Greenwashing is a major problem.
By definition, greenwashing is the practice of fabricating or overstating claims about the environment and sustainability. It can hurt companies in the eyes of consumers, contribute to the destruction of our natural world, and lead to hefty fines.
Acts of greenwashing by governments and companies have come under increased scrutiny with each passing year, and now the European Union is poised to take significant action. A leaked draft of the EU’s new rules against greenwashing proves that it is serious about eliminating the practice — and the U.S. could soon follow suit.
According to Reuters, which reviewed a draft of the European Commission’s proposed rules, EU countries may soon have to rigorously vet products bearing claims like “carbon neutral” or “containing recycled materials.”
Companies would also have to disclose if they have bought carbon credits — a notoriously misleading practice that Greenpeace calls “a scam” — and they would be penalized if they break disclosure rules.
“By fighting greenwashing,” reads the in-progress draft document, “the proposal will ensure a level playing field for businesses when marketing their greenness.”
The European Commission has been studying greenwashing for several years, and the latest rules are an outgrowth of its 2020 Initiative on Substantiating Green Claims. In 2021, the Commission screened hundreds of websites for greenwashing, finding that half of the environmental claims it scrutinized lacked evidence, and almost half could be considered fraudulent.
“In 42% of cases,” the European Commission wrote in a press release, “authorities had reason to believe that the claim may be false or deceptive and could therefore potentially amount to an unfair commercial practice.”
Though it hasn’t been as aggressive as the European Union, the U.S. has recently taken steps to reign in greenwashing. The Securities and Exchange Commission proposed new rules in 2022 to fight greenwashing by investment funds and the regulator has been stepping up its enforcement actions against certain companies.
Likewise, Federal Trade Commission Chair Lina Khan has signaled her agency’s appetite for fighting greenwashing by releasing a statement in December titled “Regarding the Regulatory Review of the Guides For the Use of Environmental Marketing Claims.” In the statement, Khan solicits comments from the public and warns bad actors that “the Commission has a strong track record of suing companies for deceptive environmental claims.”
“A growing number of governments and non-state actors are pledging to be carbon-free – and obviously that’s good news,” he said. “The problem is that the criteria and benchmarks for these net-zero commitments have varying levels of rigor and loopholes wide enough to drive a diesel truck through.”
He continued on to say, “We must have zero tolerance for net-zero greenwashing.”