CDP report warns “regulation is coming” as EEB anticipates EU law to “wipe out” greenwashing

21 Mar 2023 --- The European Environmental Bureau (EEB) reveals it expects the European Commission (EC) to present the Green Claims Directive (GCD) tomorrow – dubbed a much-awaited law that seeks to crack down on greenwashing. This law will regulate how companies meet and communicate their green claims.

At the same time, CDP Worldwide released its latest supply chain report stating that “this year’s data tells a stark story – change is not happening at the scale required.”

“Awareness and ambition on nature are growing, but the challenges we face are also accelerating. We must act urgently to halve emissions and become nature positive by 2030,” notes CDP in its report Scoping Out: Tracking Nature Across the Supply Chain.

“It’s not only the scale of the environmental crisis that should spur companies to action. Regulation is coming.”

Based on the leaked proposal EEB suggests that if the law is done right, it may bring some order in EU markets for green advertising, thereby helping consumers from being misled. “For the first time, legislation will oblige companies to make supporting evidence available alongside a green claim.”

“The proliferation of greenwashing is hampering the green transition: it hinders consumers’ ability to make informed sustainable choices and makes it harder for the companies that strive to reduce their environmental impacts to differentiate themselves from free riders,” states Blanca Morales, senior coordinator for EU ecolabel at EEB.

“We need clear EU rules to wipe out greenwashing claims, and we need companies to provide the evidence behind their credentials: no data, no claim.”United Nations launched the Synthesis Report of the Intergovernmental Panel on Climate Change.

What the proposal may entail
The EC says that greenwashing can mislead market actors and does not give due advantage to those companies that are taking measures toward making their products more sustainable. “It ultimately leads to a less green economy.”

Provenance’s report, Skin Deep Beauty, finds that while 90% of consumers consider environmental sustainability when buying beauty and wellness products, 79% have difficulty trusting brands’ sustainability claims. “If beauty and wellness businesses want to stay relevant to increasingly value-led shoppers, they need to be much clearer on sustainability claims and use verification to prove them.”

“A recent study by the EC found that more than half of green claims are vague, misleading or unfounded. In addition, almost half of the 230 ecolabels available in the EU have very weak or no verification procedures,” shares EEB.

It explains that the original goal of the GCD was for companies to substantiate environmental claims using the Product Environmental Footprint (PEF) method. However, the scope has expanded to regulate all types of green claims, even those not in the PEF.

“We expect the GCD to wipe out the too many misleading labels available in the EU market. The new law must require labels to build on strong governance principles, including independent certification and verification processes,” continues EEB.

The organization suggests: “EU should create a registry of ecolabels that comply with the GCD instead of delegating the approval of ‘new’ private ecolabels to national authorities (as in the leaked proposal), as this favors fragmented approaches across member states and a lower ambition overall.”

In related news, the UK Competition & Markets Authority was reported to be examining the accuracy of “green” claims featured on household essentials such as toiletries and personal care items. It intends to ensure that shoppers are not misled when purchasing a product.

Global push from IPCC
Yesterday, António Guterres, secretary-general of the United Nations, at the launch of the Synthesis Report of the Intergovernmental Panel on Climate Change, says: “The climate time bomb is ticking. The 1.5°C limit is achievable. But it will take a quantum leap in climate action.”

The Acceleration Agenda calls for various actions for OECD countries with differing deadlines for other countries. Mainly by phasing out coal by 2030, ensuring net-zero electricity generation by 2035 and by ceasing all licensing or funding of new oil and gas and shifting subsidies from fossil fuels to a just energy transition.

Sonya Bhonsle, global head of value chains at CDP, adds: “If a company is not preparing for incoming regulations and stakeholder interest on addressing nature in the supply chain, they are open to a wide range of risks and could also be missing out on the opportunities that safeguarding nature will bring.”Kao, Givaudan and Symrise have once again achieved recognitions from CDP.

“Quite simply, if a company wants to be in business in the future, they need to start embedding nature into the way that they buy and collaborating with suppliers to drive action in the supply chain.”

CDP findings
CDP’s report questions whether companies are ready to take action on nature impacts across their supply chain. It examines how companies are tackling climate change, deforestation and water security.

The report finds that more than 18,600 companies worldwide disclosed climate change data through CDP in 2022 – a 42% increase on 2021.

“More than 7,700 companies disclosed biodiversity data through CDP in 2022 for the first time. Almost 4,000 companies disclosed water security data through CDP in 2022 – a 16% increase compared to 2021. By contrast, more than 1,000 companies disclosed data on forests. While this is a 30% increase on last year, it only represents 30% of companies requested to disclose,” it shares.

Surprisingly, only 1% of companies provide financial and technical help to support direct suppliers to reduce their deforestation impacts.

“You cannot have a healthy business without a healthy planet. For Unilever, that means taking ambitious action in our supply chain to protect and regenerate nature and reducing greenhouse gas emissions in line with the science,” comments Thomas Lingard, global head of Sustainability (Environment) at Unilever.

“Our goals include having a deforestation-free supply chain in key commodities by the end of 2023, helping to protect and regenerate 1.5 million hectares of land, forests, and oceans by 2030, and reaching net zero emissions across our value chain by 2039.”

CDP awards and recognition
Companies across the personal care industry have received honors from CDP. Meanwhile, L’Oréal is recognized as a premium supply chain member in climate change, forests and water security. CDP finds only 1% of companies provide financial and technical help to support direct suppliers to reduce their deforestation impacts.

Kao was recently recognized as Supplier Engagement Leader by CDP for the sixth consecutive year for its initiatives in reducing carbon emissions and tackling climate change across its supply chain.

Additionally, Givaudan was rated A for Supplier Engagement by CDP, securing a place once again on its Supplier Engagement Rating Leaderboard.

“Climate action is urgent. We are taking measures across our business, driven by our ambition to become climate positive before 2050 and aligned to global standards and goals,” says Willem Mutsaerts, head of Global Procurement and Sustainability at Givaudan.

“Our success relies not just upon the actions we take within our own business – like pursuing our RE100 goal of 100% renewable electricity by 2025 – but also on the actions we are taking to scale up our impact through collaboration with our suppliers, whose emissions make up the largest proportion of our footprint.”

Symrise was also honored for its climate commitment in the supply chain with another A rating by CDP.

“We work with our suppliers to develop systematic measures to conserve our environment and the climate,” says Bernhard Kott, chief sustainability officer at Symrise.

By Venya Patel

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