10 Reasons to Track a Corporate Carbon Footprint
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What is the EU's Green Claims Directive?
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With growing consumer demand for sustainability, businesses have increasingly used “green” labels to attract eco-conscious buyers. However, without clear regulations, these claims can sometimes be exaggerated or misleading.
“ The Green Claims Directive aims to change that. By setting clear standards for how environmental claims should be substantiated, communicated, and verified, the EU is working to create a more transparent and trustworthy marketplace. ”
In this article, we’ll cover:
- What the Green Claims Directive is and why it's crucial for the fight against greenwashing
- The key objectives and requirements of the directive
- How it differs from other regulations like the Greenwashing Directive
- The impact on businesses and what changes they need to make
- Practical steps companies can take to prepare for compliance
- What penalties businesses could face for non-compliance
What is the EU’s Green Claims Directive?
“ The EU’s Green Claims Directive aims to regulate environmental claims made by businesses, ensuring they are clear, accurate, and substantiated by reliable evidence. The directive is designed to address greenwashing - ie. the misleading practice where companies exaggerate or fabricate environmental benefits to attract consumers. It creates a transparent framework, grounded in EU legislation, to help businesses make genuine sustainability claims while protecting consumers from false or misleading information. ”
Consumer concerns and the need for regulation
As environmental awareness has surged in recent years, consumers are increasingly seeking sustainable products and services. In response, many companies have branded their products as "green" or "eco-friendly". However, this has led to an unfortunate rise in greenwashing, where claims about a product’s environmental benefits are exaggerated or misleading.
“ In fact, a 2020 study by the European Commission found that more than half of environmental claims were vague, misleading, or unsubstantiated! This lack of clarity not only misleads consumers who are trying to make informed purchasing decisions but also harms the reputation of genuinely sustainable businesses. The study highlighted the urgent need for regulation to ensure that environmental claims are both truthful and trustworthy. ”
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The evolution of environmental claims regulation
Historically, environmental claims in the EU were governed by general consumer protection laws designed to prevent misleading advertising. However, these laws were not tailored specifically to green marketing and lacked specific rules on how environmental claims should be assessed and communicated.
Recognising this gap, the EU introduced the Green Claims Directive. This regulation aims to establish a clear framework for companies to follow when making voluntary environmental claims, helping to harmonise standards across the EU's internal market. It goes beyond general consumer protection guidelines to tackle the unique challenges of green marketing, ensuring claims are not just a marketing tool but an accurate reflection of a product or service's environmental impact.
The Green Claims Directive vs the Greenwashing Directive?
The Green Claims Directive works alongside the Greenwashing Directive (officially called the Directive on Empowering Consumers for the Green Transition), developed by the European Commission. This proposal complements the Greenwashing Directive by focusing specifically on environmental claims and requiring detailed substantiation and verification. While both aim to tackle misleading claims, they focus on different aspects of sustainability marketing.
| Aspect | Green Claims Directive | Greenwashing Directive |
|---|---|---|
| Scope | Focuses solely on false environmental claims | Covers both environmental and social claims |
| Primary goal | Ensure environmental claims are substantiated, clear, and verified | Prohibit misleading sustainability claims (environmental and social) |
| Types of claims | Only environmental claims (e.g., carbon footprint, recyclability) | All sustainability claims, including social sustainability (e.g., fair trade, labor practices) |
| Substantiation | Requires scientific evidence (often life cycle assessments) | Requires proof for all sustainability claims, both environmental and social |
| Verification | Requires third-party accreditation and verification | Bans misleading claims; no specific verification process mentioned |
| Target audience | Primarily businesses making environmental claims | Applies to businesses making all types of sustainability claims (environmental + social) |
| Focus on social issues | No focus on social issues | Specifically targets claims related to social sustainability (e.g., fair labor practices, human rights) |
| Penalty focus | Penalties for unsubstantiated environmental claims | Penalties for any misleading sustainability claims, whether environmental or social |
| Main objective | Ensure accurate, scientific substantiation for environmental claims | Ban deceptive sustainability claims across both environmental and social aspects |
These two directives (alongside other EU rules) aim to establish a comprehensive regulatory framework across the EU, ensuring that all sustainability claims (whether environmental or social) meet the same high standards. This dual approach holds businesses accountable for the truthfulness of their claims, protecting consumers and promoting genuine social and environmental sustainability in the marketplace.
How does the Green Claims Directive regulate environmental claims?
The Green Claims Directive introduces clear and specific criteria to ensure environmental claims made by businesses are transparent, substantiated, and based on reliable evidence. These guidelines help protect consumers from misleading claims, promote consumer trust, and encourage companies to adopt genuinely sustainable practices.
A key point to remember: the directive doesn't just ask for transparency, it legally requires it. Here’s a breakdown of the key criteria businesses must follow:
1. Specificity of claims
Businesses must clearly define the exact environmental aspect their claims address. This means companies must:
- Identify the specific environmental benefit they are promoting, such as reduced energy use, improved recyclability, or a smaller carbon footprint.
- Provide detailed information on how these benefits are achieved, whether through production processes, materials used, or product design.
Claims like “environmentally friendly” or “green” - whether used in marketing or on a sustainability label - are no longer acceptable unless they are backed by clear, specific details.
2. Scientific evidence
Environmental claims must be supported by credible, scientific data. Companies are required to:
- Base their claims on reliable research and measurable metrics to substantiate explicit environmental claims.
This may involve conducting life cycle assessments (LCAs) or using other recognised methods to assess environmental impact, such as carbon footprint analyses.
The directive ensures businesses can no longer rely on vague assertions without data to back them up.
3. Life cycle perspective
The directive requires a holistic approach to environmental claims, meaning companies must assess a product’s entire life cycle. This includes:
- Evaluating its impact from raw material extraction to manufacturing, transport, use, and disposal.
By considering the full life cycle, businesses must demonstrate that the environmental benefits claimed are sustained throughout the product’s entire lifespan, rather than focusing on just one phase.
This ensures claims reflect the broader environmental picture and are not based on selective or isolated data points.
4. Balanced representation
Companies must disclose any trade-offs or negative environmental impacts associated with their claims, ensuring that any positive claim is supported by equivalent information about potential downsides. For example:
- If a product is marketed as reducing emissions but requires a high-energy production process, the company must openly share this information.
This transparency promotes a fuller understanding of the product’s overall environmental impact, rather than masking its potential drawbacks.
This requirement prevents companies from cherry-picking data that only supports their claims, ensuring a more truthful representation.
5. Separate accounting for emissions
The directive requires that emissions reductions and carbon offsets be reported separately. This means:
- Companies must distinguish between reducing their own emissions and purchasing carbon credits to offset them. This is especially important for climate-related claims, where transparency around actual reductions versus offsets is essential.
Separating these two practices ensures that consumers can easily understand the true environmental impact of a product.
This distinction clarifies the real environmental benefits of a product and helps ensure that companies don’t overstate their contribution to tackling climate change by relying solely on offsets.
Key compliance checklist for businesses
1. Substantiate all claims
- Conduct a comprehensive assessment: Whether generic or explicit, every claim should reflect the product’s full environmental impact.
- Ensure scientific backing: Base claims on measurable data like LCAs, carbon footprint analyses, or other trusted methods.
2. Third-party verification
- Independent verification: Use accredited third-party certification to validate claims.
- Regular audits: Keep claims compliant with ongoing reviews and evolving standards.
3. Clearly distinguish product vs. company-wide claims
Specify scope: Clearly state whether a claim applies to a product feature (e.g. packaging) or your entire company.
4. Disclose trade-offs or negative impacts
Transparency about trade-offs: If environmental benefits come with downsides (e.g. high-energy production), disclose them for a balanced view.
5. Regular updates and review
Continuous improvement: Regularly update your claims to reflect new data and evolving scientific standards.
6. Public disclosure of verification
Enhanced transparency: Be prepared to publicly share how claims were verified to build consumer trust.
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Who does the Green Claims Directive apply to?
The Green Claims Directive has significant implications for businesses both within the EU and internationally. It applies to any company making environmental claims about its products or services, whether they are based in the EU or outside it - including those in the US and UK.
For EU-based companies
Companies operating within the EU will face a significant shift in how they make environmental claims. Under the directive, businesses must:
- Assess and substantiate their claims: This will require a rigorous review of marketing materials, sustainability reports, and environmental data.
- Adapt to stricter standards: The directive ensures that only claims backed by reliable scientific evidence and verified through third-party processes will be acceptable.
- Review marketing strategies: Companies may need to overhaul their communications to ensure transparency and accuracy in their environmental messaging.
Compliance with EU rules is mandatory for EU-based businesses to continue operating within the EU market.
For companies outside the EU
The directive also applies to businesses outside the EU that are targeting EU consumers, including those selling through e-commerce platforms. These companies must:
- Meet the same environmental claim standards as those required of EU-based businesses.
The global reach of the directive ensures that products and services sold in the EU meet high environmental accountability standards, regardless of where the company is based.
Exemption for microenterprises
To prevent undue burdens on small businesses, the directive exempts microenterprise (defined as companies with fewer than 10 employees and an annual turnover below €2 million) from the most stringent requirements.
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When does it come into effect?
- Expected adoption: Summer 2025
- Entry into force: Around August/September 2025 (20 days after publication)
- Deadline for national implementation: By early to mid‑2027 (18–24 months after adoption)
- Businesses must comply: From mid to late 2027
- SMEs may have more time: Up to early 2029 in some cases
What are the consequences for companies for non-compliance?
The Green Claims Directive imposes strict penalties for businesses that fail to comply with its requirements.
Penalties and fines
- Proportionate fines: Penalties will be proportional to the severity of the offense and the company's size, ensuring fair but impactful consequences.
- Unjust gains: Fines may reflect any profits derived from misleading claims, preventing businesses from benefiting unfairly.
- Cross-border cases: For cross-border violations, fines could reach a maximum amount of up to 4% of annual turnover.
Enforcement mechanisms
- Member state responsibility: Each EU country is responsible for implementing the directive and ensuring compliance.
- Third-party verifiers: Accredited third parties will verify claims for accuracy and legitimacy.
- Monitoring and auditing: Ongoing audits will ensure continuous compliance.
- Legal action: Businesses may face legal proceedings, fines, or corrective actions for non-compliance.
Steps for businesses to ensure compliance
As the Green Claims Directive nears full implementation, businesses need to take actionable steps to comply with the new rules and avoid penalties. Here are the key actions companies should prioritise:
1
Review existing claims: Start by conducting a thorough review of all current environmental claims in marketing materials, product labels, and communications. Ensure that each claim is substantiated and aligned with the directive’s requirements.
2
Develop internal guidelines: Create internal guidelines for substantiating and verifying environmental claims. These should be based on the directive's specific criteria, ensuring that all future claims are in compliance with the new regulations.
3
Educate teams: Train marketing, product development, and communication teams on the new requirements. Focus on the importance of accurate substantiation and the consequences of non-compliance to embed a compliance culture across the company.
4
Set up verification processes: Implement a third-party verification process for any claims used in marketing materials, product descriptions, or as part of environmental labelling schemes, to ensure they meet the directive's requirements. Identify and partner with accredited verifiers who can certify the legitimacy of claims and help ensure they meet the directive's standards.
5
Invest in sustainable practices: Consider investing in sustainability initiatives to enhance compliance. Strengthening your company’s overall corporate sustainability strategy may involve improving product life cycle management, adopting more sustainable production processes, or updating your supply chain practices to meet stricter standards.
6
Maintain detailed documentation: Keep comprehensive records of how each environmental claim is substantiated. This will be crucial for audits and verifications and will demonstrate ongoing compliance with the directive.
Looking ahead: Green Claims Directive
Current status
The Green Claims Directive is in the final stages of the EU legislative process. Following a brief delay due to the European Parliament elections in 2024, negotiations between the European Parliament, the Council, and the Commission began in early 2025 and are expected to conclude by the end of June 2025.
As part of the wider European Green Deal, the directive reflects the EU’s commitment to promoting credible, science-based environmental practices and eliminating greenwashing.
Expected adoption and implementation
If a final agreement is reached as expected, the directive will be adopted in summer 2025, with publication in the Official Journal shortly after. Once adopted:
- The proposed directive will enter into force around August or September 2025
- National authorities will have 18–24 months to transpose it into national law (by early to mid-2027)
- Businesses will be required to comply from mid to late 2027
- SMEs may benefit from extended deadlines, with full compliance required by early 2029
Key considerations for businesses:
- Stay informed: Continue monitoring the final outcome of the directive to prepare for any new criteria or changes in the obligations.
Start preparing: Key updates introduced in 2025 include:
- Clearer reporting requirements for greater consistency across EU Member States and improved legal certainty for companies operating cross-border
- Support measures for SMEs, including flexible compliance timelines and possible exemptions for microenterprises
- Regular updates to scientific metrics to reflect the latest environmental standards
- Stronger enforcement mechanisms with more defined penalties for non-compliance
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What about Greenly?
At Greenly, we help businesses take control of their sustainability efforts and manage their environmental footprint - whether to meet regulatory requirements or on a voluntary basis. Here’s how we can support you:
| Our service | What it offers |
|---|---|
|
Carbon footprint assessment
|
Measure your company’s Scope 1, 2, and 3 emissions, gaining insight into the environmental impact of your operations. |
|
Sustainability reporting
|
Track, analyse, and report your sustainability data to ensure compliance with the latest regulations and standards. |
|
Decarbonisation pathways
|
Develop tailored decarbonisation strategies to meet science-based targets, reduce emissions effectively, and support the transition to a low-carbon economy. |
|
Supply chain transparency
|
Assess and reduce the environmental impact of your supply chain, promoting a more sustainable and transparent network. |
|
Expert guidance
|
Access hands-on support from our team of experts to navigate your sustainability journey with confidence. |
|
Streamlined compliance
|
Stay ahead of changes in the regulatory landscape and ensure compliance while achieving your sustainability goals. |
Ready to take the next step in your sustainability journey? Get in touch with us today to request a free demo and discover how Greenly can support your business.
Sources:
- Greenly, What is greenwashing? All you need to know in 2022
https://greenly.earth/en-gb/blog/company-guide/what-is-greenwashing-all-you-need-to-know-in-2022?utm_source=adwords&utm_medium=ppc&utm_campaign=1:%20SN%20|%202:%20Brand%20|%203:%20Search%20Brand%20google%20|%204:%20FR - Clean Energy Wire, Q&A: How the EU aims to rein in false green claims on products
https://www.cleanenergywire.org/factsheets/qa-how-eu-aims-reign-false-green-claims-products#:~:text=A%202020%20study%20by%20the,as%20on%20the%20product).%E2%80%9D - European Commission, Green claims initiative
https://environment.ec.europa.eu/topics/circular-economy/green-claims_en - European Commission, Proposal for a directive on substantiation and communication of explicit environmental claims
https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52022PC0143 - Greenly, Everything you need to know about LCA (Life Cycle Analysis) in 2022
https://greenly.earth/en-gb/blog/company-guide/everything-you-need-to-know-about-lca-life-cycle-analysis-in-2022 - Greenly, What is the European Green Deal?
https://greenly.earth/en-gb/blog/ecology-news/what-is-the-european-green-deal - Greenly, Greenhouse gas emissions: Scopes 1, 2 and 3
https://greenly.earth/en-gb/blog/company-guide/greenhouse-gas-emissions-scopes-1-2-and-3
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