EmpCo Directive to prevent greenwashing
New requirements for environmental communication through the EmpCo Directive to prevent greenwashing
On 26 March 2024, the EU Directive on Empowering Consumers for the green transition (EmpCo Directive) came into force, which sets out new and far-reaching requirements for environmental claims to avoid greenwashing. Member states now have until the end of September 2026 to adopt and publish measures to implement these requirements.
Background to the directive
With the directive, the EU wants to enable consumers to make informed purchasing decisions in the area of sustainability advertising and thus contribute to more sustainable consumer behaviour. According to the directive, traders are obliged to provide “clear, relevant and reliable information”. This is to be achieved primarily by amending the Unfair Commercial Practices Directive (“UCP Directive”). In addition to an amendment to Art. 6 and 7 of the UCP Directive regarding commercial practices that are considered misleading on the basis of an individual assessment and are therefore prohibited, Annex I (the so-called “blacklist”) in particular will be significantly expanded with the inclusion of specific misleading practices that are considered unfair in all circumstances and are therefore prohibited.
Unfair business practices
The most important new prohibitions in Annex I of the Directive are as follows:
- Displaying sustainability label that is not based on a certification scheme or not established by public authorities (para. 1 of the Annex to the EmpCo Directive, new No. 2a of Annex I of the UCP Directive). This is intended to prevent the use of internal labels designed by the companies themselves for “fictitious purposes” and thus provide consumers with better clarity and standardisation.
- Making generic environmental claims for which the trader is not able to demonstrate “recognized excellent environmental performance” (para. 2 of the Annex to the EmpCo Directive, new No. 4a of Annex I of the UCP Directive).
- Making environmental claims about the entire product or the trader’s entire business when it concerns only a certain aspect of the product or a specific activity of the trader’s business (para. 2 of the Annex to the EmpCo Directive, new No. 4b of the Annex to the UCP Directive).
- Claiming that a product has a neutral, reduced or positive impact on the environment in terms of greenhouse gas emissions, but which are only based on the offsetting of greenhouse gas emmissions (para. 2 of the Annex to the EmpCo Directive, new No. 4c of Annex I of the UCP Directive), for example “climate neutral”, “certified CO2 neutral” or “reduced CO2 footprint”. In future, such claims will only be permitted if the positive environmental impact results directly from the product’s value chain. However, the directive does not provide for a complete ban on advertising for companies’ investments in environmental initiatives as long as the advertising is presented in a way that does not mislead the consumer about the CO2 footprint of a specific product.
- Presenting requirements imposed by law on all products within the same product category as a distinctive feature (para. 3 of the Annex to the EmpCo Directive, new No. 10a of Annex I of the UCP Directive).
Environmental statements related to future performance
The widespread practice of companies making environmental claims about future performance (e.g. the claim “Climate neutral from 2030!”) will also be severely restricted in future. Such claims are prohibited following a case-by-case assessment if they are not based on specific, clearly defined and substantiated obligations and targets of the company, which must be set out in a publicly accessible implementation plan.
Ban on “social washing”
In future, it should also be possible for a misleading act to exist if the social characteristics of a product or business activity are false and therefore untrue or can deceive the consumer in any other way, which means that competitors will also be able to take action against the so-called “social washing” of rival companies via fair trading law in future.
Prohibited statements on long-term usability
The EmpCo Directive also provides for further changes that focus on the long-term usability, durability, reparability and recyclability of products. In this context, statements that
- withhold information in the context of software updates that the update has a negative impact on functionality or makes it appear necessary when it only enhances functionality features;
- falsely claim that a certain durability is achieved under normal conditions of use;
- which characterises the goods as repairable, even though they are not;
- cause the consumer to replace or replenish the consumables of a product earlier than is technically necessary;
- withholding information that functionality will be impaired if operating materials, spare parts or accessories are used that are not provided by the original manufacturer, or falsely claiming that such an impairment will occur.
Classification and Consequences of the Directive
The Directive is part of the Commission’s new Consumer Agenda 2020 and the Commission’s Circular Economy Action Plan 2020 and is a follow-up measure to the European Green Deal. It is supplemented by the future Green Claims Directive (Proposal for a Directive on Green Claims) from 2023, which is currently still in the legislative process and sets out requirements for the substantiation and communication of voluntary environmental claims and ecolabels for companies.
In Germany, the EmpCo Directive will be implemented in the Unfair Competition Act (Gesetz gegen den unlauteren Wettbewerb – UWG). Companies must expect correspondingly stricter requirements in national law from 2026. If, on the other hand, companies continue to use the prohibited statements, there is a risk that competitors (Section 8 UWG) and qualified competition associations (Section 8b UWG) will take action for removal and injunctive relief with the risk of compensation for the resulting damage in accordance with Section 9 UWG. Irrespective of this, previous and current court rulings also show that the utmost care is required in environmental communication from a compliance perspective. It is therefore advisable to critically review the relevant advertising statements to avoid reputational risks.
Our extensive experience in all areas of environmental compliance enables us to identify legally assess and practically mitigate the risks of potential “greenwashing”. In particular, we are experts at the interface between environmental compliance and general compliance.
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