Claims that appeal to consumers’ environmental awareness and their concern about climate change, are soon to be subject to a new regulatory framework as the European Commission has proposed the Green Claims Directive. This article discusses the potential challenges of the proposed Directive to the Swedish food industry, an industry often associated with sustainability-driven innovation.
Over the years, eco-labels and certifications have become increasingly common. The Swedish food industry is no exception, as stated in a recent report examining the relationship between consumer trust, eco-labels, and sustainability (KRAV, 2021, Den hållbara maten – en insiktsrapport från KRAV). Besides eco-labels and certifications, it is not unusual that companies highlight non-mandatory environmental and sustainability efforts in their marketing. However, the industry struggles with so called “greenwashing”, namely marketing claims about the environmental impact of products that are misleading or false statements. To combat greenwashing the European Commission has proposed the Green Claims Directive, which aims at making green claims reliable, comparable, and verifiable throughout the EU. The proposal is currently reviewed by the European Parliament and the Council and will formally enter into force once a common text is agreed upon.
As part of the legislative process, the Swedish legislator invited referral bodies to review the proposed Directive. These included various stakeholders in the Swedish food industry, such as trade- and employer associations, and interest organisations for entrepreneurs in agriculture, food processing, and grocery trade. This article discusses the potential challenges of the proposed Directive to the Swedish food industry, based on the main concerns raised by these stakeholders.
Under the proposed Directive, companies may only use a green claim for commercial purposes if the claim is approved by a ‘verifier’. The verifier should be an accredited third-party body, and the claim should only be approved if it meets a number of criteria which are outlined in the Directive. If the verifier finds that the claim meets the criteria, it shall issue a certificate of conformity that allows the company to use the green claim for commercial purposes throughout the EU. The companies shall cover the costs of verifying the green claim themselves.
The concept of verification is similar to the current legislation in Sweden on green claims. Green claims are mainly regulated through the rules on generally accepted marketing practices, misleading marketing, and comparative advertising in the Swedish Marketing Act (2008:486). A key aspect of the current Swedish regulation is that green claims must be substantiated – meaning that they must be supported by evidence. Verification similarly requires that green claims are supported by evidence. However, the verification procedure in the proposed Directive imposes a stricter criterion, as it must be done in advance.
As pointed out by all the referral bodies operating in the Swedish food industry, the proposed verification procedure risks so called “green hushing” if the costs of verifying a green claim are disproportionate to the commercial value of the green claim itself. As recognised in Swedish marketing case law, ethical considerations like green claims, have a high commercial value as they influence consumers demands for a company’s goods. If the proposed verification procedure increases the costs disproportionally and imposes a heavy administrative burden, companies may be deterred from making non-mandatory environmental efforts, as it no longer can be deemed commercially viable. Worth noting is that the proposed Directive does not prescribe any guidance on what methodology should be used for verifying claims. Given that some methods may be more costly it is currently difficult to assess the costs of a verification procedure.
The proposed Directive also includes provisions that may affect eco-labels and third-party certification schemes, depending on what the scope of application of the finalised Directive will have in relation to already existing regulations.
Many food operators in Sweden create and market their own ecological product lines and trademarks to ensure that environmentally conscious alternatives are available to their customers. The Swedish Food Retailers Federation (Sw. Svensk Dagligvaruhandel) has emphasised that it is unclear whether labels and product names that contain words like “eco”, or similar, will be considered green claims themselves. The Directive does not explicitly state whether trademarks registered under national, EU, or international intellectual property law are exempt from the Directive. There is however an indication that both labels and product names will not be exempt, as the proposed Directive will be applicable to “environmental claims”, as defined in the proposed Directive for Consumer Empowerment (COM (2022) 143 final). Under this definition such claims can be made in any form, including through labels, brand names, company names, and product names.
The proposed Directive also includes provisions on eco-labelling and third-party certifications schemes from both public and private operators. The proposed Directive prohibits the creation of new publicly owned eco-label schemes and certifications but allows existing ones to be used if they comply with certain requirements listed in the proposed Directive.
As for privately owned eco-labelling schemes and certifications, the same requirements apply under the proposed Directive. Further, the proposal prescribes that Member States must establish a national system for approving and evaluating them. There are several private third-party certifications well-known to consumers in Sweden, which are often recognised as a quality indicator. According to KRAV, a private organisation that issues certifications under their rules on organic farming, livestock, and food processing, third-party certification is an effective way for producers to transparently display their sustainability efforts. KRAV has questioned whether private third-party certification operators that are already covered by Regulation (EU) 2018/848 on organic production and labelling of organic products are exempt from the Green Claims Directive or not.
It remains to be seen whether the proposed Green Claims Directive will be applied extensively to trademarks and product names, and privately owned third-party certifications that are already covered by current EU legislation on the labelling of organic products.