In a world where 46% of consumers are looking to brands to take the lead on creating sustainable change, greenwashing has emerged as a deceptive tactic used by some businesses to appear more eco-friendly than they truly are. The European Union is set to introduce stringent regulations to combat greenwashing, with potential penalties of up to 4% of annual revenue for making misleading environmental claims
The EU has Green Claims Directive, on which the EU reached a provisional political agreement, has the potential to become a transformative piece of ESG legislation. If adopted, it will mandate rigorous environmental footprint assessments for both products and companies. Life cycle environmental performance will have to be measured and transparently communicated for valid green claims. Environmental labels will face increased scrutiny, requiring testing, third-party verification, and regular monitoring. Crucially, it would extend its reach beyond EU borders, applying to companies outside the EU making claims for goods and services intended for EU consumers.
To meet these stringent requirements, businesses will have to establish robust environmental claims management frameworks, encompassing data gathering, life cycle assessments, and transparent messaging. External verification by accredited third parties will be necessary. Challenges may arise, from knowledge gaps to increased costs, but there are potential benefits, including reduced reputational and liability risks and improved stakeholder relationships.
The Green Claims Directive represents a turning point in the fight against greenwashing, demanding greater accountability and transparency from businesses. Companies must prepare to adapt and ensure their environmental claims align with these stringent regulations to build a sustainable and trustworthy future to all. It’s time to unmask greenwashing and pave the way for genuine sustainability.