Proposed Green Claims Directive – What are Contribution Claims/Offset?

The Proposed Green Claims Directive: A New Legal Framework for Environmental Claims

The business world is experiencing a significant shift towards a more sustainable and responsible approach. This trend is reflected in the increasing use of environmental claims in advertising and marketing, where companies highlight their commitment to reducing their environmental impact. However, the lack of a clear and harmonised legal framework at European level has led to some uncertainty and confusion in the market.

In response to this need, the European Commission has presented a Proposal for a Directive on Green Claims. This proposal aims to establish a robust and coherent legal framework for such claims in the European Union in order to protect consumers and ensure fair competition between companies.

What are Contribution Claims /Offset?

Contribution Claims, also known as Offset Claims, are a type of environmental claim in which a company claims to offset its carbon footprint or environmental impact by funding emission reduction or environmental protection projects elsewhere. For example, a company might claim to “neutralise” CO2 emissions from its flights by donating money to a reforestation project.

The proposed Directive introduces specific requirements for Contribution Claims to ensure that they are accurate, verifiable and not misleading. Companies making Contribution Claims will have to provide clear and transparent information on the projects they finance, including the methodology used to calculate the offset emissions and the actual environmental impact of the projects.

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Implications for Business

Companies making such declarations should pay particular attention to the following aspects:

1. Review of marketing and advertising practices:

• It is essential to review all environmental claims used in advertising materials, websites, social media and any other form of communication with consumers.
• Companies should ensure that all claims are accurate, verifiable, not misleading and supported by sound scientific evidence.
• The use of vague, ambiguous or misleading language should be avoided.

2. Compliance with the specific requirements for Contribution Claims:

• Companies making Contribution Claims should provide clear and transparent information about the projects they fund, including:
  • The methodology used to calculate offset emissions.
  • The real environmental impact of projects.
  • The characteristics and location of the projects.
  • The entities responsible for the implementation and monitoring of the projects.
• Information on Contribution Claims should be easily accessible to consumers, both in advertising materials and on the company’s website.

3. Implementation of verification and monitoring systems:

• Companies should establish internal systems to verify and monitor compliance with the requirements of the DCG.
• These systems should include procedures for data collection and analysis, records management and internal audits.
• Certification by an independent body is recommended to demonstrate the company’s commitment to transparency and accountability in environmental reporting.

4. Sanctions risk management:

• Failure to comply with the requirements of the DCG can lead to significant penalties for companies, including fines, injunctions and even criminal prosecution.
• Expert legal advice is important to identify and mitigate the risks associated with environmental declarations.

5. Opportunities for business:

• The DCG also presents opportunities for companies that can demonstrate a genuine commitment to sustainability.
• Companies that adopt responsible and transparent marketing and advertising practices can strengthen their reputation, increase consumer confidence and improve their market positioning.
• The DCG can also stimulate innovation in the development of sustainable products and services.

Conclusion

The proposed Green Claims Directive represents an important step towards a more transparent and accountable market for environmental claims. Companies wishing to use such claims will need to ensure that they comply with the new legal requirements to avoid penalties and protect their reputation. ILP Abogados can be your trusted partner in this process, providing you with the specialist legal advice you need to navigate the complex Green Claims legal framework.

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