What to know about Europe’s new anti-greenwashing laws | Popgen Tech

Sustainability is everywhere: 17 percent of products on store shelves in the US make at least one sustainability claim on their packaging. Unfortunately, not all of these claims will turn out to be true: in the past six months alone, regulators in the US, Britain, Norway and the Netherlands have collected millions of dollars from companies found to be making false environmental claims – greenwashing. Making misleading environmental claims is so common in part because few standards exist for determining what makes a sustainability claim accurate.

A new wave of laws in Europe aims to change that by setting a new and higher standard for companies to make environmental claims. Two laws in particular aim to prevent greening: the French Law on Climate and Resilience, which will enter into force in 2023, and the European Union’s proposed Unfair Trade Practices Directive, which is planned for 2024-2025. Taken together, the laws paint a much clearer picture of the processes companies will need to adopt to make any environmental claim without the risk of greenwashing. What follows is an overview of the most important new provisions in the laws, as well as techniques that companies have already used to successfully meet the new standards.

Companies must collect and show their own evidence

Companies have long relied on industry average data to estimate the environmental impact of products. This practice has come under scrutiny when those averages are used to make consumer-facing claims. Industry averages are too imprecise to help consumers make a choice between one brand’s products and another’s. The new anti-greenwashing regulations require companies to collect their own data to back up any environmental claims, and that the data must be clear, objective and verifiable. This means companies that want to make environmental claims will need to collect evidence to offset every kilogram of carbon, waste, water or energy that is part of a product’s environmental marketing claims. Evidence can take many forms: fuel and utility bills, receipts for raw materials, shipping records, and even waste disposal contracts.

Full cycle assessments of products will require a greater scope of evidence

Sometimes an environmental benefit in one phase of a product’s life – for example the use of a recyclable material such as glass – can have a greater cost in another phase, for example by requiring more energy to produce that glass. Companies will only be able to claim that a product is sustainable if they disclose the impact of the entire life cycle of the product, from raw material to end of life. This means evidence will often need to be collected from suppliers at every stage of a product’s life, including from the companies that provide recycling and remanufacturing services at the end of it.

More data means more verification

The market for sustainable products and services is booming, and so is consumers’ willingness to pay a premium. This brings with it a greater chance of fraud – products are sold as sustainable when they are actually conventional. For years, the only way to prevent fraud in sustainable products was for companies or regulatory agencies to hire auditors to conduct occasional factory visits and document reviews. With the new requirement to collect evidence from the entire product life cycle, there is simply too much data to be assessed manually.

For example, a large CPG manufacturer may have 5,000–15,000 direct suppliers, with each relying on a hundred more suppliers. It is clearer than ever that companies are to blame for the consequences of their supply chains, but without a complete picture, companies cannot deliver on their promises with irrefutable certainty. Companies are increasingly turning to software solutions that can monitor the supply chain on an ongoing basis, in an effort to root out fraud before products reach store shelves.

Collectively, emerging laws tackling greenwashing pose a much greater burden of proof for companies seeking to bring sustainable products to market. They also call for a much larger volume of data to be collected from a large number of stakeholders. The recent government crackdowns only underscore the high costs of making misleading environmental claims. Hopefully, these laws will encourage more cooperation with companies and their supply chain and lead to claims that consumers can trust.