In March 2023, the European Commission unveiled plans to end the present era of greenwashing. They released the "Green Claims Directive", a proposal that would see companies forced to substantiate any claim that relates to environmental performance. It is yet to be ratified, though consultancy firm Deloitte expects the directive to apply from 2026.
Given consumer demand for sustainable products (coupled with a high level of distrust regarding environmental claims), the European Commission sees action against greenwashing as instrumental to the region’s “green transition” as well as its plans to tackle “the triple crises of climate change, pollution, and biodiversity loss”. It wants to “protect” and “empower” consumers against misleading claims.
On the surface, the directive is just what the doctor ordered. But who will bear the brunt of this crackdown on greenwashing: major corporations, small businesses, or even the customers themselves?
This article explores the directive from the unique perspective of a sustainable fashion brand, TWOTHIRDS, whose complete product range is tailored toward customers who want to dress well, while doing less damage to the environment.
The Green Claims Directive: Explained
What Does It Mean?
The Green Claims Directive refers to marketing buzzwords that we’re accustomed to seeing everyday. Terms like “sustainable”, “recycled”, “Net-Zero”, “eco” and “reduced impact” could all be viewed as Green Claims if applied to a product or business.
The thrust of the directive is to make sure companies are being true to their word by backing up these claims with evidence and/or third-party verification. This is bad news for greenwashers - those companies whose claims “can be” true, but wilfully obscure the full environmental footprint of their product or business.
Who Will It Affect?
In theory, it should affect every business, equally. The EU wants to create a “level-playing field”, in which the biggest corporations are held to the same “minimum criteria” as the smallest.
As for consumers, the EU makes the assurance that this will make shopping easier and greener by stopping “the proliferation of misleading commercial practices related to the environmental sustainability of products.”
Does It Go Far Enough?
Only time will tell. There are certainly doubts about whether businesses will comply and what happens if they don’t, as fines and prosecution will depend on the discretion of individual member states. It may require educating the public about how to interpret green claims and making it clear they have a right to raise concerns with an independent authority.
Issues With The Green Claims Directive
Who Covers The Cost?
The European Commission made the following estimates with regards to the substantiation (evidencing) of green claims:
- A simple claim, e.g. regarding materials = 500 EUR
- An Environmental Footprint claim for one product = 8000 EUR
- A complex claim; the environmental footprint of the organisation itself = 54,000 EUR
Depending on the quantity of “eco-friendly” products in their inventory, the costs for a company to verify all of its green claims could quickly rack up.
Small and Medium Enterprises (SMEs) may be forced to redirect funds that could be better spent on improving the real-world sustainability of their products or business. Should verification prove expensive, the price of sustainable goods would also likely rise. This, despite knowledge that the biggest barrier between consumers and sustainable behavioural change is the higher cost of sustainable products.
In the fashion industry, the Directive could conversely favour fast fashion brands who make relatively few green claims but also have the budget to expand their eco-friendly range, pay for verification, and yet continue to overproduce on unacceptable scales. It’s also true, however, that it might prevent them from making vague - and meaningless - commitments that they cannot back-up with facts.
For their part, the European Commission acknowledged that SMEs “could face proportionately higher costs and difficulties” with the requirements, and said that Member States should provide “support, including financial” to SMEs “wishing to make explicit environmental claims on their products or regards their activities.”
The total cost for businesses in the EU is said to fall between 9 billion and 10 billion EUR.
A Grey Area: Deadstock Cotton
Being one such SME, our brand, TWOTHIRDS is simultaneously supportive of the Directive, but also has doubts over its efficacy. For example, one of our most sustainable materials is Deadstock Cotton (and other deadstock yarns), which cannot be held to the same standard as “recycled” or “organic” fabrics. Deadstock is the excess material that is not used by factories once an order has been completed or cancelled. It can also refer to finished clothing items that have failed to sell. By using deadstock cotton waste from the fashion industry to make affordable products, we believe we are creating garments that are less resource intensive and less damaging for the environment. It remains to be seen if the use of deadstock - and other circular economy solutions - will be able to be verified to the same “minimum criteria” as other fashion materials, given that they fall outside of certifications such as GOTS (Global Organic Textile Standard) and GRS (Global Recycled Standard).
“Highly Positive” Environmental Impact?
Further, the European Commission wrote “with certain consumers purchasing products that will be truly better for the environment, it is estimated that the impacts on the environment will be highly positive.” Enforcing substantiation as a legal requirement should make matters clearer for “certain” customers, but it may not make a material difference to the way the biggest polluters operate. Here, France’s Anti-Waste law could prove more effective, designed to prevent companies from burying or burning unsold stock, paving the way to a nationwide circular economy.
Conclusion
In 2020 the EU investigated 150 environmental claims and found that 53.3% were “vague, misleading or unfounded” while 40% were unsubstantiated. This is the issue that the Green Claims Directive hopes to resolve, making it an important and potentially groundbreaking piece of legislation. However, we maintain a healthy scepticism with regards to the cost of the new regulation for SMEs, the way fringe fabrics will be certified, and its overall effect on behalf of the environment. The Directive is perhaps best considered as part of a wider shift in regulation across the continent as countries wake up to the need for clearer labelling, better waste management, and sustainable consumerism.