Statement
BDI on the EU Commission's draft directive on the substantiation and communication of environmental claims (green claims) of 22.03.2023
BDI on the draft Green Claims Directive
Federation of German Industries (BDI)
Status: 26.05.2023
1. Moretransparencyinenvironmentalclaimsforproductsand services supportscompetition in the EUinternal market
Environmental claims are playing an increasingly important role in shaping consumers'opinionsandpurchasingdecisions.Thesustainabilityofproducts and services has become a competitive factor. Products declared as "green" orsustainablearenowexperiencinggreatergrowthintheEUdomesticmarket than other products. However, the quality of environmental claims and declarationsmadebyindividualmanufacturersabouttheirproductsand servicescanvarywidely.Thiscanbemisleadingforconsumersseekingreliable information for their consumption decisions. Within the EU, there are also around230voluntaryeco-labelsthatareusedandhaveverydifferentmodes of operation. The BDI therefore welcomes in principle theefforts ofthe EU Commissiontocreatemoretransparencyincompetitionwithregardtoenvironmental claims in business-to-consumer (B2B) transactions and to avoid "greenwashing".
2. Mandatory assessment by external inspection bodies Counterproductive
Art. 10 No. 1 and No. 2 require the Member States to develop verification systemsforenvironmentalclaimsandeco-labels.Therequirementsforverification are specified in the rest of Article 10. This obliges companies that want to make environmental claims or use environmental labelling systems to have these claims verified by external verification bodies (Art. 11). This reservationofpermissionforenvironmentallyrelatedcorporatecommunications is an instrument that has so far been foreign to German and European competition law and would constitute a disproportionate encroachment on theprotectedlegalpositionsofthecompaniesconcerned.
Since the implementation of Directive 2005/29/EC on Unfair Commercial Practices ("UCP Directive") in the business-to-consumer (B2C) area, uniformregulationsalreadyapplythroughouttheEUwithregardtounfaircommercial practices (principle of full harmonisation Art. 4 UCP Directive). In particular,theprohibitionofmisleadingcommercialpractices(Art.6,7UCP Directive) applies throughout the EU and also covers cases of "greenwashing"withoutfurtherado.
Inaddition,theseregulationswillleadtohighadministrativecostsandaconsiderable administrative and bureaucratic burden, which will inhibit spontaneity and speed, on which marketing lives to a large extent. The additional
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costs will affect companies of all sizes, but especially small and mediumsizedenterprises(SMEs).
Moreover,theadministrativeburdenisnotonlyrelevantforcompanies.The test centres and competent authorities of the Member States, which control thetestcertificates,alsohavetomakeaconsiderableadditionaleffort,which can lead to delays in the approval process. The EU Commission's proposal doesnotindicatewhetherithasbeenassessedatallhowmanysuchenvironment-relatedadvertisingclaimsaredevelopedacrossindustriesonadailyor annualbasis, and how an efficient infrastructure canbe built up to carryout the necessary verifications. As a result, fewer companies could find themselves in a position to communicate the environmentally friendly aspects of their products, which would not least be to the detriment of consumers. Investments in environmentally protective but "super-mandatory" measures thatarenot(allowedtobe)communicatedcouldhenceforthbeavoided.This, however,wouldruncountertothegoalsoftheEuropeanGreenDeal.
Mandatory prior checking should therefore either be dropped altogether or designedinsuchawaythatthebureaucraticburdenandcostsforcompanies and especially SMEs are kept as low as possible.
In addition, appropriate and sufficient transitional regulations on environmentaladvertisingclaimsonproductpackagingthatarealreadyonthemarket when the new requirements come into effect would be urgently needed. Finally,themaximumdurationofaverificationprocedureandregulationson dispute resolution between the advertising company and the verifying institutionwouldbenecessary.
3. Significantly increase transposition deadlines for member states
For the Member States, which are to set up the verification systems and accredit competent institutions, the time limits provided for this are far too short.Article25oftheproposedDirectiveprovidesthatMemberStatesshall adopt and publish the necessary laws, regulations and administrative provisionswithin18monthsoftheentryintoforceoftheDirectiveandthatthese measures shall apply 24 months after the entry into force of the Directive. However, this means that within only six months of the adoption of the implementing legislation by the Member States, governments will have to accredit asufficientnumberofverifierscapableofexaminingwhatis likelyto be a very large number of applications for verification and certification of
environmental claims and labels within this very short period. It is likely to be impossible to complete this task in just six months, with the result that a large proportion of environmental claims and labels will be discontinued within24monthsoftheDirectivecominginto force,includingmanyclaims thataresoundlybasedandmeettherequirementsoftheDirective.However, thiswouldruncountertotheobjectivesofthislegislativeinitiativetoinform consumers about the environmental characteristics of companies and their products and will severely hamper efforts to promote environmentally friendlyinnovation.Theentryintoforceofnationallegislationimplementing the ex-ante verification requirement in the Directive could realistically take placeattheearliest30monthsafterthedateofpublication.
4. Consider and maintain industry standards
Inthepast,manufacturersandassociationsweremotivatedbypublicinstitutions to enter into industry agreements and create environmental standards, someofwhichareprotectedbylogos,suchastheEMICODEbytheGemeinschaft Emissionskontrollierte Verlegewerkstoffe, Klebstoffe und Bauproduktee.V.(GEV)forlow-emissionchemicalbuildingproducts.This isnowsetupinternationally,buthadstartednationally.Thesesystemswould now be subjected to considerable bureaucratic requirements that are disproportionate. The design freedoms of the systems are considerably restricted (for example Art. 8), although they function well and provide orientation in themarket.Makingnewagreementsofthiskind wouldhardlybetackledby anyindustryafterthiseffort."
5. Minimise theeffort for updating the statements
AccordingtoArt.9,theaccuracyoftheenvironmentalclaimsmadewiththe advertising claims must be reviewed and updated no later than 5 years after the date on which the underlying studies or calculations were carried out. Reference should be made here to the associated costs and administrative burdeninvolvedinsuchareviewandupdate.Itisnotclearwhat,forexample, updatesneedtobedonefor.Ifnecessary,this mayalreadybenecessarydue to minor material changes, which must be ruled out. Therefore, clear statementsarenecessary.Inthefurtherprocedure,itmustalsobeensuredthatthe periodof5yearsisnotreducedinordertoavoidfurthercosts.
6. Extend period for possiblecorrective action
Art.15(1)obligesthecompetentauthoritiesoftheMemberStatestoregularly review the environmental claims used on the EU market and to publish the result to the public. In the event that environmental claims or labels are in conflict with the Directive, companies are required to take appropriate corrective action within 30 days of being notified by the authorities, according toArt.15(3).Whatconstitutesappropriatecorrectivemeasuresremainscompletelyopen.Thetimeframefortakingcorrectiveactionisalsofartooshort. Recalls,relabellingorthedevelopmentofnewpackagingneedtime.Theperiod of 30 days must therefore be extended urgently. Likewise, it should be clarifiedwhatappropriatemeasuresare.
7. Make sanction measures uniform acrossthe EU
Art. 17 states that the sanction rules are to be determined by member states. Thisjeopardisesthe equaltreatmentof companiesin thememberstates. For a level playing field, it is necessary to establish the same sanctioning rules within the member states of the EU, otherwise the countries will create different sets of fines. In Germany, on theother hand, the existing possibilities forlegalprotectionunderthelawonfairtradingwouldprobablyremain.Cooperation between authorities and member states seems to make sense here. The sanction rules must be proportionate and sufficiently deterrent to bring aboutcompliance.Itisrighttodifferentiatebetweenintentionalandnegligent infringements, as laid down in Art. 17, para. 2 (b). However, the measures specificallymentionedinArticle17(3)aretooharsh.
In particular, the skimming off of advantages provided for in Art. 17(3)(b) should be deleted or at least further specified. This is because in the case of complex products such as motor vehicles, the profit achieved is not necessarily (only) attributable to a specific advertising claim on environmental characteristics.Ifprofitsfromthesaleofproductsweretobeskimmedoffon thebasisofanunsubstantiatedenvironmentaladvertisingclaim,therewould be considerable economicrisks, especially in the case of high-priced goods, which would be disproportionate to the (alleged) advantage from the objectionableadvertising.Aprofitskimmingisthereforeonlypossibleifitcanbe proven that the profit achieved is due to the unsubstantiated environmental claim.Furthermore,suchalevyofprofitswouldhavetobeoffsetagainstthe finetobepaidunderArticle17(3)(a)inordertoavoiddoublepunishment.
8. Ensure involvementofall stakeholders
TheproposedDirectiveprovidesthattheEUCommissionmayadoptimplementing and delegated acts to further elaborate the Directive (cf. Art. 3 (4), Art.5(8),Art.8(8),Art.10(9),Art.21).Thisincludes,amongotherthings, theadoptionoffurtherrequirementsforproofof"environmentalclaims",for their communication as well as accreditation requirements for inspection bodies. Such significant changes to the requirements should not be adopted bytheEUCommissionalone,butincompliancewiththeEU'sBetterRegulationGuidelines,withtheinvolvementofallrelevantstakeholdersandafter carryingoutanimpactassessment.
on the draft Green Claims Directive
Aboutthe BDI
TheBDIconveystheinterestsofGermanindustrytothosewithpoliticalresponsibility. In this way, it supports companies in global competition. It has an extensive network in Germany and Europe, in all important markets and in international organisations. The BDI provides political support for internationalmarketdevelopment.Anditprovidesinformationandeconomicpolicyadviceonalltopicsrelevanttoindustry.TheBDIistheumbrellaorganisation of German industry and industry-related service providers. It speaks for 40 industry associations and more than 100,000 companies with around eight million employees. Membership is voluntary. 15 regional representativesrepresenttheinterestsofindustryatregionallevel.
Imprint
Federation of German Industries (BDI)
Breite Straße 29, 10178 Berlin
www.bdi.eu
T: +49 30 2028-1509
Lobby Register Number: R000534
Contact
Franz-Josef von Kempis
Senior Manager
Phone: +49-30-1509
v.Kempis@bdi.eu
BDI document number: D 1782