On March 22nd 2023, the European Commission (EC) announced a proposal called the "Green Claims Directive", which aims to stop companies from falsely advertising their products as environmentally friendly.
The terms “climate neutral,” “low-plastic” or “packaging reusable” can be found on a rapidly increasing number of products, as companies jump on the green train to remain competitive in the face of changing consumer tastes. That being said, environmental claims such as the above are still mostly unregulated, which is why some have nicknamed this the “Wild West” of green advertising. (4)
Nothing makes this clearer than the fact that there are more than 200 environmental labels currently in circulation across the EU. Globally, there are twice as many. Naturally, this adds to the overall opacity and confusion.
A study conducted by the EC in 2020 revealed that 40% of green claims made by companies were “completely unsubstantiated”, with more than half of them using environmental claims that are “vague, misleading or unfounded”. (2)
As the NGO Client Earth points out such unregulated claims have in fact become a barrier to real emission cuts, as companies simply slap a “net zero” label onto their products and call it a day in terms of their sustainability efforts. (5)
The truth of the matter is, that even today, companies can call their products ‘carbon-neutral’ without having to offer up any detailed information on how they arrived at this conclusion. (6)
The proposal is now meant to tackle this issue by introducing common criteria against greenwashing and misleading environmental claims.
“We believe this proposal will bring real change and will empower all people who truly want to choose products based on their reduced impact on our planet,”
Environment Commissioner Virginijus Sinkevičius said during its initial presentation.
The Green Claims Directive is part of the European Green Deal and works together with a similar proposal from March 2022 to protect consumers from false advertising.
It is also not the first move to tighten up this unregulated area. The directive on empowering consumers for the green transition, proposed in 2022, demands a ban on generic and unsubstantiated claims. This new proposal introduced at the end of March plans to set rules on how to make a green claim the right way. This includes more information on what methodologies should be used to substantiate such claims and which information needs to be given to the end consumer.
1. Moving forward grocery retailers and brands will only be able to communicate environmental information that has been properly assessed and only if it does not cause a significant environmental impact in another area of the company’s processes. So the times where a F&B brand can communicate that they reduced plastic packaging by switching over to single-use glass without mentioning that single use glass has a significantly higher impact are over. Also claiming they reduced their climate footprint because they replaced palm oil with another ingredient without proving that the new ingredient has a lower impact will not stand any longer.
2. Information on the assessment needs to be publicly available, e.g. through a QR code that leads to a website with a detailed breakdown of the product impact across different dimensions
3. GHG emissions offsets used by companies will have to be reported separately as additional environmental information (6)
4. Offenders would be subject to punishment ranging from fines to confiscation of revenues, and temporary exclusion from public procurement processes and public funding
Member states would have to ensure and verify that the methodology behind environmental claims must comply with a list of criteria (such as being based on widely recognised scientific evidence, and being accessible to any third party)
The enforcement of the above mentioned punishments would also fall to the national authorities, which would have to check green claims, share their findings with the public and then fine companies who mislead consumers (9)
One term that appears as part of the proposal is Product Environmental Footprint.
The EU Product and Organisation Environmental Footprint (PEF and OEF) methods were created by the Commission's Joint Research Centre. These methods can help companies measure how well they are doing environmentally using trustworthy, checkable, and comparable data, that should be made available to relevant parties. (7)
The PEF takes into account 16 different environmental impacts ranging from climate change over ionizing radiation and acidification to resource use that are created throughout a product’s life cycle. The PEF provides category rules for a broad range of categories such as beer, dairy products, pasta and packed water. (7)
In this regard, the PEF presents a good starting point according to Simon Haberfellner, Head of Operations & Product at inoqo.
“Covering multiple different factors is crucial,” he says. “Otherwise, other damage might be overlooked. For example Strawberries from Spain in winter have a lower carbon footprint than strawberries from a fossil fuel heated glass-house in central or northern Europe. However in the production process a huge amount of water is consumed in an area with high water scarcity. All of these complexities should really be taken into account for a more general picture.”
It currently does not look like it. The proposal offers companies the option of using alternative methodologies. These would have to be judged by verifiers and national authorities in terms of whether they are compliant with the law. (8)
One of the reasons the PEF won’t become mandatory as part of the Green Directive proposal is its shortcomings in certain areas. The proposal acknowledges the fact that for agricultural products and food, the areas of biodiversity protection and pesticide use really should be considered as part of an impact assessment. Under the PEF they are not. (8)
“inoqo sees the PEF as a great first start, even though it currently cannot offer the full picture,” says Haberfellner. “Furthermore, we are expecting impact assessments in general and the transparency they enable to become the norm soon.”
The proposal has received a number of different criticisms since its publication.
The aforementioned choice of not enforcing the PEF methodology is one of them. The EEB, the network of environmental citizens’ organisations in Europe, warns that this could “open the door to the recognition of unreliable methodologies, with no guarantee that they address the limitations of the PEF method.” The network further called for “clear and common rules to apply across the EU for all types of claims present in the market.” (8)
Margaux Le Gallou from the Environmental Coalition on Standards (ECOS) said this decision means green claims will not be comparable across the EU and also enable companies to “cherry-pick” the methodologies they prefer. She continued, “Without harmonised methodologies at the EU level, the new directive will provide little clarity to consumers and businesses and will only complicate the job of market surveillance authorities.” (10)
Green NGO the European Environmental Bureau (EEB) is strongly supportive of PEF and the need for harmonised standards to test green claims across the EU. However, they also feel that the PEF, and life cycle assessments more broadly, are unable to take into the account the full range of environmental impacts for every single product in existence. For certain product categories, they believe PEF-based labelling alone is insufficient. (11)
“We support the use of PEF but not on its own, it has to be complemented with other things and especially to address some of these missing impacts,” said Jean-Pierre Schweitzer, a product policy and circular economy expert with EEB. In particular, he points to the missing aspect of biodiversity not covered by the PEF. (11)
Another issue related to the PEF is its cost. Conducting PEF assessments is expensive, and it may not be realistic for small businesses, as it includes tracking data from the initial extraction of raw materials to every point in the value chain. This presents a major challenge to SMEs, which make up the majority of businesses in the EU. (9)
Then there is the question of how strictly the directive really would be enforced in the end. Since this is a directive, each EU member state has to incorporate it into their national legislation. Therefore, the rules and - more critically - severity of punishments could differ between the different member states.
The European Consumer Organisation (BEUC) made a statement urging the Commission to heavily fine companies in order to “rid the market of misleading green claims and labels once and for all.” (9)
Another issue is that it seems the directive stops short of completely banning climate neutrality claims, which both the EEB and the BEUC have demanded.
inoqo’s CEO Linder welcomes the proposal. “As a company dedicated to full transparency in production processes and the impact of F&B company's products on the planet, we wholeheartedly support the European Commission's Green Claims Directive proposal. This initiative is a crucial step towards stopping greenwashing and promoting genuine environmental sustainability. With our inoqo SaaS platform, we look forward to enabling our customers to truthfully assess and communicate to consumers the impact of F&B products."
The Green Claims Directive proposal is subject to the approval of the European Parliament and the Council of the EU. No date has currently been set for when this proposal might actually come into force. (1)
inoqo offers a reliable Product Impact Assessment (PIA) SaaS solution that helps F&B companies and retailers to assess the environmental and social impact of their food products. With the full transparency our assessments provide, companies can stave off any greenwashing claims that may be levelled at them. More importantly, inoqo’s PIA solution is much more affordable than traditional impact assessments due to the highly-scalable nature of the AI-powered solution. inoqo further covers a wide range of factors, including climate, social impact, nutrition and animal welfare, giving businesses a comprehensive view of their product's impact on people and the planet. inoqo’s methodology is aligned with the EU's PEF methodology to the largest extent possible, ensuring that businesses receive reliable and accurate data that meets the legal requirements.
You want to assess the impact of your F&B products? You would like to engage with suppliers to reduce your final product impact? Or do you want to communicate and engage with customers. You can do all of this while staying within your budget! We’d be happy answer any of your questions and share our methodology in detail. Simply contact us at email@example.com
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