What’s the issue?

In March 2022, the EU Commission presented a comprehensive package of measures to achieve the goals of its ‘Green Deal’, including two proposed directives intended to create strict, uniform standards across the EU relating to environmental claims in advertising. One directive has already entered into force; the other is still being negotiated. They are:

• The so-called Empco directive (‘Directive for empowering consumers for the green transition through better protection against unfair practices and through better information’), which entered into force on 26 March 2024.

• The Green claims directive (‘Directive on substantiation and communication of explicit environmental claims’), a draft of which was officially presented by the EU Commission on 22 March 2023 and is still being negotiated.

Here we consider the main provisions of the Empco directive and what it means for business. We have already reported on the Green claims directive (here). The main development in relation to that directive is that the EU Council has now adopted its negotiating position (here). Given the current status of the directive, it is unlikely it will be agreed until late 2025 at the earliest. We will report more when there are developments.

What's the EmpCo directive about?

Unlike the Green Claims Directive, the EmpCo directive does not create a new regulatory regime for unfair practices in the area of green claims. Instead, it primarily amends the Unfair Commercial Practices Directive (the UCP directive) by:

• Adding certain forms of advertising with green claims to Annex I (the so-called ‘black list’ of claims that are always considered unfair and are therefore not permitted). 

• Amending the scope of misleading actions and omissions to expressly include misleading actions and omissions concerning a product's "environmental or social characteristics" and "circularity aspects, such as durability, reparability or recyclability". 

• Expanding the scope of misleading actions to expressly include claims relating to future environmental perormance where they do not meet certain specified criteria. 

• Adding and amending various definitions.

It also amends the Consumer Rights Directive, mainly to address durability and repairability requirements. These amendments are not considered here.

What are the new blacklisted clauses?

The additions to Annex I of the UCP directive specifically addressing green claims are:

• Displaying a sustainability label that is not based on a certification scheme or not established by public authorities (new no. 2a of the Annex).

• Making a generic environmental claim for which the trader is not able to demonstrate recognised excellent environmental performance relevant to the claim (new no. 4a of the Annex).

• Making an environmental claim about the entire product or the trader’s entire business when it concerns only a certain aspect of the product or a specific activity of the trader’s business (new no. 4b of the Annex).

• Claiming, based on the offsetting of greenhouse gas emissions, that a product has a neutral, reduced or positive impact on the environment in terms of greenhouse gas emissions (new no. 4c of the Annex).

The bans on the use of non-certified sustainability labels and certain claims about offsetting, in particular, are likely to have a significant impact on the green advertising activities of businesses.

What does this mean for sustainability labels? 

Sustainability labels can now only be displayed if they are based on a certification scheme or established by a public authority. This is intended to curb the practice of companies awarding themselves their own sustainability labels.

To qualify, a certification system must be "…a third-party verification scheme that certifies that a product, process or business complies with certain requirements…" which (i) is open to all traders, (ii) is developed by the scheme owner with experts and stakeholders, (iii) sets out procedures for dealing with non-compliance, including withdrawal or suspension of the label, and (iv) monitors for compliance using an objective procedure, carried out by a third party who is competent and independent from both the scheme owner and trader.

This mandatory certification system is likely to be associated with higher costs for businesses, as recognised in the impact assessment for the directive. It might mean fewer applications for sustainability labels.

What does this mean for offsetting claims?

Claiming, based on the offsetting of greenhouse gas emissions, that a product has a neutral, reduced or positive impact on the environment in terms of greenhouse gas emissions is now an automtaically unfair – and banned - practice.

Since most businesses can only achieve climate neutrality by including offsetting amongst their measures, advertising a product using terms such as ‘climate neutral’, ‘CO2-reduced’ and ‘climate-positive’ may have become practically impossible.

Nonetheless, it will still be possible to make nuanced claims such as those relating to the businesses' own efforts to reduce CO2 emissions. Likewise, it will be permissible to refer to offsetting if done carefully eg on a homepage in connection with the businesses' sustainability commitments. Businesses can also continue to advertise their future goal of being "climate neutral" from a certain point in time. However, new requirements also apply here (see below).

What does this mean for generic and wide claims?

Making a generic environmental claim for which the trader is not able to demonstrate recognised excellent environmental performance relevant to the claim is now a banned practice. Recognised environmental excellence means environmental performance compliant with Regulation No 66/2010 or officially recognised national or regional EN ISO 14024 type I ecolabelling schemes, or top environmental performance in accordance with other applicable EU law.

Similarly, making an environmental claim about the entire product or the trader’s entire business when it concerns only a certain aspect of the product or a specific activity of the trader’s business is now an automatically unfair – and banned - practice.

While this means that generic and wide claims will no longer be allowed in the EU, it does not mean that green claims cannot be made. Nuanced and defined claims will still very much be permissible.

What does EmpCo say about ‘social washing’?

The EmpCo directive expressly recognises the concept of 'social washing'. The list of misleading acts and omissions now specifically includes claims relating to the 'social characteristics' of a product. According to the recitals to the directive, this includes claims relating to:

• the quality and fairness of working conditions, such as decent wages, social security and occupational safety

• respect for human rights

• equal treatment and opportunities for all eg gender equality, inclusion and diversity

• contributions to socio-political initiatives or ethical commitments eg animal welfare initiatives.

What does Empco say about claims in relation to future environmental performance?

Statements about future environmental performance (eg ‘We will be climate neutral by 2030’) are very popular with businesses. The EmpCo directive provides for strict regulation of these claims. In the future, they will only be permitted if they:

• contain clear, objective, publicly available and verifiable commitments

• are set out in a detailed and realistic implementation plan that includes measurable and time-bound objectives and other relevant elements necessary to support implementation, such as the allocation of resources

• are regularly reviewed by an independent external expert, whose findings are made available to consumers.

In short, claims about future environmental performance will need to be backed-up by well worked out plans, verified by independent experts and made public.

What's the timing for the Empco directive?

EU Member States have until 27 March 2026 to implement the directive. National implementing laws will take effect six months after that deadline (ie on 27 September 2026).

What does this mean for you?

Businesses with operations in the EU will need to consider their labelling and marketing processes and practices with a view to complying with the EmpCo directive by mid-late 2026 and the green claims directive (if it comes into force) thereafter.

Those who use their own sustainability labels will need to consider transferring to an independent certification scheme or ceasing to use sustainability labels altogether. While generic and wide claims (including about offsetting) are prohibited under Empco, this does not mean that businesses need to cease using green claims altogether. Nuanced claims are still permissible – the difficulty will be in crafting a claim that is not misleading and that meets marketing objectives. Those who are able to achieve that will have a significant advantage over their competitors.

If the green claims directive comes into force, obligations on businesses will be significantly higher. Depending on the scope of any exemption, some sort of up-front verification processes by an independent third party will be required for most (if not all) green claims. This will make the requirement for very nuanced claims even stronger.