Greenwashing and the global legal landscape

This article aims to examine the legal framework around greenwashing issues in Europe, Asia and the US, and explains the factors that pet product companies should consider when making public statements or advertising the environmental impacts of their products.

What’s legally green?

Environmental, social and governance (ESG) compliance – as well as the development of technologies and products marketed as green, natural, recyclable or climate neutral – is becoming increasingly important for companies operating globally, including those within the pet industry.

Not surprisingly, these general ‘green’ claims are often the object of litigation, with statements alleged to be misleading, deceptive or simply false. While courts apply very different standards to assessing claims, applicable laws also vary substantially across jurisdictions.

New legal framework in Europe

The European legislature has initiated 2 directives aimed at unifying the legal framework on environmental claims – the Empowering Consumers for the Green Transition Directive (EmpCo Directive) and the Directive on Substantiation and Communication of Explicit Environmental Claims (Green Claims Directive).

EmpCo Directive bans greenwashing

The EmpCo Directive, which should be implemented in EU member states as of 27 September 2026, aims to improve product information and bans ‘greenwashing’, i.e. it prohibits generic environmental claims unless excellent environmental performance can be demonstrated.

Environmental claims referring to the entire product where only a certain part of the product fulfills the claim will also be prohibited.

Generic environmental claims include, for example, environmentally friendly, eco-friendly, green, nature’s friend, climate friendly and biodegradable.

Excellent environmental performance can be demonstrated by product compliance with officially recognized eco-labeling schemes, or the product achieving top environmental performance for specific characteristics under other applicable EU law – provided the environmental performance is relevant to the entire green claim.

Pet product companies impacted by the EmpCo Directive should act to ensure that any environmental or sustainability labels they are using to promote products are based on a certification scheme or established by a public authority.

Under the Directive, these schemes must be transparent, fair and non-discriminatory, and compliance with applicable criteria must be objectively monitored by an independent third party. The qualification, selection and appointment of third parties will be defined in further implementation of the Directive in each EU member state’s national law.

Green Claims Directive brings harmonization

The Green Claims Directive, which is expected to be enacted in the third quarter of 2024, aims to complete and perfect the EmpCo Directive. It will compel companies to substantiate their voluntary green claims and harmonize the requirements for sustainability and environmental labels.

The Green Claims Directive differs from the EmpCo Directive as it includes sanctions for companies that do not comply with the regulation, including fines of at least 4% of their annual turnover. In addition, member states will allow for the confiscation of revenues gained by the company from a transaction involving the product concerned.

Under the Directive, prior to issuing an explicit environmental claim, companies must assess whether they can fulfill the required substantiation requirements.  These include: the product component concerned, the claim’s scientific ground, importance for the product lifecycle, complete information on environmental impact, and demonstrating that a claim is not equivalent to requirements already imposed by law.

Verifying claims and labeling schemes

The Directive introduces a new verification requirement prior to publishing a green claim. Verification must be undertaken by an accredited third-party conformity assessment body. If the assessment is positive, a certificate of conformity is issued.

This certificate will be recognized by all member states’ competent authorities enforcing the Green Claims Directive.

Within 5 years of submitting information required for verification, companies will have to review whether that information still meets mandatory requirements. Updated claims are subject to a new verification process.

The Directive proposal also sets out requirements for environmental labels and labeling schemes. These schemes should contain accessible and comprehensible information about the label issuer, as well as objectives, requirements and procedures to monitor compliance with the relevant scheme. Labels will be subject to approval by the European Commission prior to use on the EU market.

Unfair practice claims in Asia

Although greenwashing is not yet subject to specific regulation in most Asian jurisdictions, there are consumer protection laws under which consumers could take action against companies making false or misleading claims.

In Singapore, for example, consumers can make claims against suppliers who have engaged in unfair practice under the Consumer Protection (Fair Trading) Act 2003 (CPFTA). That includes false claims about products or services, and doing or saying (or omitting to do or say) anything to deceive or mislead consumers into a purchase.

Environmental claims constitute greenwashing or unfair practice under the CPFTA if the claims are factually inaccurate, are made without disclosing possible negative environmental impact, the net environmental impact of the product is negative, or terms or logos associated with sustainability are used without substantiation.

Updated Green Guides in the US

Pet product companies operating in the US must stay attuned to ongoing developments at federal and state levels.

The United States Federal Trade Commission, for example, is undertaking an update of its Green Guides, to address growing consumer interest in purchasing environmentally sustainable products.

The Green Guides are interpretive guidance that provide companies with insight in legitimate environmental marketing claims versus those that may be misleading and prohibited under Section 5 of the Federal Trade Commission Act.

The revised Green Guides should enhance guidelines regarding carbon offsets and renewable energy claims, and address terms such as ozone-friendly, recyclable, sustainable and organic.

ESG disclosure

Publicly traded pet product companies are also subject to Securities and Exchange Commission regulation, which monitors environment, social and governance (ESG) disclosure in the company‘s regulatory filings and compares this with claims made by the company elsewhere, such as in ESG reports and on its website.

Company shareholders or consumers may bring claims against a company to hold it accountable for ESG disclosure. All pet product companies need to ensure they are aware of state regulation regarding green claims. In particular, companies with a connection to California may be subject to additional laws on these issues.

Although the current state of ESG regulation in the US is subject to pending legislation at both federal and state level, pet businesses are encouraged to assess their requirements for supporting green claims based on each of the jurisdictions where they may be operating. They need to be prepared to move quickly to ensure continued compliance with regulatory requirements.

Final take for pet corporations

Companies should evaluate their current advertising strategies, websites, product claims, and regulatory and legal disclosures, and implement an effective risk-management system to ensure compliance with existing and/or new regulations.

Globally active corporations will have to decide between local strategies tailored to a respective jurisdiction or a global strategy which is compliant with different legal standards.

Pet companies who use green claims in their public statements or regulatory filings should closely monitor developments regarding the implementation of regulations such as the verification process.

They will need to ensure that they have the substantive documentation necessary to verify their claims.