In the fashion industry, the practice of using misleading labels as part of a larger marketing strategy known as “greenwashing” is pervasive. Terms such as “organic,” “green”, and “sustainable” are frequently used to create the impression that products are more environmentally friendly than they really are. This practice aims to capitalize on consumers’ growing concerns about the environment and sustainability.
How can consumers make better choices if they are not adequately informed about the environmental implications of their purchases?
According to the EU Commission, they can’t: even consumers who are willing to make sustainable choices can be misled, as companies use greenwashing to misrepresent their environmental impacts or benefits.
In 2020, the Commission conducted a study on environmental claims, which were evaluated using the Unfair Commercial Practices Directive (UCPD) principles of clarity, unambiguity, accuracy, and verifiability, only to find out that a staggering 40% of green claims were “completely unsubstantiated”, and 53.3% were “vague, misleading, or unfounded”. The vast array of “green” labels used by brands (more than 200 were identified!) was also found to undermine consumer trust, as the labels’ robustness and trustworthiness varied greatly, fueling general skepticism. In addition to that, almost half of the labels’ verification was either inadequate or not carried out. Finally, the Commission pointed out the fact that “consumers are unaware of the distinction between labels governed by third party certification schemes and those based on ‘self-certifications’, i.e. not verified by any third party”.
Greenwashing, as the Commission puts it, is “a barrier to boosting the potential of green markets in the EU through consumer empowerment” because it makes it difficult for consumers to make informed decisions. As a result, addressing this phenomenon is a top priority, especially considering that the EU developed an action plan in late 2019 (the ‘European Green Deal’) with the goal of transforming the European economy and making Europe the first climate-neutral continent by 2050.
Following a brief overview of the practice of greenwashing in the fashion industry, this article will look at the new directive proposed by the Commission just a few days ago, the highly anticipated Green Claims Directive.
Is fashion becoming more sustainable, or is it just greenwashing?
In recent years, the international debate has focused on the need to encourage and promote the development of a model of economic growth that incorporates the so-called ESG factors (Environmental, Social, and Governance criteria) for the benefit of the environment and also for society as a whole. Nowadays, businesses are compelled to engage in corporate social responsibility (CSR) initiatives in order to respond to a plurality of investors, who are more and more interested in nonfinancial information.
The fashion industry, being one of the biggest industries in the world, as well as one of the most environmentally damaging industries (and the second-largest polluter in the world) has faced increasing scrutiny over its environmental and social impact. Many fashion brands have responded by developing sustainability programs to address these concerns and reassure governments, consumers, and investors that they are taking responsibility for their actions, especially because failing to do so means risking losing credibility and facing negative publicity. While this shift towards sustainability is a positive step, there has been growing skepticism over the authenticity of sustainability claims made by fashion brands. Due to the proliferation of sustainability labels and logos on products and services and lack of transparency/reliability, environmental claims are seen by many as nothing more than ad campaigns created by brands to clean up their own image and influence consumer choices without making any real changes: greenwashing is basically a way of using environmental rhetoric to increase sales, while simultaneously destroying the environment. For example, some brands may claim to use sustainable materials or reduce carbon emissions, but fail to provide evidence or transparency about their methods. Others may use vague or misleading language to make their efforts seem more significant than they actually are. Many fashion brands have been accused of greenwashing their products, using buzzwords like ‘eco-friendly,’ and ‘ethical’ without any proof to back up their claims. As the Commission observes, “claiming to be ‘green’ and sustainable has become a competitiveness factor, with green products registering greater growth than standard products”. Greenwashing is a serious issue as it deceives consumers into thinking they are making sustainable choices when, in reality, they are not. Furthermore, consumers and stakeholders increasingly expect brands to back up their sustainability claims with concrete evidence and to provide information about their supply chain, use of sustainable materials, and carbon footprint.
Green Claims Directive (GCD): objectives, legal context, key measures and first reaction
On March 22, 2023, the EU Commission released a proposal for a ‘Green Claims Directive’, which aims at updating Union consumer law in order to provide consumers with the resources and tools they need to actively participate in the green transition. The main goals of the proposal on environmental claims are:
- Strengthening environmental protection standards and speeding up the green transition in the EU towards a ‘circular, clean and climate neutral economy’;
- Protecting consumers and businesses from greenwashing, as consumers cannot make better decisions if there is ‘a lack of trust in the credibility of environmental claims’ also due to ‘the proliferation of misleading commercial practices related to the environmental sustainability of products’;
- Enhancing legal certainty when it comes to voluntary environmental claims made by businesses; and
- Improving the level playing fields on the internal market for economic operators through ‘a harmonised and well-functioning internal EU market’.
When greenwashing practices negatively affect consumers, they fall under the general rules for misleading practices contained in Directive 2005/29/EC (‘UCPD’), which is the overarching EU legislation regulating unfair commercial practices. However, there aren’t any specific regulations in place right now, making it difficult to enforce it in this area: thus, the GCD proposal “complements as lex specialis the existing set of EU rules on consumer protection.” The Commission has created a policy framework that consists of two proposals: the GCD proposal and a proposal put forward in 2022 for a directive on empowering consumers for the green transition (‘ECGT’), which would amend the UCPD. While the ECGT establishes what companies cannot do (which claims are considered unfair commercial practices), the GCD determines how they can operate (in other words, how businesses should substantiate and communicate green claims). Together, these proposals will help the European Union in its green transition. The Green Claims Directive also complements the Ecodesign for Sustainable Products Regulation (ESPR), which establishes requirements for mandatory (not voluntary) information.
The Green Claims Directive targets environmental claims made on a voluntary basis by companies (towards consumers) which state or imply that their products, services, or organization will have ‘a positive environmental impact, a lesser negative impact, no impact, or an improvement over time’. Examples are explicit claims such as ‘CO2 compensated delivery’, ‘packaging made of 30% recycled plastic’ or ‘ocean- friendly sunscreen’. The proposal also includes guidelines for environmental labels and labelling schemes, including the prohibition of labels based on self-certification and the introduction of transparency and credibility standards “to target label proliferation.”
The key measures contained in the GCD concern the substantiation, communication and verification of green claims. The proposal requires companies to substantiate claims they make about environmental aspects or performance of their products and organisations using robust, science based and verifiable methods. More specifically, green claims must be supported by an assessment that satisfies certain minimum substantiation and communication criteria in order to prevent any misleading claims. The Commission however “does not prescribe a single method and does not require conducting a full life-cycle analysis for each type of a claim.” This aspect has already attracted some criticism: according to the Changing Markets foundation, “there is the risk that we will end up with an array of methodologies that will lead to a confusion of different ways to communicate claims.” Without standardized methodologies at the EU level (such as the “PEF”, product environmental footprint), there is a concern that the new Directive won’t offer much clarity to businesses and consumers, but will instead make it more difficult for market surveillance authorities to do their jobs. The Commission explains that the life cycle assessment approach could be limiting in some cases, as it is not always “exhaustive enough” and “does not take into account all potential impacts on the environment.” The European Environmental Bureau (EEB) however warns that allowing businesses to use alternative methodologies “could open the door to the recognition of unreliable methodologies, with no guarantee that they address the limitations of the PEF method.”
Environmental claims must not only be supported by evidence, but also by ex ante verification of that evidence. Before claims are made and put on the market, the proposal adds verification requirements.
This measure, in the words of the Commission, will ensure that “every claim the consumer is exposed to had been verified to be reliable and trustworthy” by the so-called “verifiers”, meaning independent bodies that have been formally recognized by the Member States. Additionally,”Member States shall lay down the rules on penalties applicable to violations of national provisions adopted pursuant to this Directive and shall take all necessary measures to ensure that they are implemented.”
Some people are optimistic about the potential effects of the Commission’s proposed measures, which they believe will lead to a significant decrease in false green claims on the EU market. Indeed, when making green claims, businesses will be subject to more compliance requirements if the proposal is implemented, including a new verification regime. Businesses based outside of the EU that make voluntary environmental claims intended for EU consumers will also need to comply with the rules specified in the proposed directive. Consumer group BEUC praised the Commission for “raising their game to fight greenwashing and putting an end to the wild west of unsubstantiated green claims”.
On the other hand, critics believe that this proposal is a huge missed opportunity to make a strong statement against greenwashing, especially given the fact that it does not adequately address carbon neutrality claims (which are a popular marketing tactic for businesses looking to give their products a green makeover).
This proposal, according to Eco-Age, is nevertheless a very significant piece of legislation that “will be crucial in the fight against greenwashing”, even without a ban on general climate claims. In any case, according to the EEB, “legislation will require companies to make supporting evidence available alongside a green claim for the first time.” In conclusion, by establishing clear rules and standards for environmental claims, businesses will be incentivized to adopt more sustainable practices, and consumers will be able to make more informed purchasing decisions.
By Anna Zanolli
References:
Green Claims Directive Proposal 2023/0085 of 22 March 2023.
– ‘Press briefing: EU Commission prepares to crack down on greenwashing with new Green Claims law’
(EEB, 16 March 2023) <https://eeb.org/eu-commission-prepares-to-crack-down-on-greenwashing-with- new-green-claims-law/> accessed 27 March 2023.
