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EU’s Green Claims Directive Targets Misleading Environmental Claims, But Challenges Loom in the Era of Circular Washing

ESGEU's Green Claims Directive Targets Misleading Environmental Claims, But Challenges Loom in the Era of Circular Washing

If enacted, this law will prohibit the use of generic environmental claims such as “environmentally-friendly,” “eco,” “natural,” and “biodegradable” without supporting evidence. This crackdown on misleading green claims is being hailed as the end of the “greenwashing era.” Such deceptive claims, ranging from vague to hard-to-verify (“carbon neutral”), have often misled environmentally conscious consumers.

The demand for eco-friendly products is on the rise, with nearly 90% of Gen X consumers willing to spend more on sustainable items, compared to just 34% in 2020. Simultaneously, the concept of the circular economy, which aims to reduce waste and maximize material reuse, is gaining widespread acceptance.

However, as the focus shifts from greenwashing, there’s a concern that another deceptive practice, called “circular washing,” might take its place. Brands are increasingly using circular claims to appeal to consumers, but these claims can be misleading, especially if they emphasize recycling rather than reducing material usage.

A holistic approach to circularity is essential, as highlighting just one aspect, like using recycled materials, may not reflect the overall sustainability of a product. Past studies have shown that a significant portion of green claims, up to 53%, were vague, misleading, or unsupported.

The European Union (EU) is taking steps to address greenwashing through the proposed “Green Claims” directive, which aims to ban generic environmental claims without evidence and require third-party certification for product merits. While this is a positive step, there are concerns about addressing circular washing and promoting genuine circularity effectively.

The directive is part of a broader initiative to make sustainable products and business models the norm. It acknowledges the need for nuance in evaluating products’ environmental or circular performance, considering factors like recyclability, repairability, and durability. However, relying solely on environmental scores may not provide a complete picture of a product’s sustainability.

The directive also highlights the importance of avoiding hidden trade-offs. For instance, an environmental claim about using recycled materials may not account for the fact that these materials could have been better used in a closed-loop recycling system for food packaging.

Critics argue that stringent regulations might lead to “greenhushing,” where brands avoid disclosing their sustainability efforts due to costs or fear of legal repercussions. Smaller businesses may struggle to comply without adequate support and guidance.

However, the EU is moving towards greater transparency and sustainability reporting requirements. The Corporate Sustainability Reporting Directive (CSRD) will compel thousands of European companies to report on sustainability, resource use, and circular economy performance. This data can help companies make informed decisions, attract new customers, and uncover innovative business opportunities while exposing any false claims.

Ultimately, while the effectiveness of the Green Claims directive remains to be seen, it is part of a broader effort by the EU to set new standards for sustainable business practices across the continent.

By FCCT Editorial Team

Disclaimer: The views expressed in this article are independent views solely of the author(s) expressed in their private capacity.

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