[Apparel industry] EU’s Unfair Commercial Practices Directive (UCPD) vs. Green Claims Directive

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This article was originally published on the Carbonfact blog, find the full version here.

In this article we are delving into two European Union directives that hold significant implications for the industry: the existing Unfair Commercial Practices Directive and the upcoming Green Claims Directive.

We will answer the following questions:

• What are the UCPD and the Green Claims Directive?
• How does the UCPD impact environmental claims and labeling schemes?
• How will the Green Claims Directive impact labeling practices?
• What is the timeline for the Green Claims Directive?
• How to prepare and stay compliant?

What are the UCPD and the Green Claims Directive?

The Unfair Commercial Practices Directive (UCPD), implemented in 2005, aims to safeguard consumers by prohibiting deceptive marketing practices and ensuring fair business conduct. Recently revised in December 2021 to include guidance on sustainable claims, it currently stands as the sole EU regulation addressing environmental impact claims.

In contrast, the Green Claims Directive, proposed in March 2023, seeks to establish stricter rules regarding environmental claims. It mandates companies to substantiate such claims, provide guidance on their communication, and introduce regulations on environmental labeling. Together, these directives work in tandem, with the Green Claims Directive complementing the UCPD by enforcing specific guidelines, particularly regarding substantiation and verification.

How does the UCPD impact environmental claims and labeling schemes?

The UCPD, while applicable to various commercial practices, particularly influences environmental claims and labeling. It defines "environmental claims" as practices suggesting positive environmental impacts. Real-life examples of greenwashing include labeling non-recyclable polyester as "recycled" and advertising "energy-efficiency" without reducing the supply chain's environmental impact.

Although less specific than the Green Claims Directive, the UCPD provides guidelines for voluntary environmental claims:

• Assess a product's environmental impact across its entire lifecycle and supply chain.
• Ensure environmental claims relate specifically to the product, not general sustainability practices.
• Maintain clear and unambiguous communication about key environmental impacts.
• Conduct comparative assessments using the same method and criteria when claiming a lower environmental impact compared to competitors.

Notably, the UCPD has already been enforced against major fashion retailers like Zalando, H&M and Decathlon for sharing misleading environmental claims without context or clarity.

How will the Green Claims Directive impact labeling practices?

The Green Claims Directive aims to enhance consumer trust in environmental claims made by companies. It builds upon the UCPD, specifically focusing on voluntary business-to-consumer environmental claims. The requirements laid out in the directive would take precedent over the UCPD and would apply to any voluntary environmental claims or labeling schemes not regulated by other EU acts.

Key changes include:

• Mandating companies to assess their claims, specifying if they apply to the whole product or part of it.
• Requiring claims to be based on valid scientific evidence and consider the entire product lifecycle.
• Ensuring that positive environmental achievements do not have adverse effects on climate change, resource consumption, pollution, biodiversity, etc.

In addition to verification, the Green Claims Directive also targets the abundance of environmental labeling schemes and provides clear guidance on their operation. There are numerous examples of fashion brands advertising an “eco-label” of their own creation. Learn more about environmental labeling schemes here.

What is the timeline for the Green Claims Directive?

The Green Claims Directive, proposed in early 2023, is anticipated to be voted upon in June 2024. Upon implementation, EU member states will have 2 years to develop their national laws and ensure compliance. Notably, the directive applies to all businesses making voluntary environmental claims, except for microenterprises with fewer than 10 employees and less than €2 million in turnover.

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