After two years of legislative development, the European Commission has expressed its intention to withdraw its proposal for the Green Claims Directive, a regulation originally intended to tackle misleading environmental marketing. This move represents a significant setback in the EU’s efforts to establish a more transparent and trustworthy green economy.

Update: the Commission recently took back their words: It seems that they will not withdraw the Proposal after all. Nevertheless, there is still some confusion over this sudden shift of intentions. We'll keep this post updated as new information becomes available.

But what are “green claims”, why do they matter, and what tools do regulators still have at their disposal? This article explains the issue and assesses the implications of the Commission’s decision.

What Are Green Claims?

Green or environmental claims are assertions made by companies either explicitly or implicitly that suggest a product, service, or operation has a positive or neutral environmental impact. These claims appear in various forms, including:

• Verbal and written statements (e.g. “climate neutral” or “eco-friendly”)‍
• Symbols and labels (e.g. leaves, recycling loops, or green ticks)‍
• Design choices (e.g. the use of green colours or nature imagery)‍
• Branding and logos that imply environmental superiority

Such claims may refer to a product’s composition, its production methods, disposal practices, or its usage impact, such as being less polluting or more energy-efficient than alternatives.

Greenwashing

When environmental claims are unsubstantiated, vague, or outright false, they constitute greenwashing. This practice misleads consumers and creates unfair competition in the marketplace.

Two central harms arise:

• Consumer deception: Misleading claims can influence buying decisions, diverting purchases away from genuinely sustainable options and undermining consumer trust‍
• Distortion of competition: Companies that invest in genuine environmental improvements may find themselves undercut by competitors who make false claims discouraging innovation and sustainability investment

The OECD (2020) has emphasised that sustainability is becoming a core parameter of competition. When this parameter is manipulated, the result is a market where “free riding” prevails over “competition on the merits.”

The Unfair Commercial Practices Directive (UCPD)

In the absence of a specific EU regulation on green claims, the existing Unfair Commercial Practices Directive (2005/29/EC) provides a general legal framework.

The UCPD prohibits unfair practices that deceive consumers or exploit their trust. However, it does not prescribe how to substantiate or communicate environmental claims, nor does it provide enforcement tools tailored to the complexity of sustainability communication. This could lead to the opposite issue: Greenhushing, that is, under-communicating or staying silent about the environmental benefits of a product.

In the absence of harmonised EU legislation, national authorities have developed their own tools.

The Dutch Authority for Consumers and Markets (ACM) has led the way with its Guidelines on Sustainability Claims (2023). This document outlines practical rules of thumb for companies

• Substantiate with facts and keep evidence up to date
• Be clear, correct, specific, and complete
• Describe future goals in measurable and credible ways
• Use visuals and labels responsibly, to inform rather than confuse

These guidelines serve both public and private enforcement. Courts and regulators can use them to assess whether claims are misleading, while companies can use them to design better marketing strategies and avoid legal risk.

The Missed Promise of the Green Claims Directive

The Commission’s proposed Green Claims Directive aimed to fix the gaps left by existing legislation by:

• Defining what counts as a green claim
• Requiring scientific substantiation and third-party verification
• Banning generic and unqualified terms like “eco-friendly” or “green” without evidence
• Introducing harmonised labels and enforcement standards across the EU

Had it been adopted, it would have raised the bar for corporate environmental communication, reduced enforcement fragmentation, and enhanced consumer trust. The withdrawal, reportedly due to legislative overload and political opposition in some member states, leaves these ambitions unrealised for now.

Despite the withdrawal, momentum continues across three fronts:

• National enforcement: Authorities like the ACM and the UK's CMA are increasing scrutiny of green claims
• Climate litigation: NGOs and consumer groups are bringing claims against companies for misleading environmental marketing
• Consumer expectations: Growing awareness and skepticism are pushing companies toward greater transparency

While the GCD's withdrawal is a disappointment for advocates of sustainable consumer markets, it also doesn't help European competitiveness in any way. Greenwashing remains a significant threat to environmental progress, consumer trust, and fair competition.

The EU’s current legal framework still provides tools for enforcement, and national authorities are stepping in with their own guidelines.

Would you like to know about the impact of greenwashing in financial markets? Check this article.

Need clarity on your sustainability messaging? If you’re unsure how to lawfully highlight your green credentials or want to ensure your marketing strategy avoids both greenwashing and greenhushing, reach out to us.