EU Green Claims Penalties Explained
Carbon Management
17 feb 2025
Understand the EU Green Claims Directive, its penalties for greenwashing, and compliance steps for businesses to avoid hefty fines.
The EU Green Claims Directive enforces strict rules on how companies present environmental claims to prevent greenwashing. Non-compliance can lead to severe penalties, including fines up to 4% of annual EU turnover, revenue confiscation, and market access restrictions. These rules apply to all businesses targeting EU consumers, regardless of location. Key points include:
Claim Requirements: All claims must undergo third-party verification and be supported by scientific evidence.
Penalty Structure: Based on violation severity, penalties range from fines to operational bans.
Small Business Allowances: SMEs get an extra year to comply and simplified processes.
To comply, businesses must use tools like LCA software for accurate lifecycle data and maintain thorough documentation. The directive sets a new global standard for environmental marketing accountability.
Green Claims Directive: Protecting Consumers from Greenwashing
EU Green Claims Law Basics
The Directive outlines specific rules for environmental claims, requiring a life-cycle assessment for accuracy. These claims are grouped into three main categories:
For claims involving carbon offsetting, companies must first reduce emissions and use certified carbon credits [5].
Related EU Laws
"Where EU legislation provides specific rules on environmental claims for a particular sector or product category, those rules will prevail" [3].
This directive aligns with other EU initiatives and regulations, including:
The Unfair Commercial Practices Directive (UCPD)
The Empowering Consumers for Green Transition initiative
Sector-specific EU environmental rules
These rules establish a framework for compliance, and failure to meet verification standards leads to penalties, which will be discussed in the following section.
Penalties Overview
The EU Green Claims Directive sets strict penalties to tackle greenwashing, combining financial fines with operational restrictions. The goal is to ensure that environmental claims are both reliable and provable.
Fines and Costs
For serious violations, fines can go as high as 4% of a company’s annual EU turnover. Here’s a breakdown:
Maximum fines can hit 4% of annual turnover in EU member states for large-scale violations with cross-border impacts [3].
Revenue confiscation applies to profits made from misleading claims [1].
Member states may also enforce additional penalties through their national systems.
Other Consequences
The penalties aren’t just financial - companies may face operational and reputational setbacks, including:
Public disclosure of violations.
Legal challenges from consumer or environmental groups.
Mandatory corrective actions.
Possible restrictions on market access.
Penalty Levels
The severity of penalties depends on three main factors: the seriousness of the violation, whether it affects multiple EU countries or just one, and how long the non-compliance continues. The steepest fine - 4% of annual turnover - applies to major EU-wide violations [3].
These penalties highlight the importance of having a strong compliance plan, which we’ll cover in the next section.
Meeting Compliance Rules
To avoid penalties, businesses need to establish strict verification processes to ensure their claims meet regulatory standards.
Steps for Verifying Claims
All environmental claims must go through third-party verification within 30 days. Here's how the process works:
Initial Assessment
Companies must perform detailed evaluations using recognized EU or international scientific methods. This involves collecting data that covers the entire product lifecycle [4].Documentation Preparation
Create documentation in an EU language that is accessible both digitally and in print. This must be updated every five years [4].Third-Party Verification
Submit claims to accredited verifiers who will evaluate:
The scientific credibility of the evidence
Alignment with EU-approved methodologies
Accuracy of environmental impact data
Platforms like Devera can help simplify this process. Devera automates ISO-aligned assessments, making LCA reporting more efficient and consistent.
Rules for Small Businesses
The directive includes special provisions for smaller businesses, as outlined below:
SMEs benefit from an additional 12 months to meet compliance and can use a simplified process for basic claims [7][8].
Steps to Follow the Rules
Using LCA Software
Modern LCA software or Devera simplifies data collection and reporting while aligning with ISO 14040/44 and 14067 standards.
These tools and services help businesses measure carbon footprints across their product lifecycle. They generate standardized reports, compare performance against benchmarks, and provide reliable data for verifying environmental claims.
Look for software or services that includes:
Such tools are key to staying prepared for regulatory changes.
Tracking Rule Changes
During the 2025-2026 implementation period, the European Commission will develop sector-specific methodologies [5].
Stay informed by:
Assigning compliance leaders to track EU updates.
Joining industry groups that provide regulatory insights.
Conducting quarterly reviews to align internal processes with new guidelines [6].
Internal Review Setup
In addition to using software or services, structured internal processes are essential for maintaining compliance.
Follow these steps:
1. Form a Cross-functional Team
Create a review committee with members from legal, marketing, and sustainability departments [6]. This team should regularly assess proposed environmental claims.
2. Set Up Verification Checkpoints
Establish approval workflows that require specific sign-offs at each stage. Keep all decisions and supporting data in a centralized system.
3. Maintain Comprehensive Records
Ensure documentation includes:
Data supporting environmental claims.
Results from third-party verifications.
Internal review outcomes.
Updates to marketing materials.
This detailed record-keeping demonstrates your due diligence if regulators request evidence [1][2].
Conclusion
The earlier sections highlight the importance of strong technical and operational systems for meeting compliance standards. The EU Green Claims Directive sets strict rules for environmental marketing claims, requiring companies to back their claims with solid scientific proof and consider the entire lifecycle of their products [2].
To comply, businesses must integrate technical solutions and provide evidence-based claims. The short timeline for preparation means organizations need to quickly align their processes with these new rules.
Tools like Devera simplify this process by offering real-time carbon footprint tracking and standardized reporting that meets ISO standards. These technologies help businesses keep accurate records while keeping up with changing regulations.
The directive’s impact extends beyond the EU, raising the bar for environmental marketing worldwide. By enforcing verified claims and consistent reporting, it establishes a new level of accountability for businesses everywhere.
FAQs
What is the fine for greenwashing in the EU?
Fines under the directive start at 4% of a company's annual EU turnover. Other penalties may include exclusion from public tenders and confiscation of revenue gained through misleading claims. For detailed information, check the Penalty Levels section above.
Are small businesses exempt from these penalties?
The directive includes specific rules based on company size:
Micro-enterprises (fewer than 10 employees and less than €2M turnover) are fully exempt unless they choose to participate voluntarily[3].
SMEs are given an additional 12-month grace period to comply compared to larger companies[7].
What verification is needed before making environmental claims?
Companies must meet these requirements:
Claims must be pre-approved by accredited verifiers within 30 days[7].
All environmental statements must be backed by scientific evidence.
How does the directive handle carbon offsetting claims?
There are clear restrictions on how carbon offsets can be communicated:
Claims cannot rely primarily on carbon offsets.
Offsets can only be mentioned after companies have maximized direct emissions reductions.
Only EU-certified carbon credits can be referenced[5].
"The directive maintains the existing ban on claims entirely based on carbon offsetting. However, companies that use carbon offsets or removals as a complementary measure, after reducing their footprint 'as much as possible,' may mention these activities in their advertising."[5]
What steps ensure compliance with the new rules?
To stay compliant, companies should:
Conduct a thorough review of all current environmental claims.
Train staff on the directive's requirements.
For more details, see the Steps to Follow the Rules section.
