Green Claims Directive (GCD) and Corporate Sustainability Due Diligence Directive (CSDDD): A comparative overview

The planned Green Claims Directive (GCD) is intended to ensure that the environmental claims made by companies are reliable, verifiable, and comparable. On 12 March 2024, the European Parliament adopted its negotiating position on the GCD text. This text will likely be amended based on proposed changes from the EU Council, with further negotiations expected between the two bodies in the new legislative cycle. Alongside the CSDDD and other legal acts, the GCD is part of the European Green Deal‘s efforts to improve the sustainability of companies. The GCD sets clear criteria for environmental claims to prevent greenwashing, which misleads consumers and distorts competition. It prohibits vague or unsubstantiated claims and sets strict standards for climate-related claims related to carbon credits. Carbon traders must back up their claims with specific, verifiable scientific evidence, considering the life cycle of the product and its performance against industry norms.

The GCD addresses all companies operating in the EU market that make explicit environmental claims, while the CSDDD targets larger EU and non-EU companies with significant activities in the EU. The GCD prohibits self-certification and requires third-party verification for environmental claims and labelling schemes. National authorities are expected to ensure compliance through regular inspections, and non-compliance may result in fines, a temporary ban on public procurement and other sanctions. By standardising requirements across the EU, the GCD will ensure that consumers have access to accurate information, promoting transparency and comparability of environmental footprints. Together, the GCD and the CSDDD strengthen corporate accountability and incentivise sustainable business practices through improved transparency and comparability.