European Commission Yanks Proposed Anti-Greenwashing Rules on Eve of Final Negotiations

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8 hours ago

'We are now in a situation where we have to admit that Europe has failed,' Claus Teilmann Petersen, sustainability/stakeholder engagement and human rights manager at Bestseller, said of the European Union's omnibus package, somewhat deflatedly, ahead of the Global Fashion Summit in Copenhagen earlier this month. 'We cannot deliver what we set out to do. I'm pretty sure that we will get into a situation where the simplification will be deregulation.'
Petersen words took on a prophetic air Friday after the European Commission revealed that it would withdraw a proposed law targeting nebulous or unfounded corporate environmental claims—a practice better known as 'greenwashing'—saying that legislative proposal, as it stands, goes against the executive arm's 'simplification agenda,' particularly regarding microenterprises.
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'Around 30 million micro-enterprises–96 percent of all companies— could be covered by the proposal if microenterprises were to be included,' Maciej Beresteck, a spokesperson for the European Commission, wrote in an email. 'This would distort the Commission proposal in a manner which prevents the achievement of the objectives pursued by the proposal, i.e., supporting the development of green markets, while preventing undue burden on the smallest enterprises.'
The decision, which arrived ahead of the final negotiating round with member state representatives to solidify the deal on Monday, is yet another sign of Europe's so-called 'sustainability retreat' as the world's largest single market continues on a rightward swing that mirrors a similar about-face on progressive ideals that have been branded 'woke' and 'radical' in the United States.
It also appeared to be a sudden and highly unusual one, considering how late in the rulemaking process this is happening. The move followed a letter on Wednesday from the center-right European People's Party seeking the proposal's retraction from the European Commissioner for the environment, Jessika Roswall, who is affiliated with the political bloc, and confirming that it would not support 'any trilogue outcome.'
It was only recently, on the Global Fashion Summit's main stage, that Roswall talked about 'moving barriers to bridges to shape a more sustainable future where textiles, fashion and environmental care go hand in hand.' It's not 'just about rules,' she said, but about 'working together' to place 'better products' on the market. Roswall's office did not respond to a request for a comment.
While the EPP said it supports protecting consumers from falling prey to environmental marketing spin, the green claims directive 'risks unduly hindering sustainability communication through procedures that are overly complex, administratively burdensome and costly,' including a 'fundamentally flawed' preapproval requirement that deviates from established internal market practices and is not being applied across sectors.
'There is, quite simply, no dedicated cost-benefit analysis or supporting data underpinning the ambitious system proposed by the GCD,' the letter said. 'Nor does the proposal convincingly demonstrate that the expected benefits of the regime would outweigh the significant costs and regulatory uncertainty it entails.'
But Elisabeth von Reitzenstein, senior director of public affairs at Cascale, the multi-stakeholder organization formerly known as the Sustainable Apparel Coalition, said she was 'extremely' concerned about the European Commission's 'abandonment' of the green claims directive. It pointed to more 'soft-pedalling' on environmental requirements from the EU, she said, further degrading a Green Deal that sought to zero out the continent's carbon emissions by 2050 and marking a 'troubling' about-face for markets that 'once set the pace' on climate action.
'While not perfect, the green claims directive would have marked an important leap forward in enhancing transparency, ensuring a level playing field for businesses investing in progress, and providing clarity for consumers on the products they are choosing to buy,' von Reitzenstein said. 'Now we risk letting unchecked green claims proliferate and greenwashing go unchallenged. We may also see a continued risk of 'greenhushing' where companies are not able to communicate the great work they are doing in times of legal uncertainty.'
Beresteck said that the European Commission remains committed to fighting greenwashing, adding that it will continue to work on making sure consumers are 'correctly informed' through policies such as the directive on empowering consumers for the green transition, which the EPP endorsed during a plenary vote in 2024 and is poised to go into force in 2026.
While both sets of legislation aim to stave off greenwashing with fines up to 4 percent of an offending company's annual turnover, the green claims directive was supposed to clarify the other's rules and enforcement mechanisms, said Nusa Urbancic, CEO of the Changing Markets Foundation, a watchdog group that campaigns against greenwashing. Pulling it at this point would be a 'disaster,' she said, pointing to research that shows that nearly 60 percent of claims by fashion brands can be considered misleading or unsubstantiated according to guidelines from the United Kingdom's Competition and Markets Authority.
'Since the Commission and several other consumer agencies announced a clampdown on greenwashing, the market has slowly been moving in a better direction with dishonest claims being scrapped by companies,' Urbancic said. 'Reversing these efforts will not only undermine consumer trust but will also be a setback for companies that are really investing in environmentally friendly products and services at a time when the climate and biodiversity crises are accelerating.'
Last month, EU ombudsman Teresa Anjinho said she had opened an investigation into the process behind the omnibus bill, following complaints by civil society organizations, including Anti-Slavery International, the Clean Clothes Campaign and the European Coalition for Corporate Justice, alleging that the European Commission had circumvented the necessary procedural requirements in its haste to table the amendments without conducting out a public consultation, a detailed impact assessment and a a 'climate consistency' assessment.
'Strong sustainability laws like the CSDDD and CSRD are key to the EU's competitive advantage in a global market where consumers and investors increasingly demand responsible corporate action,' the coalition said. 'We have seen time and time again that vague corporate promises aren't driving the change we need. Weakening environmental and human rights requirements is a step in the wrong direction.'
Whether any recourse remains for the green claims directive—other then proceeding with negotiations—is less clear. It was this proposal that suggested using the Product Environmental Footprint, or PEF, as a harmonized tool to evaluate products across 16 environmental indicators, including freshwater, resource and land use. Nixing the legislation would also prevent the PEF from being incorporated into EU law through this particular route, though it continues to be referenced in the CSRD and the ecodesign for sustainable products regulation and could still be rolled into future legislation.
For now, withdrawing the proposal risks damaging European credibility and leadership on climate action globally, said Thorfinn Stainforth, senior policy manager of EU climate policy at Environmental Defense Fund Europe, a nonprofit.
'This directive would have provided businesses with the certainty they've asked for and empowered consumers to make sustainable choices,' he said. 'Instead, we're left with continued ambiguity at a time when Europe could be providing the clear framework businesses need to accelerate the shift toward sustainable investments and environmental integrity.'