EmpCo: A regulatory milestone for greenwashing

As greenwashing becomes a growing concern for consumers, the EmpCo Directive introduces rules to back sustainability claims with evidence. 

In brief

• The Empowering Consumers Directive sets the transparency rules for sustainabliity communication.
• Adherence to the rules may protect the companies from greenwashing accusations.
• Research shows that the demand for verifiable sustainability information in the market is high.

The global awareness about the impact that brands and products have on the planet and society is rising. As consumers become mindful of sustainability, many companies are looking into adjusting their marketing strategies to appeal to new audiences. The abundance of product information - covering sourcing, product characteristics, country of origin, durability and reparability - can feel overwhelming for consumers to navigate.

Today’s landscape of product claims is full of labels, standards and certificates, which lack clarity and consistency. This is now set to change with the EU Empowering Consumers for the Green Transition Directive (EmpCo). Its goal is to protect consumers, but umbrella protection goes beyond sustainability. The directive addresses the broader issue of transparent and substantiated communication. The companies targeted are the ones selling to consumers in the EU, with member states set to implement the directive into national law in March 2026. Companies have until the 27 September 2026 to become compliant. 

It is therefore crucial for the companies to ensure:

• Environmental and social claims are backed by evidence and clear documentation.
• Vague terms like “green” or “eco-friendly” are avoided unless precisely defined.
• Only EU-approved or independently verified environmental labels are used.
• Any product claims based solely on offsetting greenhouse gas emissions are supported by actual lifecycle impact reductions.
• Transparency in comparative advertising of environmental/social features as well as verifiability of any future targets.
• Products with built-in durability limits and false claims about lifespan and durability are not put on the market.
• Repair possibilities and availability of spare parts are communicated in a consistent manner – with a harmonized label to be introduced by the EU.

From bold claims to big fines: The cost of misleading messaging

While the media continues to highlight emerging cases of exaggerated sustainability claims, it is important to emphasize that the directive is not designed to punish companies. The aim is to enable clearer, more accurate communication in a world where verifiable communication is becoming more difficult to access.

Cases involving two leading North American companies show just how essential specificity and verification can be. One of the biggest Canadian clothing manufacturers attached labels to its coats claiming that the coyote fur was ethically sourced using sustainable practices. These claims, raised by a plaintiff as misleading, were based on third-party verification standards ¹⁾. This case demonstrates that even compliance with third-party standards may not be enough to fully safeguard a company from communication risk.

An American manufacturer of coffee machines was fined in two countries for marketing its single-use coffee pods as recyclable. While the pods were recyclable in some locations, the company failed to clearly communicate it. This lack of specificity led to USD2.2 million in fine in Canada and a USD10 million settlement in the US. This is a clear example of a situation that could have been avoided with clearer messaging ²⁾ .

These cases reflect a broad trend: Countries are establishing greenwashing guidelines, and while EmpCo is not the first directive of its kind, it is the first to apply at a European level, ensuring consistent rules across member states.

Conscious choices or confused consumers?

One of today’s biggest challenges for consumers is information overload. Consumers are faced with a tough job evaluating companies’ promises on products effectiveness and sustainability. At the same time, consumers still rank sustainability information as an important parameter in their purchasing decision. Among Norwegians who were interviewed in 2023 by the Norwegian Consumer Council, sixty percent wanted to be informed by the manufacturer whether the food they buy is produced in an sustainable manner ³⁾. Seventy-three percent of European citizens say the impact of the product on the environment is “very important” or “rather important” when making a purchasing decision according to a recent EU survey ⁴⁾.

The Empowering Consumer Directive reinforces brands reputation by connecting sustainability and truthfulness, turning credibility into competitive advantage. By adhering to the rules in the EmpCo, stakeholders and brands can benefit from alignment with international standards. Besides building credibility with consumers, EmpCo-compliant external communication enables more targeted campaigns and reduces risk of backlash and greenwashing accusations.

Conclusion

Companies have an important role in the field of communication: They can both enable consumers to make better-informed decisions and protect themselves from penalties and loss of trust by verifying their sustainability communication against the rules of EmpCo. The exercise is not only about compliance, but about ethical labelling and protecting the brand.

The Empowering Consumers Directive is not just a sustainability initiative; it is a transparency initiative. It recognizes that consumers want to make informed choices, but they need help navigating the complexity of product claims. 

How EY can help your company understand the risk

At EY, we offer screening of external communications to identify any potentially risky claims. We assess risk based on criteria aligned with the requirements of the Empowering Customers Directive. Our support includes reviewing internal documentation and evaluating the use of third-party verifiers to ensure they also comply with EmpCo rules. We help identify any gaps in methodology and prepare tailored templates to suit your needs, leaving companies with a complete documentation package and recommendations for future disclosures.

With less than 365 days left to make external communication free of generic and unsubstantiated claims the time to act is now. If you want to screen your webpage, report, product offerings or labels to identify and assess risk of incompliance do not hesitate to reach out!