Green promises – broken: Exaggerated green claims by companies have been in the news a lot recently. In future, the EU will impose severe penalties:
“Sustainable”, “climate-neutral”, “good for the environment” – anyone strolling through supermarkets in Germany these days will obviously come across many socially and ecologically oriented companies. The promises are underpinned by official seals such as the “Blue Angel” and the “Green Button”. But EU analyses show that 53% of sustainable labels are misleading. EU directives are now being adopted to ensure that green labels have substance in the future.
Proliferation of green labels leads to consumer mistrust:
As many companies have developed their own labels, there are currently more than 230 sustainability labels in the EU, leading to a lack of transparency and uncertainty. For some publishers, the paid awarding of labels has even become a new business model: a few weeks ago, cometis received an offer from a German publisher: The award of a “Top Employer” certificate. The corresponding remittance slip to pay for the offer was enclosed. It should be obvious to everyone that such seals do not prove ESG performance, but only improve the publisher’s returns. This undesirable development weakens consumer confidence. To counteract this, the EU adopted the first of several directives on dealing with green claiming in February 2024.
False green claims lead to media crossfire – dm and DWS just the tip of the iceberg:
False sustainability promises have recently led to serious reputational damage for German companies. The drugstore chain dm is no longer allowed to advertise its products as “climate neutral” due to a lawsuit filed by Deutsche Umwelthilfe and the fund provider DWS has to pay a fine of 25 million dollars in the USA due to exaggerated ESG claims. DAX companies are also confronted with accusations: Volkswagen is accused of using forced labor at a plant in China and at a BMW cobalt mine in Morocco environmental damage and employee health problems should have occurred.
Green seals should be officially checked – NGOs can take legal action against incorrect green claims:
In order to avoid crises like dm and DWS in the future, the EU adopted the “Empowering consumers for the green transition” directive in February 2024. This is intended to put an end to the proliferation of sustainable labels in the EU. All labels must be officially tested and accredited and the test data must be accessible to consumers. Accreditation must be renewed after five years. This should help consumers in the EU to make conscious sustainable purchasing decisions. In addition, consumers and NGOs will be given far-reaching opportunities to take legal action against misleading green claims.
Risk and opportunity for German companies:
Many companies want to live up to their responsibility for the climate, environment and society with a strong ESG performance. Consumers, the media, regulators and investors are also keeping a close eye on the sustainability of companies from the outside. Incorrect and exaggerated labels and green claims undermine both the efforts of companies and the trust of consumers. The new EU directives will clean up the market. In the future, companies will be able to shine through comprehensive sustainability reporting and ESG reporting as well as with good ESG ratings such as in the Global ESG Monitor from cometis. Therefore, excellent ESG reporting will be rewarded with the Integrity Star Award on September 11 and 12 in 2024. Unscientific and exaggerated green claims for advertising purposes, on the other hand, will be pilloried.
Do you need further advice on dealing with ESG rating agencies? Then cometis is the right contact for you: We will be happy to answer your questions by telephone (+49 611 20 58 55 18) or by e-mail (diegelmann@cometis.de)!