EU Commission proposes new consumer rights to tackle greenwashing

The question

What measures is the European Commission proposing to promote sustainable products and to tackle greenwashing in the EU?

The key takeaway

The EU is set to standardise the handling of green claims and to simplify the processes for cross-border operating and advertising with a unified standard that applies throughout the EU. Companies will be able to rely on EU-wide rules, rather than local regulations.

The background

On 30 March 2022, the European Commission published a package of European Green Deal proposals to make sustainable products standard in the EU. The Commission previously detailed measures that aimed to ensure that consumers could access sustainable products in the EU market and appropriate information to make informed choices in the following documents:

• The Circular Economy Action Plan: In March 2020, the Commission published the Circular Economy Action Plan, which detailed planned initiatives and which contained proposals to ensure consumers receive better information and possible steps to prevent greenwashing.
  
  
• New Consumer Agenda: In November 2020, the Commission launched the New Consumer Agenda which confirmed its intention to adopt a legislative proposal improving the information consumers receive on product sustainability and protecting against practices such as greenwashing and early obsolescence.

The measures complement other consumer initiatives relating to the circular economy, including the Commission’s right to repair initiative which focuses on encouraging repair of goods after purchase and is currently subject to a public consultation. The Commission plans to adopt any legislative measures relating to this initiative by Q3 2022.

The development

The European Commission has now announced proposed amendments to EU consumer protection legislation with the intention of empowering consumers for “the green transition”. The proposed amendments will update the Consumer Rights Directive (CRD) to oblige traders to give additional pre-contractual information on the durability and reparability of products in a clear and comprehensible manner (Article 5(1) (contracts other than distance and off-premises contracts) and Article 6(1) (distance and off-premises contracts) of the Consumer Rights Directive). There are also several proposed updates to the Unfair Commercial Practices Directive (UCPD) to ban greenwashing, and to ban not informing consumers about early obsolescence. 

The changes seek to enable consumers to make informed, environment-friendly choices when purchasing products. The Commission expressed that it felt that consumers struggle to make decisions surrounding the environmental impact of products due to insufficient and unclear product information relating to the environmental characteristics, durability and reparability of products at the point of sale and seek to ban “greenwashing” practices. It is looking to oblige traders to provide more reliable information to enable consumers to make easier sustainable choices.

The Commission’s proposals will now be discussed by the Council and the European Parliament. Following this, the amendments to the directives will be adopted. The average timeline from proposal to formal adoption under this procedure is around 18 months and new legislation can be expected by the end of 2023 at the earliest.

Why is this important?

Currently, there are over 100 environmental labels in the EU with different methods of assessing environmental impact, which are difficult to compare. The lack of uniformity exposes companies to liability and reputational risks that are hard to predict. The variety in labelling prevents brand-credibility, consumer trust and the establishment of a fair level playing field among market participants. The standardisation of the handling of green claims across the EU will simplify cross-border operations and advertising. Stricter requirements on durability guarantees and reparability information will likely increase “sustainability competition”, encouraging producers to invest in products which are upgradeable, durable and repairable.

The Commission’s proposals are complemented by other initiatives including the Sustainable Products Initiative and upcoming initiatives on Substantiating Green Claims. The proposals also complement the Commission’s plans to introduce a new consumer right to repair, for which a call for evidence was launched on 11 January 2022. The right to repair initiative will focus on encouraging the repair of goods after purchase, while the proposed amendments to the CRD and UCPD focus on provision of information on repairability ahead of purchase. 

Many of the directive’s measures, such as those relating to pre-contract information regarding durability and repairability and new blacklisted practices, echo the CMA’s proposals to amend the UK consumer regime to support environmental sustainability.

The proposal will be complemented by an initiative on substantiating green claims, which is expected to be published in July. In addition, a legislative initiative on the right to repair is expected in Q3/2022.Summer 2022

Any practical tips

Standardisation of the approach to green claims across the EU is to be welcomed, not least for the benefits of cross-border operations and advertising. That said, there is a risk that the new rules may potentially have the reverse effect to that intended by the EU, especially if brands become too cautious in adopting green claims for fear of breach of a blacklisted practice. A sensible practical tip must be to get to grips with all the existing and emerging rules on green claims as soon as possible – this topic is going to remain very hot for quite some time.