'Fossil-free living within one generation'

Greenwashing occurs when companies mislead consumers by presenting their products or services as more sustainable than they truly are. Take Vattenfall, one of the largest energy suppliers in the Netherlands with its marketing slogan ‘fossil-free living within one generation’. The Dutch Authority for Consumers and Markets (ACM) deemed this claim misleading as the phrases ‘fossil-free’ and ‘one generation’ were considered too vague to be verifiable. Vattenfall reached an agreement with the ACM to remove the slogan from its adverts.

Vattenfall’s case is part of a bigger problem that exists throughout the EU. The growing practice of greenwashing, particularly relating to climate neutrality, has led the EU to introduce two new directives to set clearer standards for sustainability claims. This blog explores the new directives and the consequences for Dutch companies.

Dutch regulation

The Dutch law on Unfair Commercial Practices is based on the 2005 Directive on Unfair Commercial Practices (UCP Directive). It amends the Dutch Civil Code by including Article 6:193c, a transposition of Article 6 of the UCP Directive, which addresses information that is factually incorrect or likely to mislead the average consumer. Although this provision is not specifically tailored to sustainability claims, it provides a legal basis for enforcement authorities to act against misleading green claims, as the ACM did in relation to Vattenfall. Due to the open nature of Article 6:193c, the ACM has issued five rules of thumb to offer further guidance for companies making green claims, such as ‘clarifying the sustainability benefits of a product’ and ‘substantiating sustainability claims with facts’. However, these rules are non-binding, and different criteria may apply in other Member States.

The new EU directives

The first directive (Directive 2024/825), on Empowering Consumers for the Green Transition, entered into force in 2024 and adds specifically unsubstantiated environmental claims as misleading under the UCP Directive. It requires that a claim is supported by clear, objective, publicly available and verifiable information. So under these new rules, which must be implemented in national law by March 2026, it would be crystal clear that Vattenfall’s slogan lacks both a clear commitment and a time-bound goal, when not substantiated by actions and facts. The second directive, which was originally planned to come into effect in 2026, the Green Claims Directive, goes further by requiring scientific substantiation, harmonised labelling and an ex-ante verification of environmental claims by a third-party when making a sustainability claim. Although this directive has been paused by the European Commission as part of relaxing Environmental, Social and Governance (ESG) regulations, the message of greater transparency on sustainability it promotes has definitely reached companies, given the attention it is receiving from law firms and accountants.

Consequences of the new European directives

The directives bring greater legal certainty and require companies to substantiate their green claims more thoroughly, leading to a level playing field. This serves both directives’ core purpose: ensuring that only companies which genuinely produce more sustainable products may promote their sustainability. Enhanced transparency helps consumers to make informed choices, aligning with the overarching goal of empowering consumers for the green transition. However, there are also concerns. The paused Green Claims Directive requires sustainability claims to be verified by an external expert, which can lead to significant compliance costs. This could place a disproportionate burden on smaller companies, potentially discouraging them from making green claims, even when they are legitimate. As a result, consumers aiming to buy green products or services might overlook genuinely sustainable options that lack verified claims.

Outlook

The new directives promise to increase legal certainty and improve consumer protection against greenwashing by establishing clear requirements, instead of non-binding guidelines of the ACM. Presumably, the number of misleading green claims is likely to decrease. However, the verification obligation poses challenges for smaller companies, as high costs may discourage them from communicating their genuine sustainability efforts. But even if requirements are relaxed, the new directives are a true green turnabout for protecting consumers against greenwashing.

This blog was written as part of the Sustainability & Law lecture series.