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The ESG News Review: New rules compel big sustainability claims to be verified before publication

Credit: The ESG News Review

The slew of measures intended to clamp down on greenwashing by ensuring that claims are truthful and not distorted took a small, but important, step forward in Europe this week.

It may also prove to be an onerous and complicated step, although the EU has gone to lengths to assert that it has been well thought through.

Under the new standards that have been revealed, companies will, in future, have to submit their sustainability assertions to the EU, to then be scrutinised within 30 days by a team of accredited verifiers.

Failure to stick to the rules - beyond the consequences in the court of public opinion - will draw measures including being blocked from public procurement opportunities, revenue confiscation and fines amounting to at least four percent of the company’s annual turnover.

According to a piece in Euractive, the rules will cover assertions such as a product, service or business being “eco” or “green”.

In another piece, a European Parliament official was quoted as saying, “I am pleased that the solution proposed by the committees is balanced, brings more clarity to consumers and, at the same time, is, in many cases, less burdensome for businesses than the solution originally proposed.”

The new directive follows a previous EU ban on companies making green claims that are based solely on carbon offsetting schemes. It’s not yet final - there will need to be a vote on it in the parliament, which will likely take place after the EU’s June elections.

Reading the fine print, the new standards will apply to all companies selling goods and services in the EU bloc, regardless of where they are located and where they intend to publish their claims. It’s also important to appreciate that the directive is targeted squarely at protecting consumers by informing their purchasing choices fairly and accurately, rather than informing corporate investment decisions.

It’s fairly clear that the intention here is to prevent big claims over big actions that turn out not to have happened, at least according to the definitions of the new standards. And that will focus on any grandiose statements about ‘neutrality’ or ‘greenness’ that relate directly to carbon offsetting, rather than ongoing use of the words green or eco in more everyday references to positive environmental action.

But that said, the level of scrutiny, the verification process, and the overall direction of travel on preventing greenwashing should have a broader impact on the words that companies choose to use beyond the domain of carbon offsetting.

The ESG News Review is written by Steve Earl, a Partner at PR agency BOLDT.

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