Spotlight on sustainability: the European directive for consumer empowerment in the green transition

Sustainability continues to be in the spotlight. In March 2022 the European Commission proposed a directive to amend the Unfair Commercial Practices Directive (2005/29/EC) (“UCPD”) and the Consumer Rights Directive (2011/83/EU) (“CRD”) in order to empower consumers for the green transition through better protection against unfair practices and better information (the “Directive”). A provisional political agreement on the Directive was reached by the European Parliament and the European Council on 25 October 2023.

In this article we discuss what amendments have been made and what we can expect from this Directive.

Objectives of the Directive

The Directive is designed to bolster the efficiency of the internal market while simultaneously supporting consumer and environmental protection, and facilitating the green transition. It emphasizes the necessity for consumers to be well-informed, enabling them to adopt sustainable consumption habits. This calls for clear, trustworthy information from traders and introduces rules to combat unfair commercial practices that inhibit consumers' ability to make sustainable choices. These practices include the premature aging of products (referred to as ‘obsolescence’), false green claims, misleading social information, and unclear sustainability labels. The Directive aims to ensure that environmental claims are transparent and reliable, fostering fair competition and encouraging the development of more sustainable products to minimize environmental harm.

Amendments to the UCPD

The Directive introduces specific amendments to Articles 6 and 7 UCPD, as well as Annex 1 of the UCPD. Articles 6 and 7 UCPD relate to practices that are considered misleading and are prohibited, yet should be assessed on a case-by-case basis. Annex 1 of the UCPD contains specific misleading practices which are in all cases prohibited, also called the ‘blacklist’. The Directive upholds the primary goals of the UCPD while incorporating significant enhancements. Specifically the following amendments are noteworthy:

Art. 6(2) UCPD
This Article will be amended to enhance the transparency and oversight of claims related to future environmental performance. As such, any trader making claims in this regard must substantiate them with a publicly accessible, comprehensive, and practical implementation plan. Additionally, these claims will require independent verification by third-party experts, with their findings also made accessible to the public.

Art. 7 UCPD
Drawing product comparisons based on environmental or social attributes has evolved into a prevalent marketing strategy, but it carries the potential to mislead consumers. To combat misleading claims, amendments to this Article 7 UCPD impose the obligation to disclose the methodology used for comparisons, the specific products being compared, the suppliers involved, and mechanisms for maintaining the information's currency.

Annex 1 UCPD, general claims
The existing list of prohibited commercial activities will be updated by including broad environmental assertions like 'eco-friendly', green’, 'biodegradable', 'carbon friendly’, or 'eco', unless they are substantiated with adequate proof.          

Annex 1 UCPD, sustainability labels
Traders may not display sustainability labels which are not based on a certification scheme, or which have not been established by public authorities.

Annex 1 UCPD, greenhouse gas emissions offsetting
Claims implying that a product has a neutral, reduced, or positive impact on greenhouse gas emissions are prohibited, as these claims can mislead consumers by suggesting the product itself or its production and supply chain are environmentally friendly when they may not be. Claims such as 'climate neutral' or 'carbon positive,' are only allowed to be used when based on the actual lifecycle impacts of the product, not on emissions offsetting outside its value chain.

Annex 1 UCPD, early obsolescence
Several practices concerning early obsolescence of products have been added to the black list of Annex 1 UCPD. For example, misleadingly labelling software updates as essential when they merely improve functional aspects, falsely advertising products as repairable when they are not, and unjustly requiring the purchase of spare parts solely from the original manufacturer.

Harmonised label
The Directive introduces a harmonised label with information on the commercial guarantee of durability that producers offer and which will include a reference to the legal guarantee of conformity. The harmonised label should be prominently displayed and utilized in a manner that makes it easy for consumers to recognise which specific products are covered by a no-cost commercial guarantee of durability, applicable to the whole item and lasting over two years. In addition, a harmonised notice will be displayed prominently in shops and websites to give information on the legal guarantee of conformity. The implementing powers in relation to the design and content of the harmonised label lay with the Commission.

National efforts

Some Member States are already taking an active approach in empowering consumers for the green transition. For example, in the Netherlands the Dutch Authority for Consumers and Markets (“ACM”) has published its ‘Guidelines on Sustainability Claims’ in June this year. These guidelines align with the proposed amendments as set out in the Directive. ACM provides guidance to traders and producers in order to comply with rules surrounding sustainability claims. In short, ACM advises to:

• ensure that sustainability claims are clear, precise, and complete;
• support claims with current factual evidence;
• compare products to other products or other competitors in a fair manner;
• articulate future sustainability goals clearly in a measurable and confirmable manner; and
• ·visual representations and labels should aid consumer understanding and avoid causing perplexity.
  
  

Recent cases

Environmental action groups are already bringing businesses to court over misleading green claims. For example, in October 2023 the Court in Berlin prohibited HelloFresh from advertising itself as 'the first climate-neutral meal box supplier' and from claiming to offset 100% of its direct emissions through purchased rights, instead of actual CO2 reduction. The emission offsetting rights were purchased from the ‘Kasigau Corridor’ forest protection project in Kenya. The court determined that companies cannot rely on the assumed reliability and effectiveness of purchased emissions rights.

In the Netherlands, the Advertising Code Committee (“Reclame Code Commissie”) reprimanded the clothing retailer Primark for alleged misleading sustainability claims on posters in its Dutch stores. Primark used claims such as '… reduce CO2 emissions by 50%. So the planet can breathe freely' and '… we make our clothing circular. So the world keeps turning' on its posters. The Committee ruled that the posters gave the impression that the sustainability goals had already been achieved, while they were actually future aspirations. According to the fine print on the posters, these were targets for 2027, but a concrete plan to achieve them was missing. Additionally, the Committee found this nuance in the fine print to be insufficiently visible to consumers.

Primark has announced its intention to appeal the judgment. The clothing retailer asserts that its goals are realistic and attainable, emphasizing that they clearly communicate these objectives, including through annual reports.

The road ahead

The Directive represents a step towards a more sustainable and consumer-friendly market, aligning economic activities with the need for environmental protection. Notably, reference to the Directive will be incorporated in the EU Representative Actions Directive, which allows for collective claims in instances of non-compliance with the Directive. Given the proactive consumer and environment organisations in the EU, it is likely that such class actions will be initiated in the future. 

In the upcoming months, the European Council and European Parliament will formally adopt the Directive, after which the Member States will have 24 months to incorporate the Directive into their national legislation.