Green Marketing Claims

Let’s play detective and have fun uncovering!

Observe the rising of the abuse on green claims, observed in advertising and public relations lately, in an attempt to present products, services and corporations as green, eco-friendly or sustainable.

A recent sweeping research conducted by the EU on commercial websites, found that over 50% included unsupported environmental claims and over 37% made misleading or deceptive environmental claims.

The rising of green marketing claims is due to an increasing number of consumers who would be willing to pay extra for products with more sustainable products, like for example*:

• over 60% of consumers would be willing to pay higher for a sustainable packaging

• 78% of consumers state that a sustainable lifestyle is important to them

• Brands making ESG claims, that is claims on Environmental, Social, and Governance-related issues, experience a more rapid growth than their competitors

*research findings by McKinsey

As many of these claims are vaguely overpromising, they may create a green impression but do not necessarily convey fact or truth, as they may contain:

• grains of truth

• vague statements

• misleading information that conceals some aspects while over-promoting others

• exaggerated promises on the impact of certain initiatives

• marginal improvement presented as if it is about to save the planet by itself

• scientific jargon

• grand statements for corporate commitment for green results by 2030 that nobody can verify

• falsified or non-credible certifications from questioned third parties

• tampered or confusing logos of recycling

• or just plain puffery

When it comes to inaccurate green claims, there are two important implications worth discussing:

• First, consumers may end up choosing less eco-friendly products than they intend to or strive for, because they are misinformed or carried away by a more promising but inaccurate claim.

• Second and worse, in the long run consumers get confused, end up doubting all claims, worrying that nothing they do will ever make an actual difference, distrusting both brands and regulatory bodies.

Green claims are, therefore, targeted by EU policy making attempts and this is quite justified.

Although there are strict rules against misleading advertising already, the European Union is now trying to tackle inaccurate green claims specifically, not only because such claims are becoming too frequent but also because they impact consumers’ choices.

In order to combat greenwashing, in March 2023, the European Commission published its Proposal for a Directive on Green Claims (“Green Claims Proposal”).

The Green Claims Proposal sets out the minimum requirements on the substantiation and communication of voluntary environmental claims and environmental labelling in business-to-consumer (B2C) commercial practices.

The Green Claims Proposal targets EU-operating companies that have more than 10 employees and generate more than EUR 2 million in annual turnover.

The Proposal has an extra-territorial impact because it also applies to non-EU companies who target EU consumers.

The Proposal will not apply to certain sectors because it does not aim to change existing or future sectoral rules. Most financial services for instance are excluded from the Green Claims Proposal.

What are the companies obliged to do?

Under the proposed rules, companies will need to:

• Substantiate environmental claims using life cycle assessment

• Communicate claims accurately and holistically

• External verification of claims required

• Prohibition of common phrases like 'net zero', 'carbon neutral', and 'eco-friendly' in advertisements, social media posts, and packaging

• Phrases allowed only if sufficiently substantiated and verified

What will be the penalties imposed to the companies for greenwashing?

• Member States shall lay down the rules on penalties. These need to be effective, proportionate and dissuasive. When determining the type and level of penalties to be imposed in case of infringements, Member States should consider, amongst others, the nature, gravity, extent and duration of the infringement.

• The penalties and measures for infringement of the Green Claims Proposal need to include: (a) fines which effectively deprive those responsible of the economic benefits derived from their infringements; also increasing the level of such fines for repeated infringements; (b) confiscation of revenues gained by the company; (c) temporary exclusion for a period of maximum 12 months from public procurement processes and from access to public funding.

• The maximum amount of fines should be at least 4% of the company’s annual turnover in the Member State(s) concerned.

To tackle greenwashing and promote responsible communication on environmental issues, we need more than just top-down policy making, whose significance is not questioned of course. We also need green literacy and green training. We need to empower and enable consumers to assess green claims critically and make informed decisions.

Beyond families and educational institutions, corporations should also strive to promote green training, not just by avoiding greenwashing but also by promoting state-of-the art reporting on green initiatives, explaining their ESG criteria, and holding themselves accountable on green performance reporting and improvements.

We need more than the rub of green to get rid of greenwashing.

Georgia-Zozeta Miliopoulou, Ph.D.

Associate Professor, Deree-The American College of Greece