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European Commission’s failure to ban “carbon neutrality” undermines its green claims strategy

Although the European Commission understands the problems created by greenwashing, its proposed Green Claims Directive will not end these damaging practices.

Released today, the draft bill sets forth measures for preventing misleading green claims and tackling greenwashing. 

While the Commission recognises that climate-related claims have the potential to deceive consumers because they lend themselves to ambiguity and confusion, the proposal will do little to curb the burgeoning corporate greenwashing trend. 

The draft directive fails to outlaw vague and disingenuous terms like “carbon neutrality”, which are a favoured marketing strategy for companies seeking to give their image a green makeover while continuing to pollute with impunity. In addition, it not only continues to allow the problematic practice of using carbon credits to offset or cancel out emissions, it does not even require the publication of proof that carbon credits have been purchased by a company when it makes a “neutrality” claim.

Back to the drawing board

“This proposal is a huge missed opportunity to send a powerful message to corporations that the EU is taking corporate climate responsibility seriously,” says Lindsay Otis, policy expert on global carbon markets at Carbon Market Watch. “The Commission appears to understand the problems created by greenwashing, but refuses to adequately address them. It is now up to the European Parliament and Council to enact a ban on carbon neutrality claims, because anything short of that will not only fail to protect consumers, but will also fail to push corporations towards truly sustainable practices.”  

The proposal further fails to require stringent climate action plans from companies that make green claims. While the need to focus on emission reductions is referred to, there is no binding requirement to deliver on specific emission reduction targets, nor for having climate strategies in place that are compatible with the goals of the Paris Agreement. 

In fact, the draft bill allows green claims for companies and even products as long as they address a “significant” impact of that product or company. This ambiguity leaves the door open for continued greenwashing practices. For example, a company would be able to claim that one of its products is  “carbon neutral” by ignoring indirect emissions and offsetting direct ones with junk carbon credits. The European Commission missed the mark by not blacklisting these highly problematic claims. 

Creative accounting

The proposed firewall that separates the reporting of emissions and offset credits only applies to companies’ websites and reports and not to the information they advertise on their products, which is unlikely to significantly improve current practice.  

In addition, it is disingenuous to require the use of  “high-quality” carbon credits, while in reality there are currently no (and may never be) credits available that can truly neutralise emissions (See Corporate Climate Responsibility Monitor). Offsetting should simply be banned.

“Consumers must be protected from false and misleading claims, but this proposal risks backfiring. It doesn’t promote alternatives to current claims models, it doesn’t address existing shortcomings of green advertising, and pretty much fails across the board to put an end to greenwashing,” says Gilles Dufrasne, lead on global carbon markets at Carbon Market Watch. “The problem is clear, and reflected in the Commission proposal, but the political will is missing. Without further rules, European consumers will continue to hesitate when shopping between carbon-neutral sandwiches, climate-positive salads, and CO2-compensated bananas”.

Instead of pretending to offset their emissions, responsible companies should shift to more responsible communication styles. For example, they could claim to have contributed to global climate action when financing climate projects, instead of claiming that they are offsetting their own emissions and selling so-called “carbon neutral” products.

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