European Commission Clarifies Green Claims Directive Remains Active Despite Withdrawal Statement

The European Commission has clarified that the Green Claims Directive, its proposed anti-greenwashing regulation for environmental product claims, has not been withdrawn, despite earlier statements indicating the Commission intended to pull the proposal. The Commission indicated it would only move to withdraw the directive if microenterprises were not exempted from its scope.

The Green Claims Directive was introduced in March 2023 to address a need for reliable consumer information, following studies finding that more than half of environmental claims by EU companies were vague or misleading and 40% were completely unsubstantiated. The directive requires businesses to substantiate, communicate and independently verify their voluntary environmental claims with scientific evidence, and restricts the proliferation of private environmental labels. Trilogue negotiations between the Commission, EU Parliament and Council were scheduled for June 23 but were cancelled after the European People's Party requested the Commission withdraw the proposal, arguing it was overly burdensome.

The Commission's position is that including microenterprises — companies with fewer than 10 employees and less than €2 million in revenue, accounting for approximately 96% of EU companies or around 30 million businesses — would create unacceptable administrative burden. Rapporteur Sandro Gozi stated that the Parliament's negotiating mandate already included the exemption of microenterprises, raising questions about why the Commission issued its withdrawal statement just before the trilogue was due to begin. Several MEPs criticised the Commission's approach as setting a dangerous precedent for the legislative process.

The status of the Green Claims Directive remains uncertain, with the continuation of negotiations dependent on resolving the dispute over microenterprise scope. For Indian companies and exporters marketing products to European consumers with environmental claims, the directive, if enacted, would impose substantiation and verification requirements on any green claims made in the EU market. Clarity on the directive's final scope and timeline is important for Indian exporters of products with eco-labels or sustainability certifications that are sold to European retailers and consumers.

Key figure — 30 million microenterprises in the EU, representing approximately 96% of all EU companies