The Commission targets Greenwashing in the fashion retail sector 

In March 2022, the European Commission presented its “Strategy for Sustainable and Circular Textiles”, aiming to create a greener and more sustainable future for the fashion retail sector.[1] The need for transformation is clear: The production and consumption of clothing has risen exponentially over the years, fueled by trends such as fast fashion, using up resources and impacting the climate. Only 1 % of clothing material in the EU is recycled.

One of the key actions the Commission identified is to tackle greenwashing in the fashion sector. More and more companies present their products as environmentally friendly in their advertising. In an EU-wide sweep in 2020, consumer protection authorities found that 39 % of sustainability claims in the fashion sector could be considered misleading. In order to fulfil its vision, the Commission thus intends to make claims more reliable for consumers.

In March 2022, it presented a draft directive to “empower Consumers for the Green Transition”, which is set to adapt the Unfair Commercial Practices Directive.[2] On March 22^nd, 2023, the Commission presented another proposal called the “Green Claims Directive”.[3] With its new initiative, the Commission proposes stricter and uniform requirements to make environmental claims more reliable for consumers. At the same time, the Commission hopes to create a competitive advantage for companies that make serious efforts to make their products environmentally friendly. 

Requirements for the substantiation and communication of Green Claims 

The draft lays down uniform minimum requirements for environmental claims in advertising. Only micro-enterprises with fewer than 10 employees and an annual turnover of less than 2 million euros are exempt from the requirements. The Directive defines an environmental claim as any statement or representation indicating that a product or company has a positive or no impact on the environment or is less harmful to the environment than others – for example, advertising for clothing as “sustainable”, “eco-friendly” or “good for the environment”. Not covered are environmental claims that are already regulated by more specific EU legislation. This could be relevant for the fashion retail sector in the future: The Commission has announced plans to update the Textile Fibre Labelling Regulation from 2011 to include environmentally relevant information. Its relationship and interaction with the Green Claims Directive has not been explicitly addressed yet.

Substantiation and verification of Green Claims

The proposed Directive lays down specific criteria which companies must meet before making such claims in advertising. Most importantly, environmental claims must be substantiated on the basis of scientific findings and verified in advance by independent, accredited bodies. The evidence required will depend on the type of claim. The relevant environmental impacts must be determined in each individual case. In contrast to earlier considerations, the Commission is not committing itself to a single methodology.

Presentation requirements

The draft also aims to ensure that environmental claims are communicated clearly and understandably. For example, environmental claims that refer to the entire environmental impact of a product merely in a generalised manner are not to be permissible. Rather, specific information about the product or the company relevant to the environmental claim must be provided either in physical form or by means of a link or QR code.

Rules for environmental labels

In addition, the Commission is addressing the flood of eco-labels that are now used in the EU, especially in the clothing sector. New private eco-labels must be approved in advance and will only be allowed if they require more ambitious environmental goals than the existing labels. In general, all eco-labels must be verified by third parties and regularly inspected. 

Companies face strict sanctions

According to the draft Directive, member states shall not only introduce appropriate procedures to verify and enforce the requirements. Rather, they shall also establish "effective, proportionate and dissuasive" sanctions to be applied in case of violations of the Directive's provisions. For example, consumer organisations will be able to bring representative actions. In addition, companies which advertise with misleading environmental claims face potentially heavy fines. According to the draft, member states shall ensure that when imposing sanctions, the highest fine is at least 4% of the annual turnover of the company concerned.

What happens next?

The Commission's proposal is currently being discussed in the European Parliament and the Council. It is not yet clear how long the procedure will take. It also remains to be seen what changes will be made to the draft. The obligation for prior verification and certification of advertising claims is likely to raise the constitutional question of the extent to which it is compatible with companies’ freedom of expression. If the directive is adopted, national legislators must implement the requirements within 24 months. Even though it will take a while until then, one thing is already clear: the requirements for environmental advertising will be tightened. With the new regulations, the Commission wants to ensure a level playing field and reduce legal uncertainty for companies. At the same time, the new requirements will entail a greater effort for companies regarding their environmental claims. Advertisers in the fashion retail sector should therefore keep a close eye on further developments.

[1] European Commission, COM(2022) 141 final, available at https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52022DC0141. 

[2] European Commission, COM(2022) 143 final, available at https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A52022PC0143&qid=1649327162410. 

[3] European Commission, COM(2023) 166 final, available at https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM%3A2023%3A0166%3AFIN.