EU anti-greenwashing U-turn signals compliance uncertainty

The European Commission announced its plans to withdraw the proposed Green Claims Directive on 20 June following two years of negotiations, marking a significant shift in the trajectory of EU consumer protection law.

The proposals were first announced in March 2023 in a bid to establish a harmonised, EU-wide framework for substantiating environmental claims made by businesses. The Green Claims Directive was expected to address the proliferation of unverified and misleading environmental marketing across the EU after a study found that more than half of so-called ‘green’ claims by companies were vague or misleading and some 40% were completely unfounded.

The directive would have required businesses to provide scientific evidence to support claims such as ‘climate neutral’ or ‘eco-friendly,’ and to submit such claims to independent verification. However, the Commission, citing its “simplification agenda”, has opted to abandon the proposal, reportedly in response to political pressure and assertions that the directive would impose excessive compliance and administrative burdens on businesses.

Tadeusz Gielas, a competition and consumer law expert at Pinsent Masons, said the Commission’s decision may introduce significant compliance uncertainties for businesses. “In the absence of a unified EU framework, businesses may now face a fragmented regulatory landscape, with individual member states potentially adopting divergent approaches to environmental claims made by traders when marketing goods and services to consumers,” he said. “This may increase the risk of inconsistent enforcement and legal uncertainty within the EU, particularly for multinational companies that had begun aligning their practices in anticipation of the directive. Moreover, the withdrawal could embolden less scrupulous traders to engage in greenwashing, potentially eroding consumer trust in environmental claims.”

The directive previously enjoyed considerable support from the European Parliament and Council of the EU. The Commission’s decision to abandon negotiations is likely to raise concerns about the EU’s commitment to its broader sustainability agenda, which has suffered several critical setbacks in recent months. In February, EU policymakers unveiled proposals that watered down sustainability-related reporting and due diligence requirements.

Following the Commission’s announcement, the European Council formally cancelled trilogue negotiations that had been due to take place at the start of this week. Earlier, Poland, which currently holds the Council’s rotating presidency, had indicated its willingness to continue discussions on the directive. However, a spokesperson for the Polish government said now “too many doubts” prevailed and it needed “clarity” from the Commission to continue negotiations. It is not yet clear when the withdrawal decision will be approved by the Commission’s political leadership, the EU College of Commissioners.

Members of the Renew group in the European Parliament have also expressed frustration, arguing that the Commission’s move undermines the legislative process and weakens consumer protection standards.

However, Dr. Fabian Klein, an intellectual property and advertising expert at Pinsent Masons, said the Commission’s decision to withdraw from the directive should not be seen as "the end of greenwashing regulation in the EU". In particular, he pointed to the Empowering Consumer Directive (EmpCo), which was approved by the European Parliament in March 2024 and also provides for specific regulations around green advertising. However, instead of requiring the need for a new regulatory regime and a pre-use validation as proposed under the Green Claims Directive – and all of the compliance and administrative burdens that this would have triggered – he said the EmpCo directive will further fine-tune existing regulations with respect to misleading advertising. "The existing rules and the upcoming implementation of the EmpCo – which is set to kick in in September 2026 – will make sure that the topic of greenwashing will stay in focus for interest groups and consumers in the EU alike," said Klein.

In the UK, meanwhile, the consumer protection regime has been recently strengthened by the Digital Markets, Competition and Consumers Act 2024 (DMCC Act), which granted the Competition and Markets Authority (CMA) new direct enforcement powers effective from 6 April 2025. Under the DMCC Act, the CMA can impose fines of up to 10% of a company’s global turnover for breaches of consumer law, including misleading green claims.

The act also restated and expanded substantive consumer protection law provisions on unfair commercial practices (UCPs) – which cover greenwashing – and has introduced new rules on fake reviews and drip-pricing. The DMCC Act has also introduced new rules on subscription contracts, although those provisions are not expected to come into force until 2026, with the precise timeframes yet to be confirmed.

The impact of the DMCC Act developments will also be felt outside of the UK given that any businesses that market or promote goods, services or digital content to UK consumers must comply with UK consumer protection law, even if they are not located in the UK.

Angelique Bret, a competition and consumer law expert at Pinsent Masons, said these moves signalled the UK’s increasingly assertive stance on greenwashing. “The CMA has been proactive in enforcing its Green Claims Code, which sets out clear principles for making environmental claims that are truthful, clear, and substantiated,” she said.

The CMA recently issued greenwashing compliance guidance to fashion retailers and has also warned several high-profile brands about the use of vague or misleading terminology in their marketing. “These actions reflect a broader trend in UK enforcement, where consumer protection is increasingly viewed through the lens of sustainability and corporate accountability,” said Bret.

The growing divergence between the EU and UK approaches to tackling greenwashing presents a complex compliance landscape for businesses to navigate, warned Gielas. “While the EU’s retreat from a harmonised European consumer law framework for tacking green claims may offer businesses short-term relief from regulatory obligations, it may also create long-term uncertainty,” he said. “By contrast, the UK’s clear and enforceable standards provide a more predictable, albeit stringent, regulatory environment.”