Starting September 27, using terms like “sustainable,” “eco-friendly,” or “climate neutral” on European product labels will be illegal unless the company can substantiate these claims. This restriction, part of the Empowering Consumers for the Green Transition Directive, will affect all 27 EU member states.
The European Commission recently finalized the guidelines required to substantiate such claims. On July 3, revised sustainability reporting standards were adopted, cutting mandatory disclosures by over 60%. This shift signifies a tightening on what companies can claim while reducing the public disclosures they must provide.
For consumers assessing products, understanding which documents provide pertinent information is now crucial.
New Regulations Effective in September
The directive, termed “EmpCo,” modifies the EU’s core consumer-protection law. It came into force in March 2024, with a requirement for member states to adopt it into national law by March 27, 2026, becoming fully effective on September 27, 2026. Current products remain unaffected, but new production must comply with the updated rules.
Four types of sustainability claims will be eliminated:
- Generic terms like “eco-friendly,” “green,” and “sustainable” without proof of exceptional environmental performance.
- Claims of neutrality, such as “carbon neutral” or “climate neutral,” achieved through purchasing credits rather than reducing emissions. True lower carbon claims remain valid.
- Claims for entire products based on evidence from only one component are prohibited.
- Advertising compliance with existing laws as if they are voluntary environmental commitments is not allowed.
Self-created labels are banned unless an independent third party verifies the certification scheme. The retailer, not the label’s manufacturer, is legally responsible, influencing companies to align with these stipulations to maintain shelf presence. Enforcement will be handled by national consumer authorities and coordinated through the EU’s Consumer Protection Cooperation network.
The anticipated Green Claims Directive, a broader verification law, has been delayed indefinitely. The Commission indicated in June 2025 its plan to withdraw the proposal, halting final negotiations. Its legal status remains unclear as it has not been officially withdrawn.
Streamlining the Rulebook
Validating environmental claims requires data, which the Corporate Sustainability Reporting Directive (CSRD) facilitates. It mandates reporting, supported by the European Sustainability Reporting Standards (ESRS), which outline disclosure requirements. As of July 3, these standards were updated, while a prior change limited their applicability.
This earlier adjustment, the Omnibus I package, was approved in February and implemented on March 18, 2026. It increased the reporting threshold to companies with over 1,000 employees and annual net revenues exceeding €450 million. Legal analysts estimate that 80% of the initially included companies now fall outside the scope, with small and mid-sized firms exempt entirely.
The revised standards allow companies to determine if an entire topic is immaterial and omit related data without detailing each impact. Conversely, reporting immaterial information is prohibited to ensure only significant data is included.
What’s Retained and What’s Removed
The foundational structure remains intact. All twelve topical standards are preserved, alongside the key principle of double materiality, which requires reporting on both financial impacts and effects on people and the planet. Although targeted for removal, this regulation was retained.
The reduction of data points by over 70% does not equate to a loss of crucial information. An analysis shows the number of details dropped from approximately 1,073 to 320, yet the climate standard, ESRS E1, expanded to include additional requirements such as publishing a 1.5°C-aligned transition plan and emissions inventory across Scopes 1, 2, and 3, among others. Consumer standards, covered by ESRS S4, remain.
Despite preserving key aspects, the revised standards weaken disclosure requirements for greenhouse gas emissions, microplastics, and human rights. Primary microplastics disclosures are still mandatory, but secondary ones are not. For human rights, only ongoing incidents and proceedings need reporting.
Fewer Reporters Than Before
The Non-Financial Reporting Directive (NFRD) previously governed EU sustainability disclosure, covering about 11,700 companies. The CSRD aimed to expand this to around 50,000 globally. However, under the Omnibus thresholds, approximately 42,000 companies are no longer required to report.
Roughly 8,000 companies remain obligated, though some estimates suggest as few as 5,000. These figures are below the NFRD’s 11,700, with variations due to differing counting methods. Nonetheless, today’s reports are assured, standardized, and digitally tagged, unlike the unstandardized NFRD disclosures.
Who Benefits?
The impact of leaner reports is debatable. Companies producing reports favor the changes, while data users express caution. A cost-benefit study commissioned by EFRAG found that 55% of data users anticipated lower information quality, with 67% of investors and financial institutions concerned about reduced comparability and environmental details.
The European Central Bank cautioned that permanent reliefs would diminish transparency for investors. Analysts noted the Commission upheld double materiality, preventing companies from hiding environmental impacts behind financial metrics.
Concerns were raised by 29 civil society organizations, including ShareAction and WWF European Policy Office, arguing that the standards are critical for citizens to understand corporate actions. Reducing them could lead to greenwashing, making it difficult to distinguish responsible companies from those making unverified claims.
The American Perspective
Although not enforceable for buyers in Ohio, EU consumer laws offer insights. American consumers can’t claim rights under these laws, but the public nature of disclosures and the tendency of multinational brands to maintain consistent sustainability narratives across markets provide leverage.
When researching sustainability, focus on the parent company rather than the brand. Often, the brand is a subsidiary of a larger group required to disclose environmental impacts. Search for the parent company’s “sustainability statement” or “annual report,” typically located in the management report alongside the audited financial statement.
Examine the materiality assessment to identify which topics the company deemed immaterial and omitted. This section often reveals what the company prefers not to discuss, offering insights into its priorities.
Post-September 27, compare a brand’s European and American storefronts. If a company leaves “climate neutral” on its .com page but removes it from its .de or .fr page, it indicates the claim couldn’t pass scrutiny. Claims exclusive to the US market likely failed verification elsewhere.
Practical Steps
While the new data focuses on the company level rather than individual products, it remains useful:
- Research the parent company, not the brand: Look up the corporate owner’s name plus “sustainability statement” and review the latest annual report. Avoid the summary PDF; find the statement in the management report.
- Start with the materiality assessment: It lists topics the company skipped. If pollution or biodiversity is deemed unimportant, that choice is revealing.
- Observe changes in EU packaging after September 27: As EmpCo takes effect, generic and offset-based claims will be illegal. Comparing a brand’s European site to its American version offers free insights.
- Verify climate commitments using the SBTi Target Dashboard: It’s free, regularly updated, and covers companies beyond the EU’s scope, including US firms. It flags organizations whose commitments were removed for missing deadlines.
- Mark two dates on your calendar: The EU’s ESAP portal opens on July 10, 2027, facilitating company comparisons. The Digital Product Passport will require a scannable record on products, with a battery passport debuting first and textiles following.
