European Commission Scrapping Anti-Greenwashing Legislation
The European Commission has announced the withdrawal of the Green Claims Directive, a proposed legislation aimed at providing reliable and verifiable information for consumers about environmental claims made by companies. The decision comes after two years of negotiations in the EU Parliament and Council, and the directive's subject to significant political resistance and disagreement.
The Green Claims Directive faced criticism from various quarters, with the European People’s Party (EPP) being one of the most vocal opponents. The EPP argued that the proposal did not convincingly demonstrate that the benefits outweighed the significant costs and regulatory uncertainty, particularly the mandatory third-party verification of environmental claims.
The Commission's decision to withdraw the directive primarily stems from disagreement on its applicability to micro-enterprises, companies with fewer than 10 employees, numbering around 30 million in the EU. Despite the Commission's proposal for exemptions for micro-enterprises, no final consensus was reached among the European Parliament, the Council, and Member States on this point.
The EPP's letter to the Commission also criticized the lack of an impact assessment for the proposed directive and raised concerns over its potential economic impact on small and medium-sized enterprises (SMEs) and competitiveness. The letter did not address the proliferation of private environmental labels, a topic previously discussed in relation to the Green Claims Directive.
The withdrawal of the directive has brought its adoption into doubt, and the trilogue negotiations aimed at finalizing proposed rules to protect consumers from greenwashing claims are now in limbo. The Commission has stated that they will keep the public informed on next steps, but they have not provided more details about the process and motivation behind the move to scrap the Green Claims Directive.
Despite the withdrawal of the directive, existing EU rules against misleading environmental claims still apply, and the Product Environmental Footprint methodology remains referenced in other legislation such as the Corporate Sustainability Reporting Directive (CSRD). This leaves the door open for future regulatory developments on green claims.
In summary, the Commission’s withdrawal reflects political and institutional impasses centered on the directive’s regulatory burden for micro and small enterprises, and diverging views on how strict and extensive green claim regulations should be within the EU’s broader sustainability and business frameworks. The future of green claim regulations in the EU remains uncertain, with much debate and negotiation still to come.
[1] European Commission. (2023). Green Claims Directive. Retrieved from https://ec.europa.eu/info/law/better-regulation/have-your-say/initiatives/12943-Green-Claims-Directive [2] European Parliament. (2023). Green Claims Directive. Retrieved from https://www.europarl.europa.eu/legislative-train/theme-112258_EN.html [3] European Council. (2023). Green Claims Directive. Retrieved from https://www.consilium.europa.eu/en/policies/green-claims-directive/ [4] EPP Group. (2023). Letter to European Commission on Green Claims Directive. Retrieved from https://www.eppgroup.eu/Documents/2023/03/EPP_Letter_to_Von_der_Leyen_on_Green_Claims_Directive.pdf [5] European Commission. (2023). Simplifying and Deregulating. Retrieved from https://ec.europa.eu/info/strategy/priorities-2019-2024/europe-fit-for-the-digital-age/simplifying-and-deregulating_en
- The withdrawal of the Green Claims Directive, an initiative aimed at providing transparent information about environmental claims in industries, has raised questions about the future of environmental-science regulations in the EU, as the directive was criticized for its potential burdens on micro and small enterprises and for lack of a clear impact assessment.
- As the European Commission reconsiders the Green Claims Directive's applicability, the finance sector may need to reevaluate its approach to climate-change investments, considering the ongoing debates about green claim regulations and the importance of reliable environmental information for consumers.
