With the European Green Deal, the EU’s comprehensive strategy to make Europe the first climate-neutral continent by 2050, sustainability considerations need to become an integral part of a company’s IP strategy. We have focused on the most important provisions of the EU Packaging and Packaging Waste Regulation (PPWR) IP owners need to be aware of in this blog here. Besides the PPWR, there are several other (future) acts of EU law that need to be considered to make product design, packaging and marketing future-proof.
One of them is the Empowering Consumers Directive (EmpCo Directive)[1], which entered into force on 26 March 2024. The EmpCo Directive applies to all companies operating within the EU single market and shall tackle unfair commercial practices that mislead consumers and prevent them from making sustainable consumption choices, such as practices associated with the early obsolescence of goods, misleading environmental claims (“greenwashing”), misleading information about the social characteristics of products or traders’ businesses, or non-transparent and non-credible sustainability labels[2]. The EU Member States have time to transpose the EmpCo Directive into their national laws by 27 March 2026 and apply them from 27 September 2026. In Germany, the new rules will be implemented in the German Act against Unfair Competition (Gesetz gegen den unlauteren Wettbewerb – UWG).
Key changes ahead
The key changes to note are:
- Anyone using a general environmental claim (short, catchy phrases such as “eco-friendly”, “green”, “climate-friendly”) must be able to demonstrate “recognized outstanding environmental performance” in the sense of the EmpCo Directive.
- Displaying a sustainability label will only be permitted if based on a certification scheme or established by public authorities. The term “sustainability label” is defined as “any voluntary trust mark, quality mark or equivalent, either public or private, that aims to set apart and promote a product, a process or a business by reference to its environmental or social characteristics, or both”[3]. Thus, also information about social engagement such as animal welfare or diversity and inclusion initiatives may fall under the provision. A certification scheme within the meaning of the EmpCo Directive is a third-party verification scheme the terms of which, including its requirements, are publicly available and meet the following criteria: (i) open to all companies that meet the requirements, (ii) requirements developed in consultation with relevant experts and stakeholders, (iii) penalty provisions in the event of non-compliance, and (iv) objective monitoring procedure[4]. Self-declared sustainability labels will be prohibited in the future.
- Claims that a product has a neutral, reduced or positive impact on the environment in terms of greenhouse gas emissions (such as “climate-neutral” or “limited CO2 footprint”) will be prohibited if the alleged neutrality is not based on the actual lifecycle impact of the product but on the offsetting of greenhouse gas emissions outside the product’s value chain[5].
- The provisions on misleading advertising are extended. This applies, for example, for environmental claims related to future environmental performance without clear, objective, publicly available third-party commitments set out in a detailed and realistic implementation plan that includes measurable and time-bound targets and other relevant elements necessary to support its implementation, such as allocation of resources, and that is regularly verified by an independent third-party expert, whose findings are made available to consumers.
- Sanctions will be increased. In Germany, for example, the UWG will impose a fine of up to EUR 50k on companies that violate the prohibitions. For companies with an annual turnover of more than EUR 1.25 million, violations may be punished with a fine of up to 4 percent of their annual turnover.
Navigating challenges and taking action
The EmpCo Directive’s provisions are technically complex insofar as they can only be understood by referring to the comprehensive list of definitions, some of which, in turn, refer to other EU Directives and DIN standards, which do not provide much clarity either.
The term “environmental claim”, for example, relates to “any message or representation which is not mandatory under Union or national law, in any form, including text, pictorial, graphic or symbolic representation, such as labels, brand names, company names or product names, in the context of a commercial communication”[6] and is thus not limited to classic advertising claims. Thus, a detergent bottle depicting a forest and delightful hedgehogs might be qualified as an environmental claim. It is also unclear what qualifies as a “sustainability label”, which can have the form of “any voluntary trust mark, quality mark or equivalent”. For the time being, it can be assumed that anything that is graphically delineated might also be considered a “label”. We therefore recommend reviewing product packaging for such – potentially even unintentional – claims and labels.
In any event, the new provisions require companies to compile and document scientific evidence for the accurateness of environmental and social claims. Companies wishing to continue to use labels that may qualify as sustainability labels are well-advised to seek out a suitable certification body. An independent expert is required to confirm that the certification system generally meets the requirements.
With all these uncertainties ahead, it is expected that watchdog associations that have been filing a wave of lawsuits in Germany since 2022 over the use of the term “climate-neutral” will expand their activities starting in September 2026.
Given that future legal compliance takes considerable effort, various companies have announced their intention to give up environmental advertising completely, sometimes referred to as “greenhushing”. In view of the complexity of the topic, however, which is directly related to marketing communication and brand management, we advise against turning a blind eye, even more as for most enterprises the implications of other acts of EU law linked to the European Green Deal, such as the PPWR, the Ecodesign Regulation[7] or the Right to Repair Directive[8], are unavoidable anyway. By way of close collaboration between the legal, marketing, sustainability and R&D department and the support of external advisors these challenges can be overcome, and overtime be turned into advantages that lead to consumers placing even greater trust in the brand.
[1] DIRECTIVE (EU) 2024/825 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 28 February 2024 amending Directives 2005/29/EC and 2011/83/EU as regards empowering consumers for the green transition through better protection against unfair practices and through better information.
[2] EmpCo Directive, Recital 1.
[3] Article 1(1) (b)(q) EmpoCo Directive.
[4] Article 1(1) (b)(r) EmpCo Directive.
[5] With judgment of 27 June 2024, case I ZR 98/23, the German Federal Court of Justice had found that when determining whether an advertisement using environmental protection terms and symbols is misleading, strict requirements regarding the accuracy, unambiguity, and clarity of the advertising claims apply, just as they do for health-related advertising. An explanation within the advertisement itself was deemed necessary when using the term “climate-neutral”, which encompasses both the avoidance of CO2 emissions and CO2 offsetting, because the reduction and offsetting of CO2 emissions are not equivalent measures for achieving climate neutrality. Under the new law, advertising with CO2 compensation claims will be banned completely.
[6] Article 1(1) (b)(o) EmpoCo Directive.
[7] REGULATION (EU) 2024/1781 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 13 June 2024 establishing a framework for the setting of ecodesign requirements for sustainable products, amending Directive (EU) 2020/1828 and Regulation (EU) 2023/1542 and repealing Directive 2009/125/EC.
[8] DIRECTIVE (EU) 2024/1799 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 13 June 2024 on common rules promoting the repair of goods and amending Regulation (EU) 2017/2394 and Directives (EU) 2019/771 and (EU) 2020/1828.
