Environmental Statements and Greenhouse Gas Offsetting in the Context of the Green Claims Directive, Empowering Consumers Directive, and ISO Standards
Climate-related statements are becoming increasingly important in corporate communications. Terms like "climate neutral," "COâ‚‚ compensated," or "emission-free" are frequently used in advertising and can influence consumer behavior. However, what may initially appear positive carries risks: vague or unsubstantiated claims can lead to consumer deception, accusations of greenwashing, and ultimately jeopardize market access.
The European Union is responding with two key initiatives: the Empowering Consumers Directive (EmpCo Directive) and the Green Claims Directive (GCD). Both directives establish new standards for environmental communications. Companies will be required to scientifically substantiate and transparently document their claims. The GCD explicitly mandates third-party verification, while the EmpCo Directive imposes binding transparency and substantiation obligations. In practice, this often necessitates involving external auditors to ensure legally sound communication. International standards – particularly the ISO 14060 series – play a key role in this context.
Currently, it should be noted that the GCD has been suspended by the European Commission in June 2025. A final adoption timeline is currently unclear, meaning the GCD is not yet legally binding. For the time being, companies must primarily adhere to the EmpCo Directive and existing consumer protection regulations.
Meanwhile, the Paris Climate Agreement has shifted global focus toward active emission reduction and offsetting. Article 6 of the Agreement encourages international cooperation through market-based mechanisms, such as tradeable emission credits (Internationally Transferred Mitigation Outcomes, ITMOs).
At the same time, awareness of social sustainability is growing. A new term is emerging in this context: social washing – the social counterpart to greenwashing. This highlights the increasing importance of compliance structures and due diligence along the supply chain, as seen in Germany’s Supply Chain Due Diligence Act and the proposed EU Corporate Sustainability Due Diligence Directive (CSDDD).
Terminology and Differentiation of Climate Claims
A "climate claim" refers to any statement, representation, or marketing message related to the climate or greenhouse gas impacts of a product, service, or organization. Due to the broad interpretability of such claims, clear differentiation is essential:
Refers solely to carbon dioxide emissions, typically based on carbon accounting and offsetting through climate protection projects. Other greenhouse gases are not considered.
Key point: Claims must be precise, quantified, time-bound, and based on scientifically verifiable foundations.
Companies should not underestimate potential reputational risks: consumers are increasingly sensitive to unverified climate claims. Allegations of greenwashing or social washing can cause lasting damage to brand and market position.
Regulatory Developments: Empowering Consumers Directive and Green Claims Directive
These two EU directives establish a binding framework for climate-related statements in business contexts:
- Empowering Consumers Directive (EmpCo Directive): In effect since March 2024, with a transposition deadline of 2026. It complements EU consumer law (particularly the Unfair Commercial Practices Directive) by incorporating sustainability aspects.
- Green Claims Directive (GCD): Not yet formally adopted. Its goal is to harmonize voluntary environmental claims across the EU through strict verification obligations.
Note: The GCD has been temporarily suspended, and a new legislative timeline has not been announced. As such, its provisions are currently not enforceable.
Key provisions from both directives:
- Ban on generic claims like "climate neutral" without methodological substantiation
- Mandatory disclosure of system boundaries, data sources, and accounting methods
- Prohibition of uncertified sustainability labels
- Mandatory third-party verification (ex-ante) by accredited independent bodies
These rules apply not only to products and services but also to organizational claims such as "Our company is climate neutral" or "Our sites are emission-free." Thus, comprehensive strategies must consider product carbon footprints as well as Scope 1-3 organizational emissions.
Importance of International Standards (ISO and GHG Protocol)
ISO standards offer internationally recognized frameworks for developing, implementing, and communicating credible climate strategies. They provide definitional clarity, methodological rigor, and cross-border comparability.
Key standards include:
- ISO 14064-1: GHG inventories for organizations
- ISO 14064-2: Accounting for mitigation projects (e.g., insetting)
- ISO 14064-3: Verification of GHG statements
- ISO 14067: Product carbon footprinting
- ISO 14068-1: Pathway to greenhouse gas neutrality (products, organizations)
- ISO 14083: GHG accounting for logistics and transport (Scope 3)
The GHG Protocol is also widely adopted in corporate practice:
- GHG Protocol Corporate Standard (organizations)
- GHG Protocol Product Standard
- GHG Protocol Scope 3 Standard
These frameworks help companies build methodologically sound and legally compliant climate claims. ISO 14068-1 stands out with its hierarchical approach (avoid, reduce, compensate) and its requirements for removals. A structured comparison between ISO and GHG frameworks enables companies to select the best-fit standard for their market and stakeholder landscape.
Offsetting as a Necessary Component of Global Climate Strategies
The 2015 Paris Agreement forms the international reference point for climate action. Its central goal: to limit global warming to well below 2°C, preferably 1.5°C. Achieving this requires a rapid and sustained decline in global emissions.
Reality shows that many emissions cannot be avoided in the short term due to technical, economic, or physical constraints (e.g., in industry, agriculture, mobility). In such cases, offsetting is not an alternative but a requirement to meet climate targets.
Article 6 of the Paris Agreement governs international market-based mechanisms, such as ITMOs (Internationally Transferred Mitigation Outcomes). In the voluntary market, "contribution claims" are also gaining traction.
Key quality criteria for credible offset projects:
- Additionality
- No double counting
- Transparency and traceability
- Verification under recognized standards (e.g., VCS, Gold Standard)
- Contribution to UN Sustainable Development Goals (SDGs)
- Long-term impact (permanence)
Note
Both the GCD and ISO 14064-3 define requirements for independent assessment of climate-related claims. The goal is to ensure credibility, accuracy, and consistency of disclosures.
The GCD mandates third-party verification by accredited bodies to guarantee objective evaluation of environmental claims.
Note
ISO 14064-3 outlines a structured process for the verification and validation of GHG claims. While it does not explicitly require external audits, it emphasizes independence, transparency, and methodological traceability. In practice, external accredited auditors are usually involved to avoid conflicts of interest and ensure compliance.
Verification requirements include:
- Use of accredited bodies (ISO/IEC 17029 or 17065)
- Documented methodology and transparent data
- Assessment of system boundaries, accounting methods, emission factors
- Validation of the GHG neutrality pathway in line with ISO 14068-1
These rules apply regardless of whether a company is making product-, site-, or organization-level claims.
Note: Requirements for Credible Climate Claims
ESG Reporting and Governance Integration
With the introduction of the Corporate Sustainability Reporting Directive (CSRD), many EU companies are now required to disclose their climate strategies, GHG emissions, and targets. The related ESRS E1 standard mandates reporting on:
- Absolute GHG emissions (Scopes 1–3)
- GHG reduction targets
- Emission avoidance and offsetting strategies
- Climate-related risks and opportunities
Climate claims must therefore be closely linked to ESG strategies and embedded in corporate governance structures, including:
- Climate committees at the executive level
- Internal controls for sustainability claims
- Interfaces with compliance and risk management
Note: International Regulations and Legal Risks of Climate Claims
Conclusion and Outlook
Increasing regulatory scrutiny on environmental and climate claims signals a paradigm shift in sustainability communication. Companies must ensure that all claims are substantiated, verifiable, and transparent. Aligning with international standards and involving external reviewers early on is becoming a competitive advantage.
The GCD’s suspension does not signal a retreat from regulation, but merely a delay. Companies should continue to monitor developments closely and align climate communications with the EmpCo Directive and existing international frameworks.
Moreover, sustainability communication extends beyond environmental topics. Social issues like human rights, working conditions, and diversity are gaining prominence – as is the risk of social washing. Misleading claims in this area can cause reputational and legal harm.
Companies must adopt a holistic approach:
- Embed sustainability in governance structures
- Systematically collect emissions and impact data
- Substantiate environmental and social claims through standards and verification
- Ensure transparency and due diligence in supply chains
Involving external conformity assessment bodies remains a strategic asset, even amid the GCD pause, helping to build trust with customers, investors, and regulators. A flexible compliance and communication strategy ensures readiness for future regulatory shifts.
Only those who communicate on this basis can meet the expectations of customers, markets, and authorities – today and in the future.