Introduction
The EU Parliament adopted the text this week on a directive to Empower Consumers for the Green Transition (ECGT). This new law aims to prevent a range of business practices which prevents consumers from making sustainability conscious purchase decisions. In this article we look at the new laws and consider the impact for businesses
What is ECGT?
In the EU market today, over 75% of products sold carry some form of environmental claim and half of these green labels carry vague or missing verification. ECGT will ensure consumers within the bloc are presented with clear, accurate and verified information relating to the sustainability credentials of the products they are buying.
In combination with other directives, such as CSRD, CSDDD, Green Claims and ESPR, ECGT contributes to ensuring producers in the EU develop more sustainable products and consumers can make informed choices, in turn generate more demand for sustainable products.
ECGT Scope
The scope of ECGT expands across products in all sectors and relates to environmental and social matters. This means environmental claims such as net-zero or carbon negative, will need to be verifiable. Social claims such as working conditions for workers in the value chain or the diversity of a workforce will also need to meet this criteria.
The definition of where claims are made includes written or oral claims, including those made through advertising or digital media.
Sustainability Claims
A large part of ECGT focuses on claims related to environmental or social credentials of the product or producer. Business now must only make claims which are verified and unambiguous.
This provides consumers certainly that a product choice they are making is contributing positively towards sustainability related matters, such as carbon reduction or social impacts in the production of the products.
Comparing Products
Comparison of products to less favourable versions is included in the text. This relates to the business practice of presenting a version of a product as being more favourable to the environment or society than an alternative. Claims such as these must now be verified.
There are also provisions for making claims that a product is more beneficial than an alternative from outside the market. For example, where a food product is produced within the bloc and is therefore subject to stricter production controls in comparison to products from outside the bloc. In this situation, if there are environmental or social benefits as a consequence of these stricter controls, that will be allowed.
Verification
Any claims made about products or the business that provides them must be independently verified by public bodies. Schemes such as the Eco-Management and Audit Scheme and the EU Eco-Label certification, along with international standadrs such as ISO will be required. The information used to perform these verifications will also need to be publicly available
Generic Claims
There are rules within the directive to ensure claims made about products are specific and relevant.
Examples quoted in the text as the statement that a bottle of water is gluten-free, or that a paper product is free of plastics. Such claims which have little or no relevance to the product will no be prohibited, preventing confusing messaging for consumers.
Is ECGT Enough?
Whilst this directive takes positive steps forwards, some are concerned it doesn’t go far enough. ECGT doesn’t create any requirements for products to become more sustainable, it focuses on how products are described. An example is the lack of any protection regarding early obsolescence. Many products today are designed to have a short life cycle, a business tactic which creates negative impacts for consumers and the environment.
Further legislation across the EU such as ESPR will directly impact the design of products and combined with many other directives under the banner of the European Green Deal, the EU is working to design a more resilient economy for businesses and consumers.
What will ECGT mean for Business?
Businesses will now have a legal obligation to ensure products are only labelled with sustainability related claims about commitments when the product is truly contributing to positive impacts. These claims should reflect clear, objective, publicly
available and verifiable commitments.
Many businesses use their products to state their ambitions. In the most part, these are well meaning ambitions but in other cases product labelling is used with clear exploitation of increasing consumer preferences for sustainable products.
Every business will need to consider the claims they make publicly in relation to their product, where those claims are made and the relationship to ECGT.
Where claims are relevant and specific for products, verification will be a significant cost for businesses and will require inputs such as carbon data and implementation plans which many businesses cannot currently provide.
How we can help
EU directives such as ECGT require companies to integrate sustainability into their entire operating model. With increasing consumer demand for sustainable products and regulatory pressures to adopt more sustainable business practices, every business needs to take action.
Our teams have deep expertise in the EU policy landscape including the emerging policies under the European Green Deal. We help businesses to adopt and integrate these regulations into their operating model, helping them to do better.
Contact us today if you’d like us to help your business.
