One might often see such advertisements in the market: "Packaging made from 30% recycled plastic," "Since 2015, our environmental footprint has been reduced by 20%," "The carbon emissions associated with this product have been reduced by 50% compared to 2020." Many people may have also come across T-shirts claimed to have been made from recycled plastic bottles. However, the fact is, only 1% or even less of the materials is made from recycled bottles. When consumers see these claims, it's difficult for them to know whether such claims are true or not.

In 2019, the UK environmental group ClientEarth filed a complaint with the OECD against BP, alleging that in their low-carbon advertising campaign, BP claimed that natural gas was more carbon-efficient than coal, but failed to mention the carbon emissions of natural gas throughout its entire lifecycle. The advertisement, set against a backdrop of wind turbines, blue skies, and greenery, also gave the impression that BP's renewable and low-carbon energy business was larger than it actually was, thus significantly misleading the public and violating the OECD Guidelines for Multinational Enterprises. Upon preliminary assessment by the OECD, the complaint was found to be valid with clear evidence. BP, upon receiving the complaint, immediately withdrew the advertisement and pledged to redirect resources towards promoting net-zero policies and pursuing its own net-zero targets.

In 2023, Greenpeace Australia Pacific filed a complaint with the Australian Competition and Consumer Commission (ACCC), requesting an investigation into the environmental claims of Toyota to determine whether Toyota's statements regarding the environmental performance of its vehicles and the transition plans for its electric vehicles contradict its stated goal of "net-zero emissions." In recent years in Europe, for instance, German courts and the Dutch Advertising Code Committee (RCC), have expressed opinions on whether labeling products such as garbage bags, cleaning products, or bananas with terms like "carbon neutral" or "climate neutral" is misleading or deceptive.

A study conducted by the European Commission in 2020 found that 53.3% of the environmental claims made by European businesses were either vague, misleading, or unsubstantiated. Furthermore, nearly half of the environmental labels were either not verified by a third party or lacked rigorous verification.

With unreliable environmental claims or eco-labels, consumers might be misled and have false impressions of a company or brand's environmental impact or benefits. This practice is referred to as "greenwashing." Fraudulent products or misleading advertisements might violate the Fair Trade Act or the Consumer Protection Act. However, with the lack of transparency and the asymmetry in information, proving corporate greenwashing can be challenging for regulatory authorities and rights holders.

In March 2023, the European Commission passed a proposal for the Green Claims Directive, aiming to address the issue of misleading environmental claims by establishing strict standards for green claims and implementing penalties for greenwashing practices. This legislation is expected to be enacted in the European Parliament by 2024.

This directive aims to establish a global standard for green claims, particularly targeting companies conducting business in the EU market. Therefore, in addition to EU businesses, foreign (non-EU) companies targeting EU consumers must also comply with this directive. However, there are exceptions: Small enterprises with fewer than 10 employees and an annual revenue of less than 2 million euros are exempt from compliance.

This directive establishes strict certification standards for green claims. If companies wish to make green claims for the company themselves or their products, they must prepare rigorous and scientifically recognized evidence to be verified by independent and officially recognized certification bodies, which should then issue a certificate of compliance.

The certification adopts a life cycle approach. Starting from the raw material stage to the end-of-life of the product, it emphasizes the significant environmental impacts of each stage of the product or service. If comparisons are to be made between one's own products and others’, fairness and comparability of data must be ensured. In the case of climate statements such as "Climate Friendly" or "Carbon Neutral by 2030", the directive requires companies to commit to emissions reduction efforts rather than relying solely on carbon offsetting (carbon credits).  Therefore, climate statements must specify how much emissions reduction is achieved through the company’s own efforts and how much comes from purchasing carbon credits.

Regulatory authorities in each country will conduct regular inspections. In case of non-compliance or falsehoods, they may provide guidance for minor violations or impose fines of up to 4% of the annual revenue for serious violations. Other penalties may include confiscation of relevant transaction income and a prohibition from participating in government procurement or receiving government subsidies for up to 12 months. To strengthen corporate accountability, this directive also allows consumers to lodge complaints with regulatory authorities through "qualified entities," typically consumer protection groups.

European Commission officials pointed out that this legislation can "protect those companies that can genuinely prove their green claims, allowing them to gain advantages in marketing, without having to compete with those companies with unreliable environmental claims." Therefore, it is recommended that Taiwanese companies conducting business in the EU market should pay close attention to the relevant legislative developments of this directive and prepare for them in advance.

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