Verónica Martínez | ENT environment & management
In today’s society, where consumers are disconnected from production, the information provided on product labels is crucial for making purchasing decisions.
Product labels often feature appealing claims such as “natural,” “organic,” “healthy,” or “100% recyclable.” But what do these terms really mean? In many cases, the definitions are vague or non-existent, allowing companies to use these words to attract consumers who are conscious about environmental and/or health issues, even though the product may not meet these claims.
Although consumers are willing to support a more sustainable and circular economy in their daily lives, the lack of reliable information at the point of sale and misleading business practices regarding product sustainability prevent them from making environmentally sustainable choices (European Commission, 2022).
The use of misleading labels not only confuses consumers but also distorts competition, giving an advantage to products that do not actually meet the standards they promise.
To give a sense of the scale of the problem, a study carried out by the European Commission in 2020 found that 53.3% of environmental claims made for products and services in the European Union (EU) were vague or misleading, and up to 40% lacked substance. Furthermore, many claims were unclear about whether they applied to entire products or just components, and confusion regarding the stages of the life cycle covered was also common. The same study also indicates that while most stakeholders recognize “greenwashing” as an issue, industry representatives often do not (European Commission, 2020, 2023). This has resulted in widespread consumer distrust of environmental claims, especially those managed by private entities (European Commission, 2023).
A survey conducted by the Spanish Organization of Consumers and Users (OCU) on environmental claims also shows that although consumers find it useful for products to carry environmental information, they distrust these claims, mainly due to the lack of information (OCU, 2024).
Faced with the growing problem of misleading labels, the European Union is taking action. On one hand, Directive (EU) 2024/825 of the European Parliament and of the Council of 28 February 2024 amending Directives 2005/29/EC and 2011/83/EU concerning consumer empowerment for the ecological transition through better protection against unfair practices and through better information (Directive on Consumer Empowerment for Ecological Transition) modifies existing directives to provide better protection against unfair practices and better information for consumers, particularly in relation to the green transition. On the other hand, the proposal of Green Claims Directive provides specific rules (lex specialis) and context for interpreting the Green Transition Directive (lex generalis) (Simmons & Simmons, 2024). Its goal is to make green claims reliable, comparable, and verifiable across the EU, protect consumers from greenwashing, and contribute to the creation of a circular and green economy in the EU (European Commission, 2023).
Both standards set minimum requirements in business-to-consumer (B2C) commercial practices and will address false environmental claims made to consumers. For example, the Directive on Consumer Empowerment for the Ecological Transition includes the prohibition of statements based on greenhouse gas emission compensation. It also prevents companies from presenting generic environmental claims, such as “environmentally friendly” or “good for the planet,” for being too imprecise.
It will take several years for these two directives to reduce the proliferation and use of misleading eco-labels, as the proposed directive on ecological claims is still in the adoption process and both directives must be transposed into the national legislation of each member state.
In the meantime, it is the consumers who through their purchases can penalize producers of products that use these bad practices. Simply by not buying products with labels that we know are false and/or vague (see examples in the figure). Generally, a product without eco-labels is better than a product with misleading eco-labels.
Intermediaries can also select their suppliers based on the eco-labels they use. This is especially important for supermarkets that can influence the messages that producers use on their labels. These actors, although they do not decide what messages to include in the labels, do contribute to greenwashing by facilitating their placement on the market.
Consumers and intermediaries’ actions can give a competitive advantage to companies that make an effort to develop more environmentally respectful products, certify their products with independent certifications with external validations, and communicate honestly (see examples of rigorous labels in the figure).
References
European Commission (2020) ‘Environmental claims in the EU Inventory and reliability assessment Final report’. Available at: www.milieu.be.
European Commission (2022) ‘COMMISSION STAFF WORKING DOCUMENT IMPACT ASSESSMENT REPORT Accompanying the document Proposal for a DIRECTIVE OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL amending Directives 2005/29/EC and 2011/83/EU as regards empowering consumers for the green transit’. Available at: https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52022SC0085.
European Commission (2023) ‘Proposal for a Directive of the European Parliament and of the Council on substantiation and communication of explicit environmental claims (Green Claims Directive)’, European Commission, 0085, pp. 2013–2015.
OCU (2024) Encuesta sobre etiquetas medioambientales | OCU. Available at: https://www.ocu.org/consumo-familia/consumo-colaborativo/noticias/etiquetas-medioambientales (Accessed: 26 April 2024).
Simmons & Simmons (2024) Navigating EU rules on greenwashing and deceptive environmental claims | Simmons & Simmons. Available at: https://www.simmons-simmons.com/en/publications/cltyli0ef0040tirsw1vkko9o/navigating-eu-rules-on-greenwashing-and-deceptive-environmental-claims (Accessed: 25 April 2024).