The practice of greenwashing–making false or overstated claims about the sustainability of a product or service–is on the rise. This deceptive practice can mislead people into believing that they are making environmentally responsible choices when they are not and hamper effective climate action.
European regulations are catching up with this deceptive practice to protect consumers and the environment. Below is an overview of greenwashing, current European greenwashing regulations, and safeguards for businesses to avoid engaging in greenwashing.
What is greenwashing?
As the importance of the environmental, social, and governance (ESG) framework in business rises, many companies have done their due diligence to make socially conscious decisions and improve their environmental impact, benefiting the environment while tapping into consumer demand for sustainable products.
Some companies, on the other hand, attempt to capitalise on the ESG movement by presenting their products and business operations as “green,” “sustainable”, or “eco-friendly” without taking actions to mitigate environmental damage or decarbonise operations. These companies may also be concealing harmful environmental impacts. This is called greenwashing.
In a 2022 Greenpeace analysis of over 2,000 social media posts by 22 major EU-based fossil fuel producers, car manufacturers and airlines, over 60% of posts were categorised as greenwashing–giving the illusion of sustainable innovations despite a lack of operational changes in highly polluting industries.
Greenwashing is the practice of giving a false impression of the environmental impact or benefits of a product, which can mislead consumers.
- European Commission
Greenwashing often appears in the form of superficial environmental claims made by a company to improve its corporate image without taking proper ecological action. Companies also use environmental labels and sustainability comparisons to create the illusion of sustainability to exploit consumer demand for environmentally responsible products.
Greenwashing is so prevalent that executives are aware of this practice within their organisations. In a 2022 global survey of executives at global companies conducted by The Harris Poll, 58% of respondents acknowledged that their companies had overstated their sustainability efforts, while 65% said they didn’t know how to advance sustainability efforts.
- 58% of surveyed global executives agree that green hypocrisy exists and their organisation has overstated their sustainability efforts.
- 66% of respondents questioned how genuine some of their organisation's sustainability initiatives are.
- 65% of respondents agreed they want to advance sustainability efforts but don’t know how.
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Greenwashing is highly prevalent in the EU, as indicated by a 2021 European Commission study of online sustainability claims, which found 42% of those claims to be potentially false or deceptive, possibly qualifying as unfair commercial practices under EU directives.
With the incidence of greenwashing on the rise in recent years, the European Union has introduced several directives to prevent companies from marketing their products and services as environmentally sound unless they have verifiable facts and detailed information to back those claims.
Combating greenwashing holds companies accountable and puts the planet on the path to achieving genuine sustainability. Understanding greenwashing is necessary for consumers who want to avoid being duped by unfounded marketing claims and instead make informed decisions to support fundamental, sustainable practices.
Understanding greenwashing is also crucial for companies who want to avoid unethical and damaging business practices and potential legal penalties while contributing to a decarbonised future.
What are the implications of greenwashing?
Greenwashing can hamper real progress towards collective sustainability goals. This happens in several ways.
As consumers catch on to the practice of greenwashing, dishonest tactics eventually erode consumer trust in environmental claims, posing a barrier for genuinely sustainable businesses to be recognised and supported for their efforts. Dishonest marketing dilutes the perceived value of actual sustainability efforts.
Companies can engage in harmful environmental practices while creating an illusion of environmental responsibility through greenwashing efforts. This enables the company to misdirect attention from and avoid accountability for its contributions to ecological degradation.
This in turn often hide their operations' real environmental impact, making it difficult for regulators to enforce standards and policies effectively.
The practice of greenwashing has been recognised and denounced on a global level. In a 2022 report, the United Nations decried the practice of greenwashing and called for zero tolerance for net-zero greenwashing. The report stresses a need for transparency and accountability to achieve an equitable transition to a sustainable future.
Using bogus ‘net-zero’ pledges to cover up massive fossil fuel expansion is reprehensible. It is rank deception. This toxic cover-up could push our world over the climate cliff. The sham must end.
-António Guterres, UN Secretary-General
Engaging in greenwashing in 2025 could bring companies face-to-face with increasing legal and financial repercussions.
Climate litigation cases targeting companies for false environmental claims are on the rise. From 2017 to 2023, the number of climate change court cases, including those surrounding greenwashing, more than doubled. These legal actions can result in significant financial penalties and damage to a company’s reputation.
Greenwashing contributes to a lack of transparency about environmental impact among polluting enterprises. This impedes the implementation of sustainability regulations from the local to international level, thwarting efforts to mitigate climate change and protect ecosystems. Companies that engage in greenwashing can face heavy legal penalties and reputational damage.
What are the latest regulations against greenwashing in the EU?
In recent years, the European Union has been actively introducing and refining policies to combat greenwashing in Europe. These policies share the goals of protecting consumers and achieving an equitable green transition by enhancing transparency and ensuring that environmental claims are reliable and verifiable.
The EU has implemented two “sister" directives to regulate greenwashing: the Empowering Consumers for the Green Transition Directive and the Green Claims Directive.
Empowering Consumers for the Green Transition Directive
The EU’s Empowering Consumers for the Green Transition Directive focuses on consumers’ right to reliable information about the environmental impact of products and business practices and their durability.
The directive aims to provide consumers with accurate information to engage in genuinely sustainable consumption patterns and achieve the circular economy and green transition.
The Directive’s three main principles are:
- Requiring companies to substantiate all sustainable/environmental claims with concrete evidence;
- Mandating that sustainable/environmental claims undergo validation by an independent, authoritative body;
- Ensuring that sustainability/environmental impact information provided to consumers is clear, transparent and dependable.
Also known as the “EmpCo Directive,” “Greenwashing Directive,” and “ECGT,” the Directive entered into force on 26 March 2024. EU member states are required to transpose it into national law by 27 March 2026, and the law will become applicable on 27 September 2026.
Table 1. Regulations on environmental/sustainability prohibited claims
Table 2. Regulations on environmental/sustainability requirements
Table 3. Regulations on durability and reparability
Thanks to these new rules, consumers will now receive answers to questions like, "Is the product I want to buy really sustainable ?", "Can I choose a product designed to last ?", "Is the environmental claim on the product reliable ?"’
– Didier Reynders, Commissioner for Justice, European Commission
Green Claims Directive
While similar in intent to the ECGT Directive, the EU’s Green Claims Directive (GCD) has the narrower aim of ensuring that environmental claims meet stringent standards and are based on robust, science-based, and verifiable methods. The two directives are meant to establish a comprehensive framework for all sustainability claims within the EU.
The GCD establishes a standardised methodology for verifying the environmental impact of products, services, and companies. In the inter-institutional negotiations, the finalised GCD text is expected to be agreed upon and adopted by mid-2025, giving member states 24 months to transpose the directive into national law and 36 months to apply the measures.
The GCD regulates explicit environmental claims and labels used by companies with more than 10 employees and an annual turnover of over 2 million euros, excluding microenterprises with fewer than 10 employees and a yearly turnover of less than 2 million euros. Microenterprises may, however, obtain a Certificate of Conformity if they meet GCD standards.
The Directive’s key measures include:
- Requirements for substantiation of explicit environmental claims covering the following:
- Environmental aspects, impact and performance included in the claim
- Relevant EU or international standards used as part of the substantiation
- How improvements related to the claim are achieved
- Information on greenhouse gas (GHG) offsetting
- Underlying studies or calculations used to assess, measure and monitor impacts, aspects or performance;
- Certificate of conformity;
- In the case of comparative advertising, appropriate comparative data provides consumers with transparent, reliable, and valuable information.
- Requirements for communication of information on environmental impact:
- Claims should also inform consumers how to reduce the environmental effects when applicable;
- Details on claim substantiation should be provided through a URL or QR code.
- Requirement for third-party verification for explicit environmental claims and labels before publication:
- EU Member States are expected to set up procedures for verifying substantiation and communication of explicit environmental claims;
- Verifier to provide companies with certification of conformity.
- Requirements for governance of current and future public and private environmental labelling schemes:
- Stakeholders considered;
- Transparency and availability of information on ownership, decision-making bodies, objectives, requirements and procedures;
- Appropriate complaint and dispute resolution mechanism;
- Validation procedure for new national or regional schemes;
- Prohibition of self-certified labels;
- Prohibition of new eco-labels unless they demonstrate value to the EU market.
The GCD plans to provide a procedure for appeals and complaints for persons, organisations, and others negatively affected by misleading marketing. If found noncompliant, companies will have 30 days to take corrective action and may face fines of up to 4% of annual turnover, confiscation of revenues, and temporary exclusion from public procurement.
According to a recent analysis, implementing GCD and related greenwashing regulations could increase the number of greenwashing litigation cases worldwide.
National Greenwashing Regulations in Europe
Greenwashing is not just a European affair. Some of the largest economies of the continent have also implemented enforceable legislation on the matter.
Greenwashing regulation in the UK
The UK's Financial Conduct Authority (FCA) introduced a new anti-greenwashing rule on 31 May 2024 to complement existing EU anti-greenwashing regulations. The rule applies to all FCA-regulated firms, such as financial advisers and wealth managers, and all communications about financial products and services. The rule aims to promote transparency in sustainability reporting investment products.
The rule requires that FCA-regulated firms ensure that their communications about financial products and services are correct and capable of substantiation, clear and transparent, comparable to previous or current products or services, and complete in consideration of the entire product or service lifecycle.
Another greenwashing rule in the UK, the 2021 Green Claims Code, requires that environmental claims be truthful and accurate, clear and unambiguous, not omit or hide important, relevant information, make fair and meaningful comparisons when applicable, consider the entire life cycle of the product or service, and be substantiated. The law applies to any claims aimed at consumers in the UK.
Greenwashing regulation in France
The 2021 Climate and Resilience Law builds upon previous laws preventing misleading commercial practices. Thanks to this law, environmental claims must be precise and verifiable. Companies are prohibited from making disingenuous claims regarding their products’ environmental impact or their environmental commitments.
Two other decrees that went into force in January 2023 prohibit using advertising statements claiming that a product or service is decarbonised without proof of such claims. Companies must provide:
- A greenhouse gas emissions report on the product or services over its entire life cycle;
- An explanation of how emissions are avoided, reduced, and offset;
- A plan for reducing GHG emissions;
- Details on the methods used to offset residual emissions;
- Annual report updates.
The claim must be revoked if emissions increase from one year to the next.
France has also incentivised manufacturers to improve sustainability practices through an eco-contribution system requiring payments of fees to fund the recycling, collection, and disposal of products at the end of their life cycle. The scheme also awards fee discounts based on product durability, acquisition of relevant environmental certifications and use of recycled materials.
For more information, click here to learn about EU greenwashing regulations’ impacts on businesses.
Best practices for your company to avoid greenwashing and comply with regulations
Important tactics for avoiding greenwashing as a company include:
- Committing to genuine decarbonisation: Focus on actual emission reductions rather than carbon offsets, invest in renewable energy, enhance energy efficiency, and transition to low-carbon technologies.
- Implementing rigorous carbon accounting: Adopt established carbon accounting methodologies, such as the GHG Protocol, to accurately measure and report your emissions. This will ensure that your net-zero pledges are based on rigorous and transparent data, enhancing their credibility and impact.
- Enhance transparency and reporting: You can stay one step ahead of upcoming laws by providing detailed and transparent reporting on your sustainability initiatives. Use globally recognised standards to ensure your reports are comprehensive and comparable.
- Engage stakeholders and foster accountability: Involve all stakeholders in your sustainability goals, fostering trust and driving genuine progress.
What tools to improve your environmental performance?
Comprehensive carbon management platforms streamline companies' carbon accounting, reporting and decarbonisation efforts. By leveraging advanced technologies, companies can gain insights into their sustainability performance, identify areas for improvement, engage effectively with stakeholders, and adhere to relevant greenwashing regulations.
Investing in the right tools, such as Plan A's carbon accounting software, enables businesses to track emissions, set science-based targets, and make thorough reports on progress. In today’s eco-conscious market, robust sustainability reporting helps companies meet regulatory demands and position themselves for success.
By implementing these tactics, companies can avoid greenwashing and contribute meaningfully to global sustainability efforts. This approach enhances credibility, drives environmental progress, and creates sustainable stakeholder trust.
Greenwashing undermines genuine sustainability and erodes trust; addressing these deceptive practices is crucial for fostering real environmental progress. While mounting European legislation signals a pivotal time in the fight against greenwashing, consumers and companies must take active measures to avoid falling for and engaging in greenwashing.
As the EU introduces legislation aimed at achieving the green transition towards a circular, decarbonised, and clean economy, companies should continue closely monitoring further developments within the evolving legislative space at the European and national levels to maintain compliance.
Book a demo with Plan A for assistance in developing a sustainability strategy that adheres to regulations and helps your business thrive in an era of increasing environmental consciousness.
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