A Level Playing Field for Green Claims

ESG Investor

Dr Torsten Schwarze, Partner at Morgan Lewis, explains how two EU directives will shape Europe’s legal framework to restrict greenwashing.

The European Commission has initiated two directives with the intent of clarifying and unifying the EU’s legal framework on environmental claims: the EmpCo Directive and Green Claims Directive.

ESG compliance is becoming increasingly important for companies, and the development of technologies and products to help reduce their carbon footprint has become a priority for many. Progress in this area is actively marketed by many companies hoping to achieve competitive advantages by labeling their products as ‘green’, ‘sustainable’, ‘recyclable’, or ‘climate neutral’.

Not surprisingly, such general green claims are often the object of litigation, as plaintiffs allege such statements as being misleading, deceptive, or simply false. While the German courts are still struggling to find common ground on these issues and a clarifying decision of the Federal Supreme Court (Bundesgerichtshof) may not be expected before June 2024[1], Brussels has initiated two directives aimed at clarifying and unifying the legal framework on environmental claims.

The first – Directive (EU) 2024/825 of the European Parliament and of the Council amending Directives 2005/29/EC and 2011/83/EU as regards empowering consumers for the green transition through better protection against unfair practices and through better information (the EmpCo Directive) – aims to improve product information and ban greenwashing and other unfair commercial practices.

The commission is currently working on a proposal for a second directive on substantiation and communication of explicit environmental claims (the Green Claims Directive, and, together with the EmpCo Directive, the directives), which shall complement and operationalise the EmpCo Directive. In this article, we summarise the content of both and explain how they are intended to interact in the EU’s fight against greenwashing.

The EmpCo Directive – legislative process

Published in the EU Official Journal on 6 March, 2024 and entered into force on 26 March, 2024, EU member states will have 24 months to implement the EmpCo Directive’s regulations. Starting 27 September, 2026, the new directive must be applied by the member states.

Germany has announced its intention for a quick transposition of the EmpCo Directive by amending the German Act against Unfair Competition, which shall be accomplished independently from the legislative process regarding the Green Claims Directive, whereas other EU member states, such as Austria, plan to implement the EmpCo Directive in conjunction with the Green Claims Directive.

Content and scope of

The full article is available here. This article was published at ESG Investor.