This text is a proposal for a Directive, if adopted, it will become a binding legislative act that sets out a goal that all EU countries must achieve. Member States will have a defined period of time to transpose the Directive into their own laws, meaning to define how they will reach these goals. However, this initiative is still at the proposal state, none of the elements mentioned in the article are agreed on yet.
What does it mean?
The aim of this proposal for a Directive is to empower consumers in the EU to adopt more sustainable consumption patterns by combatting unfair commercial practices. For this purpose, the Directive identifies and condemns practices related to intentional obsolescence (especially for electronics), misleading environmental claims (‘greenwashing’), non-transparent sustainability labels etc.
This proposal for a Directive was established in the context of the Circular Economy Action Plan and follows up on the EU Green Deal. It will be complemented by two other initiatives: the Substantiating Green Claims Initiative and the Sustainable Product Initiative.
Who is impacted?
As this proposal for a Directive is aiming at empowering all consumers within the EU market, all companies selling goods in the EU will have to comply with these requirements.
What are the critical dates to remember?
This proposal was adopted and published by the Commission on March 30th 2022.
In order to enter into force, this proposal for a Directive has to be adopted by both EU chambers, the parliament and the council.
After the Directive’s entry into force, Member States will have 18 months to adopt and publish their transposition of the text and 24 months to apply it.
Rules & Requirements
Amendments to the Unfair Commercial Practices Directive (UCPD):
Definition of a misleading claim
According to the UCPD, a commercial practice will be considered misleading if information communicated about the product is either false or likely to deceive the average consumer (even if factually true) and that in either cases it is likely to lead the consumer to make a purchase they would not have made otherwise. Environmental or social impact, durability and reparability of the product is added to the list of the main characteristics of the product in respect of which the trader’s practices can be considered misleading.
Generic sustainability claims
Isolated generic claims must be prohibited unless the brand is able to demonstrate excellent environmental performance relevant to the claim. Excellent environmental performance can be demonstrated by compliance with the EU Ecolabel or other official ecolabelling schemes. Depending on the claim, the Commission establishes different ways to demonstrate it.
Examples of Isolated generic claims: ‘eco-friendly’, ‘green’, ‘ecological’, ‘environmentally correct’, ‘climate friendly’, ‘carbon friendly’, ‘carbon neutral’, ‘carbon positive’, ‘gentle on the environment’, ‘biodegradable’, ‘responsible’, ‘conscious’ etc.
General claims that are substantiated with explanatory statements (thus that are not ‘isolated’) don’t fall under this obligation. For instance, if a product is labeled “gentle to the environment” but the claim is accompanies by a precise explanatory statement like “this product is made at 100% of recycled products and contains no harmful chemicals”, then it would be considered a specific claim, which does not fall under this prohibition.
Claims about future performance
Claims related to future environmental performance have become very common. These claims will be considered misleading except if the company can provide:
A clear definition of the target, validated by a third party
A third-party verified action plan to reach those targets
An independent monitoring system to measure the progress of the company towards those targets
Claims with unclear scope
Making a sustainability claim that will be interpreted as a claim concerning the entire product while it only concern a certain part of the product is considered unfair. For example, writing “Recyclable” on the packaging of a product can lead to think that the product itself is recyclable. If the claim concerns the packaging only, the mention “Recyclable packaging” will be preferred.
Misleading distinctive feature
It would be considered unfair if a company advertises as a distinctive sustainability benefit a feature that actually is a legal requirement or a common standard in the market.
It has become a common marketing practice to compare products based on environmental and social benefits, sometimes using a sustainability information tool*. While doing this, a brand must be transparent regarding the comparison methodology, the products used in the comparison and their suppliers. The information must be up to date and products compared must be comparable (serving the same function).
* Sustainability Information Tool: It is a software, including a website, part of a website or an application, operated by or on behalf of a trader, which provides information to consumers about environmental or social aspects of products, or which compares products on those aspects.
Displaying a sustainability label that does not rely on any certification scheme or is not established by a public authority will be prohibited. This complements the existing rules prohibiting to claim that a product or company has been certified when it has not. If the use of a sustainability label participates in conveying the impression that this product is less damaging to the environment than competing products, then this sustainability label must be considered as a claim.
Amendments to the Consumer Protection Directive:
Information to be shared with customers
Producers have to make durability and reparability information available on all types of goods.
Note: Not relevant for textile. This directive also condemns other unfair practices like early obsolescence by adding the requirements to disclose information about software updates possibilities, guarantee of durability, availability of spare parts and of a repairing manual.
As this initiatives proposes a Directive, it will leave a certain amount of leeway to EU Member States to decide how they will regulate to achieve the goal defined. In this context, each Member State will apply its own set of sanctions in case of failure to comply.
According to the UCPD, the following rules shall be respected when it comes to penalties:
Member States must implement effective, proportionate and dissuasive penalties.
For proportionality, Member States shall consider: the nature, scale, duration of the infringement, the action taken by the company to mitigate the damage, any previous infringements by the company, the financial benefits due to the infringements and penalties imposed by other Member States for the same infringement.
Member States must include the possibility to impose fines up to 4% of the company’s annual turnover in the Member State(s) concerned (or if this information is not available up to €2M).
To ensure that their green claims are not misleading, brands should start substantiating them with the necessary documentation. In the fashion industry, the claims “recycled” and “organic” for instance are very valued by consumers and to comply with this regulation, these claims must be proven using factual evidence and stating the percentage of the product (in weight) concerned by the claim. We covered content calculations in the Tracing Trainers article. Taking this action guarantees that the material integrity and allows brands to make highly confident claims.
How TrusTrace can help?
This level of transparency is exactly what TrusTrace’s Certified Material Compliance solution provides by helping brands link purchase orders with the certification information coming from the supply chain and calculating the exact amount of certified material present in the product. Having granular level of data on the value chain can prove material integrity for confident product claims. Get in touch with a TrusTrace expert today to explore how TrusTrace can provide smarter and faster traceability for your brands.
Please note: At TrusTrace, we want to keep you informed on laws and regulations, but this information should not be considered or used as legal advice.
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