European Parliament Backs Green Claims Directive, But Fails on Outright Ban of Carbon Offsetting

Nonprofit watchdog Carbon Market Watch (CMW) welcomed the developments, but argued “the Parliament has missed a significant opportunity by failing to also ban misleading carbon neutrality – and all related compensation claims—at the company level. The deceptive nature of such claims has already been recognised by the institutions, which is precisely why they were banned at product level. It is completely illogical to exclude company-level claims from this ban.”

The European Parliament has shied away from taking the next logical step by completely banning compensation claims. Instead, offsetting claims connected to “residual” emissions would be permitted, and all credits used to make such offsetting claims would have to be certified under the EU’s Carbon Removal Certification Framework (CRCF). CMW said that the CRCF units will not automatically (or magically) be high quality and high integrity – likely the vast majority will be vulnerable, overestimated and have significant sustainability implications.

The CMW was categorical about the problem: “if the Parliament insists on continuing to allow company-level offsetting claims, the least it could do is also insist on a ‘corresponding adjustment’ requirement to address the problem of double counting, but no such safeguard has been included. This omission is particularly problematic in light of the EU’s failure to properly address this issue in the context of the CRCF. Instead, many units certified by the CRCF and used for corporate claims under the Green Claims Directive will be double counted by both the voluntary carbon markets, and the EU’s nationally determined contributions (NDC) and its climate policies. Allowing both governments and companies to claim the same CRCF results considerably reduces climate ambition, enables greenwashing and slows the rate of climate action.”

Gaps in certification process

Industry association TIC Council, which speaks for the testing, inspection and certification industry, feels the Parliament has introduced some requirements that potentially will have negative effects on the Directive efficiency in fighting greenwashing.

The Parliament wants to create a simplified procedure for the verification of simpler claims and opens the door to the presumption of conformity of certain ones. “Presumption of conformity goes against the spirit of the Directive to avoid unverified claims,” the TIC Council noted and pointed out the risk to see inappropriate claims in the absence of independent verification. “Besides, simplified procedures for verification of simpler claims are already part of certification processes; there is probably no need to state in a law what now is normal commercial practice. TIC Council will engage with the Commission in the drafting of the delegated acts to define this simplified procedure without compromising the quality of the verification.”

Then there is the time limit of 30 days for verification (extended to another 30 in justified cases). “TIC Council considers that time limitation for the verification is not appropriate, as its duration depends significantly on the applicant ability to provide in time the information requested by the verifier and to implement the possible corrective actions. Adding a timeframe could place undue pressure and bias on a project that would hinder the work by a third party.”

Hanane Taidi, Director-General of TIC Council, said: “TIC Council calls on the European Parliament to consider during the trilogues these provisions that will make the verification system work better, in the benefit of both consumers and companies in the fight against greenwashing, without adding unnecessary burdens to the industry. The TIC industry is ready for the tasks that the text requires and calls for clear requirements in this highly needed Directive.”