‘Companies need to re-assess the way they communicate about their purchase of carbon credits’: EU agrees ban on ‘climate neutral’ claims by 2026

The proposals were first aired in a draft plant earlier this year​ and hope to protect consumers from greenwashing.

Rules agreed on 19 September now state that generic environmental claims, such as ‘environmentally friendly’, ‘natural’, ‘biodegradable’, ‘climate neutral’ or ‘eco’ will be banned ‘without proof of recognised excellent environmental performance’ relevant to the claim.

The rules, due to come into force by 2026, will also outlaw claims that products are carbon neutral or have reduced environmental impact thanks to emissions offsetting.

There will also be a ban on sustainability labels which are not based on certification schemes or established by public authorities.

The rules don’t only apply to food and beverage but across of host of sectors including clothes and home appliances.

The rules say ‘generic environmental claims’ that could be banned include phrases such as ‘green’, ‘nature’s friend’, ‘energy efficient’ and ‘biodegradable’, unless the products can demonstrate ‘excellent environmental performance’.

What’s meant by ‘excellent environmental performance’? An EU spokesperson told FoodNavigator that recognised excellent environmental performance can be demonstrated by compliance with official regulations (such as EC No 66/2010) or officially recognised EU ecolabelling schemes.

Meanwhile, the ‘excellent environmental performance’ in question should be relevant to the entire claim. For example, a generic environmental claim ‘energy efficient’ could be made based on recognised excellent environmental performance in accordance with Regulation (EU) 2017/1369. By contrast, a generic environmental claim ‘biodegradable’ could not be made based on recognised excellent environmental performance in accordance with Regulation (EC) No 66/2010, insofar as there are no requirements for biodegradability in the specific EU Ecolabel criteria related to the product in question. Similarly, a business is expected not to make a generic claim such as ‘conscious’, ‘sustainable’ or ‘responsible’ exclusively based on recognised excellent environmental performance because such claims relate to other aspects in addition to the environmental aspect.

Next steps

In order to become law, the provisional deal will now have to get the final OK from both the Parliament and the Council. The vote by MEPs is expected to take place in November. When the directive comes into force, member states will have 24 months to incorporate the new rules into their law. Any new rules will probably be enforced by national advertisement bodies and other domestic regulators. As this is an update of existing consumer protection rules (the Unfair Commercial Practices Directive – UCPD), the enforcement mechanisms are already in place.

The consumer group BEUC welcomed the rules, saying they will better protect consumers against greenwashing.

“It’s good news they will have more information to make sustainable choices when buying food, new clothes or home appliances,”​ said BEUC Deputy Director General Ursula Pachl. “Generic environmental claims are popping up everywhere, from food to textiles. Consumers end up lost in a jungle of green claims with no clue about which ones are trustworthy. Thankfully, the new rules are putting some order in the green claims’ chaos. Companies will have to explain why a product is environmentally friendly. This is crucial if we are to guide consumers to make more sustainable consumption choices.”​

“We are clearing the chaos of environmental claims,”​ added MEP Biljana Borzan (S&D, HR), a member of the environment, public health and food safety committee.

Implications for the carbon offset market?​

The rules bring implications for the carbon offset market and those companies that rely on offsets to compensate for emissions they cannot remove within their own operations.

“Clearly companies need to re-assess the way they communicate about their purchase of carbon credits,”​ Lindsay Otis, Policy Expert at Global Carbon Markets, told FoodNavigator. She noted, however, that nothing prevents companies from taking responsibility for their unavoidable emissions through beyond value chain investments. “Companies can communicate about this through ‘contribution’ claims rather than ‘offsetting’ claims. What the new text will ban is the purchase of carbon credits to make outlandish offsetting or neutrality claims and advertisements about the supposedly positive or neutral impacts that some products have on the planet. Companies should still be investing in decarbonisation, both within and beyond their value chains.”​

She also quashed suggestions the legislation might lead to greenhushing – where companies believe it is safer to simply not disclose details of the climate target, or even fail to act at all.

“On the contrary, companies must act,”​ she said. “They have a moral and increasingly legal obligation to take effective climate action. When it comes to this ban, the text clarifies what is and is not permissible under EU law and, therefore, decreases legal and reputational risk for companies. Prior to this upcoming ban, a large grey area existed with respect to these claims. While they were not explicitly forbidden, some companies and organisations faced various legal or regulatory actions due to the misleading nature of such claims. This offsetting claim ban will provide much needed clarity. Failing to act is not an option, and all companies will face pressure from governments and the public to act. Virtually all companies in the EU make some sort of sustainability claim, and the objective of these new rules is to better frame these within a realm that will avoid misleading consumers.”​ 

The text doesn’t say anything about ‘disclosing details on climate targets’, she noted. It focuses on product-level claims (goods and services) that are targeted at consumers. “Companies are still very much encouraged and, via other regulations, partly obliged, to communicate about their climate targets and efforts towards reaching these.”​

VU Amsterdam-based scientist Dr Thales West, involved in a recent study claiming that millions of carbon credits are generated by overestimating forest preservation​, agreed.

“I don’t think serious companies should even consider greenhushing as an option,”​ he told us. “Rather, they should build up in-house expertise to take meaningful climate and sustainability actions.”​

He added: “There is enough evidence out there indicating that certification alone is not enough to guarantee that carbon offsets actually offset carbon emissions.​

“A lot of the carbon offsets are based on flawed methodologies and that is a recipe for trouble. That has always been the case, but now we are paying attention to the issue.”​

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