Recycling and Carbon Emissions Labelling

With many different regulations on recycling and waste reduction out there, and in relation to carbon foot printing it can be confusing, time consuming and costly to ensure each product is labelled correctly. To name a few of the waste directives

• Directive 94/62/EC – Identifying packaging materials and recycling instructions for consumers.
• Directive (EU) 2019/904 – Reducing the Impact of Certain plastic products in the EU.
• The EU’s Circular Economy Action Plan
• Since BREXIT, the UK is now in charge of its own recycling and packaging policy. However, as EU law was retained after the transition, many of the same regulations and evolving schemes in the EU apply.In terms of food labelling requirements, most of those in the UK are?currently voluntary, with the membership organisation On-Pack Recycle Label (OPRL) being widely used.

Managing waste such that it has a commercial value makes clear sense and can be achieved from some initiatives such as remove, reduce, and reuse materials also reduce one’s carbon emissions. However, if you cannot measure it how would you confidently know you have improved?

Greenwashing laws may be the first of their kind, but the fight against greenwashing is an issue that all stakeholders—manufacturers, customers, investors, or regulators—are increasingly vigilant about as the cost of poor attention to detail may result in significant punitive fines.

In general, the EU Green Claims Directive is a more stringent set of rules than the UK’s Green Claims Code. This is because the Directive aims to create a single set of rules for all businesses operating in the EU to protect consumers and level the playing field for businesses. Despite a few differences, these laws largely function similarly and require many of the same rules.

Climate change should be provoking a rapid transition in global business practices and prompting companies to focus on sustainability. But as more companies emphasize sustainable operations, the expectations and understanding of what constitutes real?climate action have shifted dramatically. Earlier in 2023, the European Union and the United Kingdom enacted new legislation to curb Greenwashing. The new rules are designed to stop companies from providing misleading statements about the environmental benefits of their products, services, or operations.

Understanding and navigating these changes and requirements can be complex for companies, but it’s crucial for sustainability efforts and business’s reputation. Here’s our guide to what the laws entail, who they impact, and what it means for businesses going forward.

New European anti-greenwashing laws—one from the?UK’s Competition and Markets Authority?(CMA) and the other, the?EU’s proposed Green Claims Directive—were introduced primarily due to two intertwined factors: the heightened focus on environmental sustainability worldwide (floods, fires, droughts, melting ice caps and sea warming) and the growing prevalence of misleading greenwashing claims.

To appeal to an increasingly environmentally conscious customer base, businesses often portray their products or services as more eco-friendly than perhaps they are. But consumers and organizations have caught on, and now there’s a push for greater transparency.

Misinformation undermines genuine efforts toward sustainable development and can lead to a damaging misallocation of resources, which is, after all, what ESG (Environmental, Social and Governance)?is all about: understanding financially material risks and opportunities so capital markets can price risk. To curb this practice and enforce a higher level of corporate accountability, the region has decided to legislate against greenwashing. The UK’s proposed new rules would require businesses to be more transparent about their environmental claims, while the EU’s proposed Green Claims Directive would set out a framework for businesses to make environmental claims that are accurate, clear, and substantiated.

The new laws cover an array of requirements, all designed to ensure that environmental claims by companies are accurate, reliable, and backed by substantial evidence. Critically, to ensure that the laws are effective, companies could receive penalties—significant fines and public disclosure of the company’s non-compliance.

It’s important to note that while the two texts are very similar, they are, in fact, different initiatives. The UK’s Green Claims Code and the EU Green Claims Directive are sets of rules designed to prevent greenwashing or misleading environmental claims about products or services. The UK is mostly aligned with the ambitious climate and sustainability laws and policies of the EU, like the Corporate Sustainability Reporting Directive (CSRD) which is the new EU legislation requiring all large companies to publish regular reports on their environmental and social impact activities. It helps investors, consumers, policymakers, and other stakeholders evaluate large companies’ non-financial performance.

However, there are a few key differences:

In general, the EU Green Claims Directive is a more stringent set of rules than the UK’s Green Claims Code. This is because the Directive aims to create a single set of rules for all businesses operating in the EU to protect consumers and level the playing field for businesses. Despite a few differences, these laws largely function similarly and require many of the same rules. We’ll talk about them as a similar force in this post because the differences are minimal in action, and companies in both the UK and EU will have to make the same changes to meet the market where it’s at.

Here are key changes that the rules will require for impacted companies:

1. Environmental claims must be backed by data?– Companies must ensure that their environmental claims align with the actual environmental impact of their products or services—and face severe penalties for misleading or unsubstantiated claims. This means, for instance, that estimates are no longer accepted. If a business claims to have reduced its carbon footprint by 20%, it must prove it. It must collect data—such as detailed records of energy use, waste production, and greenhouse gas emissions.
2. Full transparency and evidence?– Companies are required to disclose details and define the terms of their environmental impact. For example, suppose a company claims its product is made with “100% sustainable materials.” The company must now provide clear, accessible evidence of this. It needs to clearly define what it considers “sustainable,” disclose the material sources, and present proof of their sustainability, such as certificates from recognized bodies or data from lifecycle analyses (LCA).
3. Requires auditing and assurance?– Companies must have their environmental claims audited by an independent third party to verify their accuracy. This might involve hiring an external environmental consultancy, independent auditor, to review their data collection methods, check their calculations, and verify the truth of their claims.
4. Demands real reduction targets?– The laws require businesses to set concrete, measurable targets to reduce their environmental impact?and demonstrate progress towards these targets. The effect is twofold: a. Tracked and reported targets?–For example, if a company has a fleet of delivery vehicles, it might set a target to switch a certain percentage to electric vehicles by a specific date. It should then regularly report on its progress towards this target. b. Reduction—not carbon offsets?– If a company has relied on carbon offsetting to achieve its climate targets—for example, by investing in tree-planting schemes to offset its own carbon emissions—this is no longer allowed. Instead, the company will need to?reduce?its actual emissions, perhaps by investing in renewable energy sources, improving energy efficiency, or redesigning its products to be less carbon intensive.

Ultimately, the law outlines specific ways companies must walk the walk, not just talk the talk when it comes to sustainability efforts.

The best way to comply with these new laws—and future ones—is to create a controlled system for climate data collection and reporting, as well as external verification processes.

Carbon accounting software like Benchmark, offer the power and flexibility of in-house experts or consultant services at a fraction of the price.

Additionally, independent verification?of environmental claims is now necessary and can be done via a third-party auditor. Businesses should protect themselves by hiring external auditors well-versed in environmental standards and regulations to review their environmental data and validate their sustainability claims. Pursuing recognised certifications?can also bolster a company’s credibility and demonstrate its commitment to environmental stewardship.

Businesses need to adopt transparent and regular reporting practices. Adhering to recognized reporting standards, such as the (GRI) or Sustainability Accounting Standards Board (SASB), can ensure these reports are thorough, comparable, and transparent.

To effectively communicate their environmental efforts, businesses should also develop a clear communication strategy, which might involve publishing comprehensive annual sustainability reports?as well as regular updates on the company website, social media posts, and mentions in annual shareholder reports.

Stakeholder expectations, specifically investors, have changed. They expect companies to disclose material risks and environmental performance because investors and capital markets find this information decision critical. Different markets have different expectations (Europe has essentially codified GRI into law, whereas the U.S. anchors on the financial materiality approach of SASB) and selecting a platform that will facilitate these disclosures for your key stakeholders is critical. However, it’s also crucial to understand that these steps are not just about complying with legal requirements. They represent a commitment to genuine environmental responsibility, one that can align a business’s operations with the principles of sustainable development, build trust with stakeholders, and solidify its reputation as a sustainability leader.

Benchmark is a daily estimating, quotation running software solution used by some of the largest corporations in the packaging industry, driving commercial excellence throughout your organisation globally. Ideally suited for single site and multi-site global organisations, our software offers a unified solution for commercial and carbon modelling across your group. Supported by a team of packaging experts and cost engineers who also provide consultation to major brands and retailers. Benchmark has no vested interest in any one material and is verified to ISO 14067 standards for its CO?e modelling.

Other Sources for further information:

1. GOV.UK, “Greenwashing: CMA puts businesses on notice,”?https://www.gov.uk/government/news/greenwashing-cma-puts-businesses-on-noticeAccessed on July 20, 2023
2. European Commission, “Proposal for a Directive on Green Claims,”?https://environment.ec.europa.eu/publications/proposal-directive-green-claims_enAccessed on July 20, 2023
3. Bloomberg, “6 Ads Banned for Greenwashing by the UK’s Advertising Watchdog,”?https://www.bloomberg.com/news/articles/2023-05-27/six-examples-of-greenwashing-from-the-uk-s-advertising-authorityAccessed on July 20, 2023
4. Covington, “The Green Claims Global Drive: Developments in the UK, US and EU,”?https://www.globalpolicywatch.com/2023/05/the-green-claims-global-drive-developments-in-the-uk-us-and-eu/Accessed on July 20, 2023