Honesty Under Pressure: How Companies Are Responding to Greenwashing Allegations After the Failure of the Green Claims Directive

An Expert’s View

Magdalena Pasik, Water Management and Environmental Engineer

The growing importance of climate protection, energy transition, and corporate responsibility has made environmental communication one of the key tools for building competitive advantage. Increasing social pressure and consumer expectations are pushing companies to present themselves as organizations operating in accordance with the principles of sustainable development. Unfortunately, this message does not always reflect reality. More and more frequently, we encounter the phenomenon of so-called greenwashing—which undermines trust in ecological claims and slows the pace of real environmental change.

In response to this problem, in March 2023, the European Commission proposed the Green Claims Directive, aimed at combating false or misleading environmental claims. Its goal was to introduce common rules and requirements to organize the market of green marketing declarations across the European Union. The proposal included, among others, the obligation to provide scientific evidence for every environmental claim, independent verification by accredited bodies, and a ban on using vague slogans like “green” or “eco” unless supported by a life cycle analysis of the product.

However, on June 20, 2025, the European Commission officially withdrew the Green Claims Directive proposal. The main reasons for this decision were political pressure and concerns about the costs and complexity of implementing the new rules. Opponents of the proposal—including some EU member states and influential political factions in the European Parliament—argued that the proposed obligations would excessively burden companies, especially SMEs, by forcing them to undergo costly verification and adjust their marketing communications. A lack of consensus between the Parliament and the Council of the EU effectively blocked further legislative work, and the directive did not enter into force. In light of abandoning this legislation, do any instruments still safeguard corporate integrity? Let’s try to answer that question.

What is Greenwashing?

Greenwashing is the act of knowingly or unknowingly conveying information suggesting that a product, service, or company activity is environmentally friendly when, in fact, it does not meet such criteria. This can take the form of slogans such as “eco,” “bio,” or “planet-friendly,” as well as the use of nature-related colors and symbols without evidence of actual environmental impact. These practices may appear in many forms—from product-related greenwashing to image-related, process-related, or the use of fake labels and unjustified claims of climate neutrality.

The core problem with greenwashing is the lack of reliable evidence and transparency. Consumers are often unable to verify the truthfulness of marketing claims, and companies are not required to disclose documentation proving their authenticity. This leads to serious consequences—for both the environment and the market, which becomes dominated by unfair competition.

Provisions of the Green Claims Directive

The Green Claims Directive was part of the European Green Deal and aimed to ensure greater transparency and credibility of environmental claims. It included the obligation to scientifically substantiate any statements regarding a product’s or company’s environmental impact. This meant conducting a Life Cycle Assessment (LCA) and covering all stages—from raw material extraction to product disposal. Companies were also to be required to submit evidence supporting their claims to independent verifying bodies. Verification was to occur before publishing the information, marking a significant shift from the current free-market communication model. The directive also foresaw the harmonization of certification systems—only officially approved labels and certificates would be permitted.

The draft directive prohibited unsubstantiated general marketing claims such as “green,” “natural,” or “climate-neutral” unless backed by life cycle analysis and actual environmental impact. Also banned were declarations based solely on carbon offsets without demonstrating real emissions reduction. Private and unverified eco-labels that could mislead consumers were to be prohibited. Companies would thus be required not only to tell the truth but to prove it before the message reached the public. This approach aimed to eliminate dishonest practices and create a level playing field for businesses genuinely investing in sustainability.

Penalties and Consequences

Businesses that violated the proposed regulations would have faced serious consequences. Sanctions of up to 4% of annual EU turnover were envisioned, along with exclusion from public procurement, confiscation of profits gained through deceptive practices, and the obligation to publicly correct misleading information. From a financial market perspective, greenwashing began to be seen as a risk factor—investors and rating agencies started to consider these aspects in their assessments, which could lead to lower ESG ratings and loss of access to sustainable finance.

Why Was the Directive Withdrawn?

On June 20, 2025, the European Commission officially withdrew the Green Claims Directive proposal. This decision was driven primarily by political pressure and concerns over the administrative burden for businesses—especially for SMEs. A lack of consensus among member states and major political factions in the European Parliament stalled further legislative progress. Critics also argued that the directive did not sufficiently consider sector-specific characteristics and might have increased compliance costs without delivering real environmental benefits.

The Commission, however, emphasized that the withdrawal does not mean abandoning the fight against greenwashing. Existing directives, such as the Unfair Commercial Practices Directive (UCPD) and the Empowering Consumers for the Green Transition Directive (ECGT), already contain mechanisms to combat false environmental claims and can serve as legal grounds for holding companies accountable. It was also suggested that the topic may return in a simplified form—possibly integrated into existing ESG or LCA frameworks—in the coming years.

Mechanisms of UCPD and ECGT

Following the withdrawal of the Green Claims Directive in June 2025, the EU chose to combat greenwashing based on existing and concurrently developed legal instruments. The most important among them is the Empowering Consumers for the Green Transition Directive (EU 2024/825), adopted in 2024 and commonly known as EmpCo or ECGT.

Unlike Green Claims, which aimed at preventive verification of each environmental claim by accredited entities, EmpCo integrates the rules of honest marketing communication into broader consumer protection law. This shifts the emphasis from ex-ante control to post-factum control—but with more clearly defined evaluation criteria.

The new regulations significantly raise the bar for businesses regarding the transparency, precision, and substantiation of environmental claims. In particular, vague, unclear, or misleading statements such as “eco-friendly,” “green,” or “environmentally safe” are banned unless supported by solid, verifiable evidence. Companies must provide specific information about product features, environmental impact, and reference methodologies and data sources. Transparency is also required regarding the scope of the claim—e.g., indicating it applies only to certain stages of the product life cycle.

The directive also focuses on emissions offsetting. It prohibits suggesting that a product is climate-neutral based solely on offsets without actual carbon footprint reduction throughout the product’s life cycle. Companies must present both emissions data and evidence of offset project effectiveness, meeting recognized international standards such as the Verified Carbon Standard (VCS) or Gold Standard.

Another important area involves false or unauthorized eco-labels. Companies may not create and use their own unclear “eco-labels” that could mislead consumers about a product’s environmental impact. Labeling must be based on certification systems recognized at the EU or international level—such as EU Ecolabel or EMAS. Finally, the directive addresses manipulation around product durability—for example, unjustified shortening of device life cycles, repair barriers, or software updates that worsen performance. The new regulations support the right to repair and require informing consumers about expected product lifespan and spare parts availability.

Enforcement at the National Level

According to the partial harmonization mechanism, each member state must implement the EmpCo directive by March 27, 2026, with actual enforcement starting in September 2026. In Poland, the Office of Competition and Consumer Protection (UOKiK) will be the key institution overseeing compliance with the new regulations. UOKiK already holds broad powers to enforce laws against unfair market practices. It can impose administrative fines, initiate investigations, and issue warnings against businesses engaged in greenwashing.

It’s worth noting that, aside from EmpCo, other consumer protection laws still apply—most notably the Unfair Commercial Practices Directive (UCPD), Poland’s Act on Counteracting Unfair Market Practices, and civil code provisions related to liability for misleading actions.

The Role of NGOs and Investors

In the absence of detailed sector-specific regulation, non-institutional market watchdogs—such as NGOs and investors—are gaining importance. NGOs, foundations, and associations monitor company behavior, analyze ESG reports, expose manipulation, and intervene with regulators. Their activity helps maintain public and reputational pressure on companies abusing environmental rhetoric.

Meanwhile, investors increasingly view environmental credibility as a key decision-making factor. Companies lacking transparency or involved in greenwashing risk exclusion from investment portfolios. Thus, honest environmental communication becomes not just a matter of reputation but a strategic component of risk management and stakeholder relations.

How to Prepare for the Future?

Despite the withdrawal of the directive, its assumptions may return—in the form of new legislation, national solutions, or updates to existing frameworks. Companies that already choose transparency, audits, and verification of environmental claims will gain a competitive edge and prepare for future regulatory requirements.

Key actions include implementing Life Cycle Assessment standards, ESG reporting, cooperating with independent auditors, and regularly reviewing marketing communication. Education will also be essential—both internally and in relations with clients and business partners. Developing internal responsible communication policies and training marketing and sales teams can significantly reduce the risk of violations and improve the quality of claims made to consumers.

Greenwashing remains a real threat to market credibility—and to companies that fail to meet rising social, consumer, and investor expectations. Although the Green Claims Directive was withdrawn, this does not mean a lack of regulation—existing laws and increasing market pressure force companies toward greater responsibility and transparency. The coming years should be a time of intensive preparation for change. Honest, data-driven environmental communication will become the cornerstone of modern business strategy and could determine a company’s position in the green economy of the future.

Sources: kpmg-law.de; esg.sustainability-directory.com; bazhum.muzhp.pl; Magdalena Bierzyńska–Sudoł – Green Marketing and Greenwashing – Analysis of the phenomenon in brand promotion on selected examples