By Konrad Shek, 24 January 2025
The advertising industry plays a vital role in accelerating the transition to a sustainable economy. As consumers become increasingly climate-conscious, their purchasing decisions naturally gravitate towards greener products and services. This shift drives investment and innovation in sustainable solutions. However, this virtuous circle depends entirely on accurate information. The fight against climate change is as much an information challenge as it is about cutting emissions and conserving resources. Without reliable and accurate information, how can we measure progress or enable consumers to make informed choices? When consumers are misled about a product’s environmental credentials, or when differing standards make meaningful comparisons impossible, it undermines the efforts of policymakers pursuing climate action and sustainability objectives.
Recognising this challenge, European policymakers have long prioritised the protection of consumers from misleading environmental claims. This principle was codified in the Unfair Commercial Practices Directive (UCPD) which became European law in 2005. Misleading environment claims was widely interpreted to be covered under the concept of misleading commercial practice which “contains false information and is therefore untruthful or in any way deceives […] the average consumer”.
Crucially, the UCPD permits codes of conduct and self-regulatory bodies to operate alongside courts and administrative authorities, whilst ensuring formal legal proceedings remain available. This tried-and-tested approach of blending statutory legislation and self-regulation has helped balance consumer protection with market innovation.
Despite this established framework, the EU Commission felt that it was necessary to propose additional measures to strengthen consumer protection in environmental advertising. The Commission introduced a proposal for substantiation and communication of explicit environmental claims (Green Claims Directive) in 2023. This Directive, intended to complement Directive 2024/825 on empowering consumers for the green transition, has a stated aim to protect consumers from ‘greenwashing’ while creating a level playing field for all economic operators in the European market. Significantly, it will require all companies making environmental claims to undergo ‘ex-ante verification’ – having claims verified by an independent third party before products or services go to market, with substantiating information reviewed every five years.
We firmly believe in the EU Commission’s overarching goal of strengthening consumer protection against unfair practices and ensuring that they can make informed decisions about their purchases, as well as the successful implementation of the European Green Deal. It is in the interest of both consumers and businesses to prevent misleading claims about environmental sustainability and promote the exchange of credible information. Environmental credentials and claims can be a decisive competitive factor among brands and are playing an increasingly important role in consumer purchasing decisions.
However, we are concerned that this Directive will not meet its stated objectives and will add unnecessary administrative complexity. We have identified several fundamental problems with the proposed ex-ante verification requirement:
First, it is a significant departure from the current balanced approach, where commercial communications containing unqualified or unsubstantiated green claims can already be challenged for misleadingness through established national advertising self-regulatory bodies, national authorities and courts. It would also disproportionately burden smaller, innovative companies – precisely the businesses often at the forefront of environmental innovation, and could lead to ‘greenhushing’, where companies deliberately understate or omit legitimate environmental achievements due to prohibitive administrative and financial costs.
Second, the practical implementation of ex-ante verification presents several critical challenges. Companies will face significant uncertainty in planning marketing campaigns and product launches, as the draft provides no guidelines on verification timelines. Moreover, the freedom to choose inspection bodies risks ‘forum shopping’ where companies can cherry pick organisations to conduct verification. This potentially leads to inconsistent standards being applied across environmental claims. Perhaps most concerning of all, obtaining a certificate of conformity would not provide legal certainty, as national authorities and courts enforcing the UCPD could still challenge these claims.
Third, in an era of rising living costs, we must ensure that sustainable choices remain accessible to all consumers. There is a risk that the additional costs to business will be passed on to consumers who may in turn seek cheaper alternatives instead of opting for the greener option.
Finally, the Green Claims Directive, despite its laudable intentions, risks creating an uneven playing field where only well-resourced companies can afford to promote their environmental credentials in the EU. This would not only disadvantage smaller, innovative businesses but also put European companies at a competitive disadvantage to the rest of the world. It could ultimately slow the very environmental progress it seeks to accelerate.
Given these serious concerns, we believe there is a better path forward. Instead of introducing blanket ex-ante verification requirements, we propose that policymakers develop more targeted enforcement mechanisms. This approach would maintain the proven effectiveness of advertising self-regulation in protecting consumers and enabling innovation, while focusing additional scrutiny on claims where greenwashing poses the greatest threat. By taking this nuanced approach, we can enhance consumer protection without creating unnecessary barriers for companies committed to environmental progress, or jeopardise advertising revenues that the free press and media rely on.
As trilogue negotiations approach, the window for addressing these concerns is narrowing. However, it is not too late for policymakers to consider alternative approaches to the ex-ante verification requirement. The EU’s green transition depends on fostering innovation and sustainable growth, not stifling them with bureaucracy. We urge policymakers to consider how a more targeted enforcement approach, building upon the proven advertising self-regulatory and UCPD framework, could better achieve the Directive’s aims while maintaining the EU’s competitive edge in sustainable innovation.