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The European Commission has announced plans to annul its proposed Green Claims Directive, intended to curb greenwashing in corporate environmental marketing. The proposal, introduced in March 2023, followed studies that revealed over 50% of green claims in the EU were misleading, with 40% unsubstantiated. The legislation would have required businesses to verify voluntary environmental claims with scientific evidence and independent oversight. It also sought to regulate private environmental labels at the EU level. However, ahead of scheduled trilogue negotiations, the European People’s Party (EPP) criticised the directive as overly complex and lacking an impact assessment, urging its withdrawal. (ESG Today)
Why does this matter? The Commission appeared to backtrack shortly after the announcement, saying that it would only go ahead with the withdrawal if the EU Council’s amendment to extend the directive’s scope to 30 million micro-enterprises was not removed, making room for a possible deal.Italy later withdrew its support for the anti-greenwashing legislation, meaning that the EU Council’s presidency no longer has the backing of enough Member States to continue negotiations. Italy's move means the proposed law may never come into force.
NGOs, including ClientEarth, Carbon Market Watch, ECOS and the European Environmental Bureau,spoke out , urging policymakers not to abandon the directive, arguing that only greenwashing companies stand to benefit from its removal. They added that scrapping the law at this stage would be “highly unorthodox” and go “against the proper legislative process”. Political group Renew Europe also weighed in, warning the move would “undermine the EU’s environmental credibility and “set a damaging precedent for institutional cooperation and legislative integrity.”
This is the latest move to water down major European Green Deal initiatives following political pressure and rising far-right influence. Earlier this year, the Commission introduced the Omnibus package of proposals to simplify key regulations. These included raising Corporate Sustainability Reporting Directive (CSRD) thresholds to firms with 1,000 employees and either 1,000 employees and €50m ($58m) turnover or €25m in assets and delaying Sustainability Due Diligence Directive (CSDDD) obligations to July 2028. It also proposed making the EU Taxonomy mandatory for companies with at least €450m in revenue and amending the Carbon Border Adjustment Mechanism (CBAM) to exclude 90% of importers from its scope.
Last month, the EU Council proposed even more sweeping cutbacks, limiting CRSD reporting to businesses with a turnover of €450m. It also raised the threshold of the CSDDD requirements to companies with 5,000+ employees and revenue of €1.5bn with a shift from an entity-based to a risk-based approach. Meanwhile, Climate transition plans have been delayed by two years, with companies now required only to outline implementing actions rather than demonstrate execution. The council will next negotiate these proposals with the European Parliament, which is also considering further curtailments.
Other recent developments include delaying the implementation of the EU’s anti-deforestation law to 30 December 2025 and giving EU automakers an additional two years to comply with new CO2 emission targets for their vehicles. Last year, the EU passed a significantly weakened Nature Restoration Law, which had been in jeopardy following widespread farmers' protests. The legislation – aiming to restore at least 20% of the bloc’s land and sea by 2030 – was also voted through by a tiny majority.
These regulatory downgrades have raised concerns among campaigners, including Greenpeace and Friends of the Earth, who warn that the EU is retreating rapidly from its environmental commitments. They added that such measures threaten climate progress and put the EU’s economic prosperity and competitive advantage at risk.