Green claims guidance and what it means for your company

As you walk down the aisle in the supermarket, you’ll see all kinds of environmental claims: terms like “sustainable”, “green”, and “eco-friendly” can make it difficult to figure out what represents genuine climate action and what is just trying to influence your purchasing decision with green-coloured packaging.

More than 230 sustainability labels are currently in use in the EU, with widely varying levels of validity and transparency. The European Commission found that 53% of environmental claims on products and services are vague, misleading, or include unfounded information, and that 40% of claims are not supported by any evidence. Unfortunately, this means that consumer trust in environmental claims is extremely low, and even the companies making meaningful changes for the climate are lost in the sea of green.

In recognition of this issue, governments and environmental bodies around the world have released guidance on how to publicly communicate climate action, often referred to as “green claims”.

Green claims guidance around the world

Europe-wide green claims legislation is still only a proposed measure. The European Commission officially adopted the “Proposal for a Directive on substantiation and communication of explicit environmental claims” in March 2023. Once it becomes law, this Directive will establish minimum requirements for organisations making voluntary environmental claims, in accordance with the European Green Deal.

In the meantime, individual markets in Europe offer their own guidelines. In The Netherlands, the “Guidelines regarding sustainability claims” were updated in June 2023 to offer more practical advice on phrasing, while in France, a new version of the “Practical guide to environmental claims” was published in May of the same year. French law specifically prohibits the use of certain unclear terms, such as “environmentally friendly”. Making emissions-based claims like “carbon neutral” is heavily restricted, and such claims must be accompanied by a full emissions report and evidence of avoidance and reduction efforts.

Outside the EU, the UK’s Advertising Standards Agency (ASA) recently updated its own guidance on green claims. The core of this advice is not about prohibiting environmental claims, but about providing the necessary context for the claims to be understood. For example, for a company to make a claim such as “net zero”, it would need to define the term and provide evidence of its strategy to achieve this, including timelines.

Across the Atlantic, the Green Guides is a set of guides for the use of environmental marketing claims issued by the Federal Trade Commission (FTC), which is responsible for national consumer protection in the US. While the Green Guides are not legally binding, they have served as the justification for some violations of FTC rules in the past. The guidance was last updated in 2012, and consumer expectations have shifted in the past decade. The FTC was accepting comments on the Green Guides in early 2023 and an update is expected in the near term.

What are the benefits?

There are clear advantages to increasing clarity and transparency around claims of environmental sustainability. Consumers benefit from product labelling and advertising that is credible and trustworthy, helping them to make well-informed purchasing decisions.

Market expectations are shifting, and we saw in our 2022 Climate Action Awareness Report that consumers are beginning to expect and even demand stronger climate action from companies. Businesses therefore benefit from increased credibility, transparently sharing their action with the public. Establishing a common approach to environmental claims also allows companies to complete on a level playing field, boosting competitiveness for those who prioritise climate action in their company strategy.

What are the restrictions?

Different countries and authorities offer different guidance, with varying levels of legal enforcement, so there’s no one-size-fits-all answer to the question of what is permitted. This can be a particular challenge to companies operating in multiple markets, to ensure the claims approved by one authority will stand up to the scrutiny of others.

What all of the guidelines agree on is that any claim must be backed up by evidence, and the qualifying information (or link to access it) should be positioned in close proximity, such as on packaging or at a point of sale. Qualifying information might include a baseline carbon footprint, an explanation of reductions already achieved, future targets and timelines, and information about any climate projects being funded.

Companies must always ensure that they are not misleading consumers in any way. Some guidance specifies that a company should not promote its positive impact on the climate without acknowledging its overall environmental impact, to avoid misinterpretation. Making selective claims can mislead consumers about the real proportion of business activities that are affected. For example, reduced product emissions should not be presented as overall corporate reductions. 

According to the ASA's research in the UK, consumers often conflate commonly used terms like "carbon neutral" and "net zero" with stronger claims like "zero emissions" or a "zero carbon footprint". While ClimatePartner’s previous Carbon neutral label linked directly to an explanation of what stood behind the claim, there is no binding definition for the term. The ongoing debate about definitions is unhelpful, and so we are in the process of phasing out this label. 

The crux of most guidance is that any claim implying a positive impact on the environment must be substantiated. The increased transparency and clear labelling offered by ClimatePartner certified and the Financial climate contribution provide a reliable structure around which to build your climate action strategy.

What can companies do? 

In summary, companies need to take a common-sense approach to any claims they make about their business practices and products. The safest course is to go the extra mile in disclosure and to be as transparent as possible about what lies behind any statements of environmental impact.

The common thread in most of the available guidance is the need to consider consumers’ likely interpretation of a statement. Where general claims could be interpreted as absolute claims, or have multiple possible interpretations, additional information is required to make the meaning of the claim clear.

Companies should focus on communicating their environmental measures positively and factually. By following the five steps of climate action and making your efforts transparent through ClimatePartner certification, you will have a defined pathway to communicate your climate action strategy in line with current guidance.

Contact us to kick off your climate action today!