Implementation of the "Empowering Consumers for the Green Transition" into German law

1. EU rules on greenwashing

The European Union has taken significant steps in recent years to empower consumers in the context of the green transition and to combat misleading environmental advertising, known as "greenwashing". Two key initiatives in this area are the Empowering Consumers for the Green Transition Directive (EmpCo Directive) and the Green Claims Directive.

The EmpCo Directive, officially known as Directive (EU) 2024/825, was adopted on February 28, 2024 and came into force on March 26, 2024. It aims to empower consumers through better protection against unfair practices and better information for the green transition. Member States are obliged to transpose this directive into national law by March 27, 2026, with the provisions to apply from September 27, 2026.

The Green Claims Directive was proposed by the European Commission in March 2023 (see here) and supplements the EmpCo Directive by setting out specific requirements for the substantiation, communication, labeling and verification of environmental claims. In March 2024, the European Parliament adopted its position on the original Commission proposal at first reading. The EU Council of Environment Ministers adopted its position on June 17, 2024. However, the final adoption is still pending and is expected to take place in 2025.

2. Transposition of the EMPCO Directive into German law

On December 9, 2024, the Federal Ministry of Justice published the "Third Act to Amend the Act against Unfair Competition" as a first discussion draft. The provisions of the EmpCo Directive are to be implemented in the Unfair Competition Act (UWG).

The implementation of the fair trading provisions of the EmpCo Directive requires the amendment of several provisions of the UWG and the addition of commercial practices that are always unlawful to the Annex to Section 3 (3) UWG.

Of particular note is the complex of regulations on the use of environmental claims, which leads to changes in Section 2 UWG ("Definitions") and in Section 5 UWG ("Misleading commercial acts") as well as to the expansion of the list in the annex to Section 3 (3) UWG.

An "environmental claim" is any statement or representation in the context of a commercial activity, including representations by means of text, images, graphic elements or symbols such as labels, brand names, company names or product names, which is not legally binding and which explicitly or implicitly states that a) a product (a) a product, product category, brand or trader has a positive or no impact on the environment or is less harmful to the environment than other products, product categories, brands or traders, or (b) the environmental impact of a product, product category, brand or trader has improved over time.

It is clarified that the use of a general environmental claim such as "environmentally friendly" is always inadmissible if the outstanding environmental performance it emphasizes cannot be proven. It is also inadmissible to make an environmental claim relating to the entire product, although the environmental claim actually only applies to a partial aspect of the advertised product. Furthermore, additional requirements apply to advertising with claims about offsetting greenhouse gases, as these are particularly likely to mislead consumers. In future, sustainability labels must be based on a certification system or be established by the state.

In addition, statements on future environmental performance may only be made if they are based on a detailed, realistic implementation plan that contains measurable and time-bound targets and is based on objective, publicly available commitments. Objectivity is to be ensured in particular by a review by independent and external experts.

The Federal Ministry of Justice's assessment of the compliance costs for businesses is particularly noteworthy. The Ministry assumes that companies are generally very familiar with their products and that the effort required to identify potentially inadmissible claims will therefore remain manageable. An average time expenditure of around three hours is calculated for the adjustment or removal of such information on products and services.

The discussion draft has since been forwarded to relevant stakeholders. It is to be expected that various changes will be made before the final law is passed.

3. Effects on companies and practice

The planned changes to German competition law through the "Third Act to Amend the Act against Unfair Competition (UWG)" will present companies with new challenges. Particularly noteworthy is the obligation to communicate green claims in a substantial and transparent manner, which in future will place clear requirements on documentation and traceability. Companies must ensure that their environmental advertising not only complies with legal requirements, but can also provide evidence of recognized environmental performance. This could pose challenges for smaller companies in particular, which may not have the same resources to create and verify proof of sustainability as larger companies.

The requirements for future environmental statements are also becoming stricter, which could lead to more precise planning and more detailed strategies. Environmental claims may only be made if they are supported by concrete, measurable and time-bound implementation plans. The obligation to regularly review and adapt green claims could result in additional complexity and an increased administrative burden, particularly for companies operating in fast-moving industries.

4. Talk to us!

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