March 4. 2024. 7:54

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EU says ‘not banning carbon offsets’ in greenwashing crackdown


New legislation presented by the European Commission on Wednesday (22 March) to clamp down on greenwashing allows businesses to continue making carbon-neutral claims, provided they meet specific transparency requirements.

For climate-related claims – such as ‘CO2 neutral’ or ‘net zero’ – the proposed Green Claims Directive requires companies to distinguish between their own emission reduction efforts and the use of carbon-offsetting schemes, such as planting trees.

Companies are requested to specify whether offsets relate to emission reductions or removals, and provide additional information, including the methodology used to substantiate the claim and the share of total emissions addressed through offsetting.

“The message needs to be clear, we are not banning carbon offsets, they are allowed,” stated Environment Commissioner Virginijus Sinkevičius, who presented the proposal.

“The only thing is that the consumers must be fully informed. If you’re stating that the product you are selling is carbon neutral, and it’s carbon offset, additional information is needed to specify its carbon offset,” he added.

In its proposal, the Commission recognises that climate-neutral statements such as “climate neutral”, “carbon neutral”, or “100% CO2 compensated”, are often misleading for consumers.

Such statements are often based on offsetting emissions through ‘carbon credits’ generated outside the company’s value chain, for instance from forestry or renewable energy projects using methodologies that are often not transparent or accurate.

This can lead to “significant risks of overestimations and double counting of avoided or reduced emissions” while deterring companies from “emissions reductions in their own operations and value chains”, the Commission said in its legislative draft.

To address this, offending companies will be subject to penalties ranging from fines to confiscation of revenues, as well as temporary exclusion from public procurement processes and public funding.

“We are bringing an additional level of stringency on how companies can use offsets,” a senior Commission official explained during a press briefing on Tuesday.

“The whole goal is to make sure that the reductions take place in the own organisation making the claim. We are not forbidding claims related to offsets, but we are stringent on how to substantiate these and to communicate them to consumers.”

EU clamps down on misleading ecolabels with penalties against greenwashing

The European Commission tabled new legislation on Wednesday (22 March) to tackle misleading environmental claims by introducing penalties against greenwashing and tighter rules for the approval of new ecolabels.

Campaigners call for ban on all carbon neutrality claims

Green NGOs argue that carbon neutrality claims should be banned because they mislead consumers by suggesting that products or services do not have any climate impact. They also say carbon neutrality claims prevent companies from pursuing ‘real’ emissions reductions.

A recent report by Carbon Market Watch, assessing corporations which are part of the Race to Zero initiative, found that their current climate plans will only cut 36% off their combined emissions by their net-zero target years, instead of the 90-95% that is required.

Additionally, almost all their climate plans rely on offsetting, the report said. Together, the assessed companies plan to offset between 23% and 45% of their combined carbon footprint.

According to the European Environmental Bureau (EEB), this proposal is “a missed opportunity on the path to achieving a carbon-neutral economy, which requires companies to focus on reducing their emissions.”

In February, a group of environmental organisations sent a joint letter to the EU asking for a ban on all climate neutrality claims such as ‘carbon neutral’ and ‘CO2 neutral’.

They also called for tighter restrictions on claims relating to future environmental performance, such as ‘net zero by 2050’, when these rely upon offsetting to neutralise emissions, and for a prohibition on environmental claims that promote fossil fuels.

“The claims obstruct the progress of genuinely sustainable products and behaviours,” the letter said.

“Such claims are scientifically false, often rely on the use of junk carbon credits and give consumers the false sense that they and traders can continue to behave and consume in a ‘business as usual’ manner, while not having any negative impact on the environment and the climate.”

Don’t believe everything you read: Why ‘green’ labels need to be regulated

The EU’s new Green Claims directive, due to be published on Wednesday (22 March), is essential to move from claims to facts and ensure products live up to their environmental credentials, writes Tahmid Chowdhury.