumers for the green transition as well as the green claims initiative coming later this year. 

We share the objectives put forward in the Commission’s proposals: sustainability claims in the EU marketplace should be clear, relevant and substantiated to enable consumers to make more informed and sustainable purchasing decisions. However, there are pitfalls and challenges in regulating sustainability claims effectively in a way that incentivises sector transformation and investments in sustainable supply chains. 

The system behind a label

The proposal for a Directive empowering consumers for the green transition through better protection against unfair practices and better information includes several amendments to the Unfair Commercial Practices Directive and the Consumer Rights Directive. If adopted, it will prohibit companies from making generic or vague claims about environmental performance that cannot be backed up by evidence, and prohibit sustainability labels that are not based on third-party verification or established by public authorities. 

These are positive developments that will send clear signals that the EU is serious about tackling greenwashing. But as always, the details of regulation will determine how effective it is. On that side, there’s room for improvement. 

While the proposal mentions that any certification scheme “should fulfil minimum transparency and credibility conditions”, the proposed definition of these conditions is limited and should be strengthened. Reliable claims or labels are backed up by credible systems. ISEAL’s Codes of Good Practice set out robust requirements for sustainability systems, such as ensuring that they monitor and evaluate their long-term impacts. This commitment to understanding and transparently communicating results enables claims to be substantiated.

Allowing space for innovation

We share the Commission’s view that robust third-party schemes that rely on certification are an important part of the solution. But definitions and restrictions that are either too broad or too rigid can be counterproductive. Balance is needed between ensuring good practice and fostering innovation. 

For instance, insisting that third-party verification has to be based on traditional in-person audits that follow narrow procedures can stifle the use of new technologies and techniques – like remote sensing data and worker voice tools – that may have the potential to monitor compliance more efficiently and reliably. 

Similarly, an overly restrictive environment could limit the overall awareness and availability of information on sustainability issues. Blacklisting particular “greenwashing” terms is unlikely to be effective – rather, each claim should be assessed on its merits.

A wider focus

Finally, the EU’s narrow focus on climate- or environment-related claims misses an opportunity. Consumers should also be able to trust claims about human rights, working conditions, living wages and other social concerns. Leaving these issues out of scope risks driving action, investment and awareness away from these critical issues. The Commission should support companies, labels and certification systems to address these issues in a balanced and holistic way. 

Looking forward

ISEAL’s Credibility Principles and Codes of Good Practice provide a framework that can support the EU’s initiatives on empowering consumers and substantiating green claims. We are in the process of revising and integrating our existing suite of good practices into a single Code, which includes essential practices in managing sustainability claims. We are inviting feedback on the draft Code of Good Practice and encourage anyone concerned with the question of credible claims to contribute.

We also believe there are opportunities to build on existing public initiatives that provide information to consumers and buyers about which labels and claims are trustworthy and credible. Examples include Siegelklarheit in Germany and Keurmerkenwijzer in the Netherlands, and the International Trade Centre’s Sustainability Map.

At ISEAL, we believe that credible sustainability labels can guide and empower consumers to make better choices that have a positive impact on people and the planet. We’re keen to do our bit to ensure that green claims and labels in the EU can be trusted.