Future regulation against green money laundering: benefits for consumers and companies

June 11th, 2024


“Ecological whitewashing” or “Greenwashing” is the fashionable expression, in part due to “all the initiatives and policies launched by the European Union, and also in the rest of the world, on sustainability, the circular economy and how the impact they have on the environment is communicated to us. the different products and services that are made available to us as consumers,” according to Jose Maria Ferrer, responsible for Food Regulatory Affairs / Training AINIA.

According to the Proposal for a Directive of the European Parliament and of the Council on the justification and communication of explicit environmental claims (Ecological Claims Directive) “Greenwashing” consists in practice of making unclear or substantiated environmental claims. Is about any message or representation that is not mandatory under Union or national law, including textual, pictorial, graphic or symbolic representation, in any form, including labels, trademarks, company names or names of products, in the context of a commercial communication, that indicates or implies that a product or a trader has a positive or no impact on the environment, is less harmful to the environment than other products or traders, respectively, or has improved its impact over time.

According to AINIA, the proposal for the Directive on environmental declarations focuses on three key points: increasing the level of environmental protection and contributing to accelerating the ecological transition towards a circular economy; protect consumers and businesses from green money laundering and contribute to informed purchasing decisions, and improve legal certainty, a level playing field in the internal market and boost competitiveness.

But how will the new legislation ensure the reliability and verifiability of environmental claims? For José María Ferrer, the key element to stop ecological money laundering is through objectification of messages. To this end, the proposal introduces a series of minimum requirements on the justification and communication of environmental claims, which are subject to third-party verification.

In addition to this element, to achieve protection of the environment, consumers and greater legal certainty for all operators, the EU considers some indicators that will allow it to verify whether the measures have had an effect. These performance indicators focus on measuring results on: whether environmental claims about products and companies are reliable, comparable and verifiable; whether information users trust environmental information; the environmental performance of products and organizations improves, and if obstacles to green markets are reduced.

Benefits provided by legislation to prevent ecological money laundering

In the case of consumers, will have environmental information on consumer goods that will be reliable, comparable, verifiable and easily accessible, according to the expert in food law. In this way, they will be able to make their purchasing decisions with greater knowledge of the facts and will contribute to the ecological transition in addition to preventing ecological money laundering.

For AINIA, the companies they benefit from achieve a level playing field in terms of ecological claims and reinforce the credibility of the messages they convey to the consumer. Moreover, competitiveness will be boosted of operators that increase the environmental sustainability of their products and activities and greater demand for them.

The benefits for consumers and operators allow, according to Ferrer, to reduce the risk of ecological money laundering and unfair competition respectively.

Next steps of this legislative initiative

The European Parliament approved the position at first reading last March 12th 2024, now we have to wait for the next step from the Council, although “we have to take into account the upcoming elections to the European Parliament so it is unlikely that it will be approved and published in the OJEU until after the summer,” concludes Ferrer.

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