The European Union has outlined new measures designed to prevent companies from making unsubstantiated environmental claims about their products, warning companies they could soon face penalties of up to at least 4% of their annual revenue for “greenwashing”.

The European Commission, the executive arm of the European Union, published The so-called “Green Claims Guidance” on Wednesday. The highly anticipated proposal seeks to create an EU-wide methodology that would help clean up the environmental claims market.

The Directive is subject to approval by the European Parliament and the European Council before it enters into force.

The EU says it hopes to provide more clarity to consumers so that when a product or service is sold as green, they can be confident that it is indeed green.

However, the proposals have met with mixed reactions from consumer and environmental groups.

Campaigners have widely welcomed the effort to curb the burgeoning trend of corporate greenwashing, but say the months-long lobbying effort has “greatly attenuatedThe guidance is such that the measures are now too vague to adequately address the problem.

They called on the European Parliament and Council to improve the proposals so that they are “valuable” to consumers and businesses.

Greenwashing refers to a marketing practice in which companies seek to capitalize on the growing movement of environmentally sound products by selling goods that are labeled green but are not, in fact, green.

It is a big problem within the European Union. For example, commission Stady The publication in 2020 found that more than half (53%) of green claims on products and services were deemed vague, misleading, or unfounded, while 40% were unsubstantiated.

Some phrases that consumers may be familiar with when purchasing goods include “environmentally friendly”, “ethical” or “sustainable”.

The commission says there are about 230 different eco-labels in use across the 27-country bloc, citing evidence that this leads to confusion and mistrust among consumers.

The EU’s Green Claims Directive seeks to address this trend.

She says the proposal will ensure claims are communicated clearly in favor of consumers – and businesses, noting that companies that make a real effort to improve the environmental sustainability of their products should be more easily recognized and thus be able to increase their sales.

The measures target explicit claims, the commission says, such as “CO2-compensated delivery,” “packaging made with 30 percent recycled plastic” or “ocean-friendly sunscreen.”

However, it does not cover terms such as “carbon neutrality” advocacy groups saidstating that this is a preferred marketing strategy for companies seeking to give their products an “green makeover”.

“This proposal is a huge missed opportunity to send a strong message to businesses that the EU takes climate responsibility seriously,” said Lindsay Otis, global carbon markets policy expert at Carbon Market Watch.

“The Commission appears to understand the problems created by greenwashing, but refuses to address them appropriately,” Otis said. “It is now up to the European Parliament and the European Council to enact a ban on carbon neutrality claims, because anything less will not only fail to protect consumers but also to nudge companies towards truly sustainable practices.”

The European Union says that before companies report any types of covered green claims, companies must first verify them independently and substantiate them with scientific evidence. EU member states will be in control of establishing a verification process that will be supervised by independent bodies.

Companies based outside the EU making green claims targeting the bloc’s consumers will also be required to adhere to the directive.

“Green claims are everywhere: ocean-friendly shirts, carbon-neutral bananas, bee-friendly juices, 100% CO2 offsetting deliveries, etc.,” said Frans Timmermans, executive vice president of the European Green Deal.

“Unfortunately, these allegations are often made without evidence or justification whatsoever,” he added. “With this proposition, we are giving consumers reassurance that when something is sold as green, it is, in fact, green.”

The proposal excludes claims covered by existing EU rules, the Commission says, such as the EU Ecolabel or organic food logo.

“Addressing misleading green claims is critical to ensuring that consumers have reliable information and are empowered to make sustainable choices,” said Margo Le Gallo, program director for environmental information and assessment at the nonprofit Environmental Standards Alliance.

“Unfortunately, without harmonized methodologies at the EU level, the new directive will provide little clarity for consumers and businesses, and will only complicate the task of market surveillance authorities. Today, most green claims are too good to be true and the proposition is… far from the real (green) deal. )”.

Others were optimistic about the potential impact of the actions put forward by the committee.

The proposals “will help provide clearer language, common governance standards and minimum requirements for communicating corporate climate efforts in reliable and credible ways,” said Isabelle Hagebrink, director of global communications at South Pole, a climate strategy and solutions firm.

“We hope this, in turn, will help inspire more real corporate climate ambitions,” Hagbrink told CNBC by email. She added: “Given that we have entered our decade of action and climate scientists have once again sounded the alarm, we simply cannot have anyone – especially the leaders of big companies – ‘shut up’ on their climate efforts.”