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Does your business manufacture consumer goods which are sold into the EU?
Does your business supply or distribute consumer goods into the EU?
If the answer to either of these questions is yes, then you need to know about the Empowering Consumers for the Green Transition Directive (ECGTD).
What do you need to know about the ECGTD?
The ECGTD is legislation that applies in the EU. It relates to sustainability and contains new measures to give consumers in the EU the information and protection they need to make more sustainable purchasing choices.
The ECGTD forms part of the European Green Deal and the Circular Economy Action Plan. If you want to know more about these European proposals, as well as the other new legislation which is being considered at EU level, then check out our article here.
The ECGTD amends the following EU legislation: the Consumer Rights Directive (CRD) and the Unfair Commercial Practices Directive (UCPD).
The ECGTD entered into force on 26 March 2024. However, member states have 24 months to transpose it into national law and 30 months to enforce it. This means that businesses will need to start complying with the Directive from September 2026.
What changes does the ECGTD make?
The ECGTD introduces new rights and obligations for consumers and businesses in the EU.
Changes to the CRD to require businesses to supply additional pre-contract information on the durability and reparability of products
The CRD already requires businesses to provide pre-contract information to consumers. The ECGTD will require businesses to provide additional information to consumers, which is intended to help consumers make more informed and sustainable purchasing choices. The retailer will be required to provide the consumer with the following:
- Information about the two year legal guarantee of conformity given to consumers under the European Sale of Goods Directive. This must be brought to consumers' attention in a prominent manner using a harmonised notice. The form of the harmonised notice will be specified in secondary legislation.
- Information about any commercial guarantee of durability which lasts more than two years and which is offered by the manufacturer. This is so consumers are clear about what guarantees come with the goods. The information must be captured in a prominent manner, in a harmonised label, and also remind customers about the legal guarantee of conformity. The form of the harmonised label will be specified in secondary legislation.
- Information about environmentally friendly delivery options, such as a bundled shipping option.
- For goods with digital elements – how long software updates will be available for.
- Clear and accurate information about the environmental impact of the products and services they buy, including their lifespan, repairability, availability of spare parts, and recyclability. This should help consumers to source more durable goods.
Our insight on changes to the CRD
Some of the information requirements are reliant on the producer (the manufacturer of the goods or the importer into the EU) providing the information to the trader (the retailer) in the EU. We can anticipate that traders will want to put obligations into their contracts with the producer to require them to provide this information so that traders can be open with their customer base.
Changes to the UPCD to include new banned and automatically unfair practices
The UPCD protects consumers from unfair commercial practices, including unfair advertising. It already includes a number of banned and automatically unfair practices. The ECGTD adds new banned practices to the list, which are designed to protect consumers against misleading 'green' claims (often referred to as 'greenwashing'). The banned practices include the following:
- Displaying a sustainable label which is not based on an official certification scheme.
- Making generic environmental claims without being able to back up the claim. The legislation gives the example of terms such as "eco-friendly" or "energy efficient". The prohibition does not apply where the claim is specific and backed up. For example, a claim that 10% of the energy used to produce the packaging comes from renewable sources.
- Making sweeping environmental claims which apply to the entire product or business when in fact the claim is only related to part of the product or business.
- Making claims such as "climate neutral" or "limited C02 footprint" where these claims are based on the offsetting of greenhouse gas emissions rather than the actual product lifecycle.
- Withholding information that a software update will have a negative impact on the functioning of a product with a digital element.
- Presenting products as capable of repair when in fact repair is not possible.
- Encouraging the consumer to replenish consumables before they really need to. An example given in the legislation, which we can all relate to, is a printer saying the cartridges need to be replaced before they are actually empty. These are practices which can lead to early obsolescence.
The UPCD also adds new practices that could be misleading and direct consumers towards a particular purchasing choice. These practices will need to be considered on a case by case basis:
- Claims that the producer will transition to more sustainable business practices without an objective and publicly available implementation plan, which includes targets.
- Advertising benefits to consumers that are irrelevant to product type and which could mislead consumers into thinking they are more beneficial. The legislation gives the example of advertising bottled water which is gluten free.
- Comparing products to other products on the basis of their circularity aspects, such as how recyclable the product is, without providing objective evidence about the method for the comparison.
Our insight on changes to the UPCD
The legislation refers to an official certification scheme for sustainability labels and encourages public authorities to promote measures to facilitate access to these labels for SMEs. We will need to watch this space to see what measures are introduced at member state level to support SMEs.
Greenwashing is not a new concept. In the UK we have seen the Competition and Markets Authority launch an investigation into the fashion sector in relation to potentially misleading claims that certain fashion companies' products, including clothing, footwear, and accessories, are environmentally friendly. We have also seen the Advertising Standards Authority ban adverts for breaching the CAP Code rules on misleading advertising and environmental claims. So this will be familiar territory for UK businesses but they will want to make sure that their EU counterparties are complying with the requirements of the ECGTD.
What do businesses that supply consumer goods to the EU need to do next?
Businesses won't need to comply with the new legislation until September 2026.
Now is the time to get to know about the new legislation and to monitor how it is transposed into national law in the member states in which your business operates. You need to consider how you will respond to the new requirements in your internal processes. For example, what additional pre-contract information will you need to provide? Do you need to adjust any of your business practices?
As we get closer to 2026, you will need to think about what it means for your existing and future contracts and business relationships within the EU.
For example:
- A manufacturer which uses a distributor or retailer to distribute consumer products in the EU might want the distributor/retailer to warrant it will comply with the ECGTD in its marketing and to pass on the information mandated by the ECGTD to customers. If the manufacturer offers a commercial guarantee of more than 2 years on its products then it will want the trader to tell consumers about the guarantee.
- A distributor or retailer selling consumer products in the EU might want the manufacturer to be contractually obliged to supply the pre-contract information required by the ECGTD. The trader might also want the manufacturer to support with queries relating to the ECGTD from its customers.
Where can you read more about the ECGTD?
If you want to read the full text of the ECGTD (Directive (EU) 2024/825) then you can access it in the Official Journal of the European Union here.
The European Council press release about the ECGTD has a good overview of the rationale behind the EU's Circular Economy Action Plan and how the ECGTD fits into that Plan. You can access it here.
Do you want to know more about how the ECGTD might impact on your contracts and your trading relationships in Europe?
Simply reach out to Peter Snaith or Sarah Daun.
