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Green Claims Directive: European Parliament votes to ban carbon neutrality for products but not companies

The European Parliament’s vote on a bill aimed at combating greenwashing upheld a ban on describing products as “carbon neutral” but failed to apply the same principle to companies.

The European Parliament voted today on amendments to the European Commission’s proposed Green Claims Directive. This is the EU’s second consumer protection proposal aimed at tackling pervasive ‘greenwashing’ practices, in addition to the Empowering Consumers for the Green Transition (ECGT) proposal, which banned companies from claiming that their products are “carbon neutral” as a result of purchasing carbon credits to “offset” their emissions. 

In today’s vote, the Parliament incorporated the aforementioned product-level offsetting claim ban into the text of the Green Claims Directive. This was necessary to ensure legal consistency across EU law and to set a minimum bar to safeguard both consumer and environmental protection. Other positives include the inclusion of a contribution claims provision, which gives sorely-needed recognition to this alternative to the problematic practice of offsetting, and the addition of a ‘highly polluting industries’ amendment.

Missed opportunity

While Carbon Market Watch welcomes these developments, the Parliament has missed a significant opportunity by failing to also ban misleading carbon neutrality – and all related compensation claims – at the company level. The deceptive nature of such claims has already been recognised by the institutions, which is precisely why they were banned at product level. It is completely illogical to exclude company-level claims from this ban and, in doing so, the Parliament has opened the door to a slew of other problems, as outlined below. 

Instead of taking this next logical step by completely banning compensation claims, the Parliament proposes to permit offsetting claims connected to “residual” emissions – an area riddled with uncertainties –  and requiring that to start with all credits used to make such offsetting claims are certified under the EU’s Carbon Removal Certification Framework (CRCF), which is also riddled with problems. CRCF units will not automatically (or magically) be high quality and high integrity – likely the vast majority will be vulnerable, overestimated and have significant sustainability implications.

Double trouble

There are several problems associated with the Parliament’s misguided approach. Although it’s best to stop companies from making these claims altogether, if the Parliament insists on continuing to allow company-level offsetting claims, the least it could do is also insist on a ‘corresponding adjustment’ requirement to address the problem of double counting, but no such safeguard has been included. This omission is particularly problematic in light of the EU’s failure to properly address this issue in the context of the CRCF. Instead, many units certified by the CRCF and used for corporate claims under the Green Claims Directive will be double counted by both the voluntary carbon markets, and the EU’s nationally determined contributions (NDC) and its climate policies. Allowing both governments and companies to claim the same CRCF results considerably reduces climate ambition, enables greenwashing and slows the rate of climate action.

Even more troubling is the fact that the Parliament has given the European Commission the power to approve voluntary carbon market standards deemed to be “compliant schemes corresponding to at least equivalent requirements to those provided by [CRCF]”. This is extremely concerning because it could essentially open the floodgates to the use of low-quality credits for offsetting. 

The answer to all of these concerns, however, is simple: ban all offsetting claims and shift to the “contribution” claim model.

Author

  • Lindsay Otis

    Lindsay is Carbon Market Watch's expert on global carbon markets, with a special focus on corporate climate responsibility.

    View all posts

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