Unpacking green claims (Part 1): ecolabels and the EU Green Claims Directive

Have you ever stood in front of grocery store shelves stuffed with products scratching your head and trying to make sense of the wildly diverse environmental claims on the packaging?

“Carbon neutral”, “Natural”, “Lower CO2 emissions”, “Organic”, “Eco-friendly”, “Recyclable”, “Bee-friendly”, etc.

It happens to me on a regular basis and usually ends with a feeling of confusion and frustration.

According to the statistics, I am not alone: consumers are increasingly aware of the impact of their choices on the environment and want to be informed about the products they are purchasing. At the same time, a 2020 open public consultation found that the general public in Europe does not trust environmental statements on products.

Product packaging is a primary channel for consumer goods brands to communicate with their customers. It’s effective because it directly reaches consumers at the point of sale and can influence purchasing decisions. It’s a tool for branding, helping products stand out on busy shelves but also a vehicle for communicating key data points about the product.

Quite a lot of progress in fact has been made on transparency and standardization of food products labeling. We now expect to see detailed ingredient lists, allergens, nutritional scorecards, expiration dates, country of origin, etc.

But when it comes to sustainability and environmental claims, it’s still the wild west out there.

In fact, even brands with strong sustainability programs struggle to communicate their impact without sounding vague or even making misleading statements.

In 2020 the EU Commission carried out a study on 150 environmental claims which found that 53.3% provide vague, misleading or unfounded information about products’ environmental characteristics. The analysis also found that 40% of claims were unsubstantiated which means that they were not supported by verifiable evidence; a practice commonly known as greenwashing

What are the rules for environmental claims in EU?

According to the EU Commission an environmental claim is a “message or representation, which is not mandatory under Union law or national law, including text, pictorial, graphic or symbolic representation, in any form, including labels, brand names, company names or product names, in the context of a commercial communication, which states or implies that a product or trader has a positive or no impact on the environment or is less damaging to the environment than other products or traders, respectively, or has improved their impact over time”.

Making environmental claims is not mandatory, and in the EU there is no specific law (yet!) regulating how environmental claims should be made.

The Unfair Commercial Practices Directive (UCPD) protects consumers from misleading and aggressive marketing practices such false advertising, direct coercion, and deception, however it is not specifically tailored to address the complexities of environmental claims which led to the proliferation of vague and unsubstantiated claims.

In 2022, the EU Commission proposed the Green Claims Directive to target and regulate environmental claims, ensuring they are clear, substantiated, and verifiable. This directive aims to provide a more detailed framework to prevent greenwashing, complementing the broader consumer protection offered by the UCPD.

The directive was adopted by the EU Parliament in January 2024, the next step is approval by the EU Council before publication in the Official Journal. After publication, EU member states will have 24 months to transpose the directive into national law.

Which means the regulation won’t come into force until 2026.

So while we wait for the EU Green Claims directive to (hopefully) bring some clarity and standardization to our grocery store shelves, how can sustainable brands communicate impact to their customers without falling into the greenwashing trap?

Ecolabels: reliable stamp of approval or misleading marketing ploy?

Some companies rely on environmental labels or ecolabels which usually come in the form of a trust mark, quality mark or equivalent setting apart and promoting a product with reference to its environmental aspects.

These labels are sometimes based on third-party certification schemes which certify that a product meets the requirements set up by the scheme and monitor compliance.

Other times it’s the company itself that comes up with the scheme and the requirements for the label and it’s quite difficult for consumers to distinguish between these “self-awarded ecolabels” and third party verified.

A study carried out by the EU Commissions found an increasing number of ecolabels covering different aspects, adopting different operational approaches and being subject to different levels of scrutiny. The study examined 232 active ecolabels concluded that almost half of the labels’ verification was either weak or not carried out.

Not all labels are unreliable of fraudulent of course. There are some officially recognized labels with longstanding reputation which are generally to be considered reliable.

The Fairtrade logo for example focuses on human rights, labor conditions and agricultural practices, FSC ensures that paper products or packaging come from responsibly managed forests or recycled sources, EU V-label provides a standardized criteria to identify vegan and vegetarian products.

Another label frequently used on packaging is the B-Corp logo which means the company achieved a high score on the B Corp social and environmental impact assessment.

None of these however provides and holistic evaluation of the environmental impact of a product.

Other labels come closer: The EU Ecolabel, is an official program established by the EU Commission which awards the label to products and services meeting environmental standards throughout their entire life cycle — from production to disposal. Unfortunately it does not cover food products at the moment.

The EU Organic logo certifies products with at least 95% organic ingredients and is compulsory for all pre-packaged EU food products, produced and sold as organic within the EU. This certification however, focuses on the agricultural production phase and does not comprehensively measure the full environmental impact, such as carbon footprint, water usage, or biodiversity impact, of a product.

In the chaos, everyone loses

Since publishing environmental impact information is not mandatory, not all brands share this information or, if they share it, they don’t do it consistently.

When information is shared, it’s presented in different ways, based on different methodologies or assumptions and with different levels of accuracy and completeness. Taking advantage of the unclear regulatory landscape, some brands make vague, unsubstantiated or even false statements.

While in the short term some actors may gain from unfair practices, in the long term everyone loses.

Consumers: lack reliable information to make sustainable purchases and find it hard to understand the claims and compare products. As a result, they cannot take environmental characteristics into account when making purchases decisions. They may lose trust in brands and assume all labels and claims, even well substantiated ones, are untrustworthy.

Brands: face unfair competition from false and overstated claims. May be discouraged from implementing and communicating sustainability initiatives because of fear of being accused of greenwashing or even sued.

Reliable ecolabel schemes: face loss of trust from consumers and brands which in turns affects the the value and credibility of the scheme. In the long run companies may decide it’s not worth investing in a reliable ecolabel which will reduce demand and funding for these initiatives.

Overall sustainable goods market: consumers make subpar decisions, lacking information about the environmental impact of the products they see on the shelves, companies slow down or de-prioritize corporate sustainability initiatives. Demand of sustainable goods decreases. In general there is less of an incentive to develop, produce and promote more sustainable products.

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Unpacking green claims (Part 2): Who did it better? In-store reviews of plant based brands