What You Say About Sustainability Now Carries Legal Consequences

Quick Read

Green claims about environmental performance and sustainability are now subject to strict regulatory scrutiny across major economies, with regulators finding that a significant proportion of corporate claims cannot be substantiated and cause real harm to consumers and capital markets. Organizations must treat green claims as a governance and assurance matter requiring substantiation and legal defensibility before publication, rather than as a marketing function. The regulatory landscape has shifted from an unregulated space to one with material consequences for non-compliance across Europe, North America, and Asia-Pacific.

Executive Summary

Green claims are no longer a marketing matter.

Green claims — statements about environmental performance, sustainability commitments, carbon neutrality, net zero targets, or climate action — have proliferated across corporate websites, annual reports, investor presentations, product brochures, and social media channels. For most of the past decade, these claims existed in a largely unregulated space. That era is over.

Regulators across Europe, North America, Asia-Pacific, and beyond have concluded that unsubstantiated and misleading sustainability claims cause real harm: they deceive consumers, distort capital markets, and undermine confidence in the broader sustainability transition. The regulatory and legal frameworks that have emerged in response are significant, fast-moving, and carry material consequences for non-compliance.

This whitepaper has three purposes:

• To explain why the regulatory environment has changed and what is driving it

• To identify which types of claims, in which channels, carry the greatest risk

• To outline the principles and processes that organisations need to adopt to ensure their claims are accurate, substantiated, and defensible

Green claims are no longer a marketing matter. They are a governance, legal, and assurance matter — and they need to be treated as such before publication, not after.

Section 1: The Greenwashing Problem and Why Regulators Acted

Greenwashing — the practice of making environmental claims that are false, misleading, unsubstantiated, or disproportionate — has been documented extensively across industries. Studies by the European Commission, the UK Competition and Markets Authority (CMA), and the International Consumer Protection and Enforcement Network have consistently found that a significant proportion of green claims made by companies cannot be substantiated.

A 2021 European Commission study found that 42% of green claims examined online were exaggerated, false, or deceptive. A subsequent sweep found that more than half of surveyed websites contained at least one practice that could constitute a misleading green claim under existing consumer protection law — before any new green claims legislation had been enacted.

These findings reflect a broader pattern: as sustainability became a reputational and commercial asset, the incentive to make ambitious claims outpaced the rigour applied to verifying them. Marketing teams, under pressure to communicate ESG credentials, published claims that legal, compliance, and sustainability functions had not reviewed or approved. Data was selectively presented. Terminology was used loosely. Aspirational targets were framed as current reality.

The Core Problem

Most greenwashing is not deliberate deception. It is the predictable result of claims being made without adequate review processes, clear accountability, or independent verification. The law does not distinguish between intentional and negligent misleading conduct.

1.1 Why ‘We Didn’t Intend to Mislead’ Is Not a Defence

Consumer protection law in most jurisdictions operates on an objective standard. A claim is misleading if it is likely to mislead the average consumer — regardless of the intent of the organisation that made it. This is a critical point that many legal and compliance teams have underestimated.

An organisation that publishes a claim it genuinely believed to be accurate, but which was not substantiated by underlying data, still faces liability if that claim was misleading in effect. The question regulators and courts ask is not: did you intend to mislead? The question is: could a reasonable person be misled by this claim?

This shifts the burden significantly. It is no longer sufficient to have a good-faith belief that a claim is accurate. Organisations need to be able to demonstrate, at the point of publication, that the claim was accurate, substantiated, and proportionate.

1.2 The Shift From Voluntary to Mandatory

Until recently, sustainability disclosures — and the claims derived from them — were largely voluntary. Organisations chose whether to report, what to report, and how to frame it. The standards that existed (GRI, TCFD, CDP) were largely reporting frameworks, not verification regimes.

The shift to mandatory disclosure regimes — the EU's Corporate Sustainability Reporting Directive (CSRD), the ISSB sustainability standards (IFRS S1 and S2), and similar requirements emerging in Australia, Singapore, the UK, and the United States — has fundamentally changed this dynamic. When sustainability data becomes a regulated disclosure, claims derived from that data carry the same legal weight as any other regulatory disclosure. Inconsistency between what an organisation says publicly and what it discloses formally becomes a compliance failure, not just a communications issue.

Section 2: The Regulatory Landscape: What Is Now in Force

Green claims regulation is now a global phenomenon. While the specific rules differ by jurisdiction, the direction of travel is consistent: claims must be accurate, specific, substantiated, and independently verifiable. The following table summarises the key frameworks organisations operating internationally need to be aware of.

2.1 The EU Framework: EmpCo Directive (Directive (EU) 2024/825)

The operative EU instrument for green claims is Directive (EU) 2024/825 on Empowering Consumers for the Green Transition, known as the EmpCo Directive. It was adopted on 20 February 2024, published in the Official Journal on 6 March 2024, entered into force on 27 March 2024, and applies from 27 September 2026. Member states were required to transpose it by 27 March 2026.

The EmpCo Directive amends the Unfair Commercial Practices Directive (UCPD, Directive 2005/29/EC) and the Consumer Rights Directive (Directive 2011/83/EU). It adds specific provisions for green claims to the UCPD's framework, including new practices to the Annex I blacklist — practices that are prohibited in all circumstances without need for case-by-case assessment. The most significant blacklisted practices for green claims are:

Generic environmental claims (Annex I point 4a)

A 'generic environmental claim' is defined as any environmental claim made in written or oral form where the specification of the claim is not provided in clear and prominent terms on the same medium. Generic claims are blacklisted unless the trader can demonstrate 'recognised excellent environmental performance' relevant to the claim.

The European Commission's FAQ on the EmpCo Directive (updated 18 May 2026) provides important precision on how this works in practice. A claim such as 'climate-friendly packaging' without further specification is generic and blacklisted. A claim such as '100% of energy used to produce this packaging comes from renewable sources' is a specific claim and is not caught by the blacklist. The critical mechanism is whether the specification is stated on the same medium as the claim — not merely whether evidence exists somewhere.

Recital 9 of the EmpCo Directive lists examples of terms considered generic: 'environmentally friendly', 'eco-friendly', 'green', 'nature's friend', 'ecological', 'climate friendly', 'gentle on the environment', 'carbon friendly', 'biodegradable', 'biobased', and similar statements implying excellent environmental performance. The list is illustrative, not exhaustive.

The Commission FAQ (Q7) defines the three legal pathways to use a generic claim: (1) compliance with the EU Ecolabel (Regulation (EC) No 66/2010); (2) compliance with a national or regional ISO 14024 Type I ecolabelling scheme officially recognised in the member states, such as the Nordic Swan, Blue Angel, or Dutch Milieukeur; or (3) top environmental performance in accordance with other applicable Union law, such as the Energy Labelling Regulation for 'energy efficient' claims. The relevant excellent performance must be specific to the claim being made.

Note on the EU Green Claims Directive: A separate proposed directive on the substantiation and communication of explicit environmental claims (the Green Claims Directive, COM(2023)0166) was proposed in March 2023 and progressed through Parliament in 2024. In June 2025, the European Commission announced its withdrawal of the proposal. Trilogues were suspended and the file is closed with no new proposal announced. The EmpCo Directive (Directive (EU) 2024/825) is unaffected by this withdrawal and remains the operative EU instrument.

Offset-based carbon neutrality claims (Annex I point 4c)

Claiming, based on the offsetting of greenhouse gas emissions, that a product has a neutral, reduced, or positive impact on the environment in terms of greenhouse gas emissions is blacklisted. The Commission FAQ (Q10) clarifies the precise scope: the prohibition applies to offsetting outside the product's value chain. A claim based on the actual lifecycle emissions impact of the product within its own value chain is not caught — for example, a biomass product that genuinely stores more CO2 than it emits across its lifecycle. The prohibition is on using external offset purchases to create a neutrality or positive impact claim.

Company-level carbon neutrality claims based on offsetting are not blacklisted under Annex I point 4c, though they remain subject to other UCPD provisions on a case-by-case basis. Companies may still communicate their investment in carbon credit projects provided this is done transparently and not in a way that misleadingly implies the product itself has no climate impact.

Sustainability labels without certification (Annex I point 2a)

Displaying a voluntary sustainability label that is not based on a certification scheme or established by EU public authorities is blacklisted. A 'certification scheme' must involve independent third-party verification, publicly available requirements, and monitoring by a legally separate competent third party in line with international, Union or national standards such as ISO 17065. Only EU public authorities' labels qualify as 'established by public authorities' — labels from third-country public authorities are not exempt unless based on a qualifying certification scheme.

Future environmental performance claims (Article 6(2)(d) — case-by-case)

Claims about future environmental performance without clear, objective, publicly available and verifiable commitments, set out in a detailed implementation plan with measurable and time-bound targets, regularly verified by an independent third-party expert, are prohibited subject to case-by-case assessment. The independent expert must be free from conflicts of interest and possess relevant competence; private auditors can fill this role. The verification findings must be accessible to consumers.

Scope

The EmpCo Directive applies to all B2C commercial communications. The Commission FAQ (Q1) confirms that corporate websites are more likely than not to be in scope where they address consumers, even without a direct link from a consumer-facing channel. Mandatory CSRD sustainability reports addressed to investors are generally outside EmpCo scope, but if a company uses content from its sustainability report in voluntary marketing directed at consumers, that communication falls within scope. Enforcement sits with national competent authorities, with penalties capable of reaching 4% of annual turnover in the relevant member state for widespread infringements.

2.2 The UK’s Approach: Existing Law with Active Enforcement

The United Kingdom has taken a different legislative path. Rather than enacting a standalone green claims statute, UK regulators have applied existing consumer protection and financial services law to greenwashing conduct — with significant vigour.

The CMA published its Green Claims Code in September 2021, establishing a six-point test that green claims must meet: claims must be truthful and accurate, unambiguous, substantiated, relevant, use fair and meaningful comparisons, and consider the full life cycle of the product or service.

Since 6 April 2025, the Digital Markets, Competition and Consumers Act 2024 (DMCCA) is fully in force. This is a significant development: the CMA can now investigate, determine breaches, and impose administrative fines of up to 10% of global annual turnover (or £300,000, whichever is greater) directly, without going to court. Prior to the DMCCA, the CMA needed court proceedings to impose meaningful sanctions; that requirement has been removed.

In financial services, the FCA's anti-greenwashing rule came into force on 31 May 2024. It requires all FCA-regulated firms to ensure that sustainability-related references in any communication are fair, clear, and not misleading. The rule applies regardless of whether the communication is directed at retail or professional investors, and regardless of whether it appears in a prospectus, a fund factsheet, a website, or a social media post.

2.3 Enforcement Is Real and Escalating

Regulatory guidance is not aspirational. Enforcement actions taken since 2022 demonstrate that regulators are prepared to act, and that the consequences are significant:

• CMA (UK): Investigation into ASOS, Boohoo, and George at Asda over unsubstantiated sustainability claims in their fast fashion ranges, resulting in legally binding undertakings (March 2024). CMA investigation into Unilever, closed with changes to claims (November 2024). From 6 April 2025, the CMA can impose direct administrative fines.

• ASIC (Australia): Federal Court proceedings against Mercer Superannuation for greenwashing in relation to sustainability-related investment product claims. Penalty of AUD 11.3 million imposed by the Federal Court, August 2024. Federal Court proceedings against Vanguard Investments: AUD 12.9 million penalty, September 2024.

• ACCC (Australia): Federal Court proceedings against Clorox Australia for misleading '50% Ocean Bound Plastic Recycled Bags' claims. Penalty of AUD 8.25 million agreed February 2025. New proceedings against Australian Gas Networks commenced June 2025, alleging misleading claims that gas will be renewable within a generation.

• Netherlands courts: The District Court of Amsterdam ruled on 20 March 2024 that 15 of 19 environmental claims in KLM's advertising campaigns (including the 'Fly Responsibly' campaign) were misleading and unlawful under EU consumer law. The court issued a declaration that the statements were misleading; a prohibition order was not required as KLM had already withdrawn the statements.

• US FTC: The current FTC Green Guides (2012, 16 CFR Part 260) remain operative. A revision process initiated in December 2022 has not produced updated Guides as at the date of this publication. California's AB 1305 (Voluntary Carbon Market Disclosures Act, effective 1 January 2024) and SB 343 (recyclability labelling, compliance required for products manufactured from 4 October 2026) add significant state-level requirements.

These are not outlier cases. They represent a pattern of regulatory posture that is becoming the global norm.

Section 3: Which Claims, in Which Channels, Are at Risk

A common misconception is that green claims regulation applies primarily to product labels or formal sustainability reports. In practice, the scope of regulated claims is substantially broader. Any communication — regardless of channel or format — that makes an environmental claim about a product, service, or organisation can fall within scope.

3.1 Corporate Websites

Corporate websites are among the highest-risk channels for unsubstantiated green claims. Content is publicly accessible, often not subject to the same legal review as formal disclosures, and frequently updated by marketing and communications teams without involvement from legal or sustainability functions.

Common problem areas include: homepage environmental commitments without specificity or substantiation; sustainability pages that present aspirational targets as current achievements; product or service descriptions that claim environmental benefits without lifecycle data or third-party verification; award, certification, or accreditation claims that are outdated or applied to a broader scope than the original certification covers; and supply chain sustainability claims not supported by supplier-level data or verification.

Website content is archived by regulators and third parties. A claim that was removed after a regulatory inquiry was raised is still evidence of the original publication. 'We updated the website' is not a defence.

3.2 Investor Communications and Annual Reports

The risk profile in investor-facing communications is particularly acute, because in addition to consumer protection law, securities and financial services regulation may apply. Claims in annual reports, investor presentations, sustainability reports, earnings calls, and ESG investor briefings are subject to requirements for accuracy and non-misleading disclosure under securities law; the anti-greenwashing rules of financial services regulators (FCA, MAS, ASIC); and potential liability for statements that materially affect investment decisions and are later found to be inaccurate or unsubstantiated.

The integration of sustainability disclosures into mainstream financial reporting — as required under CSRD, IFRS S1/S2, and equivalent national regimes — means that the same level of rigour applied to financial statements must now be applied to sustainability claims within those documents. Importantly, where content from a CSRD report is used in consumer-facing marketing, it falls within the scope of the EmpCo Directive's B2C provisions.

3.3 Marketing Materials, Brochures, and Advertising

Traditional advertising and marketing materials — brochures, pitch decks, product catalogues, point-of-sale materials, trade exhibition displays — are covered by advertising standards and consumer protection law in every major jurisdiction. Terms such as 'sustainable packaging', 'green product', 'carbon-reduced', or 'environmentally responsible' require substantiation and, in many cases, qualification. In the EU from September 2026, these terms will also need to meet the EmpCo Directive's specification requirement if they are to be used in B2C communications at all.

3.4 Social Media and Executive Communications

Social media posts, CEO statements, ESG-related LinkedIn content, and press releases are increasingly within the scope of green claims regulation. The FCA's anti-greenwashing rule applies to any communication made in connection with a financial product or service — including social media posts by regulated entities. Executive communications present particular risk because they are often made quickly, without formal review processes, and with significant public reach. A CEO's public commitment to a sustainability target can create a legal obligation if it is later found to be unsubstantiated or not achievable. Under the EmpCo Directive, corporate website content that addresses consumers is more likely than not to be in scope, even where the primary audience is institutional.

Section 4: The Risks of Getting It Wrong

The consequences of publishing unsubstantiated or misleading green claims operate across multiple dimensions simultaneously. Organisations that have not established robust pre-publication review processes are exposed to all of the following.

4.1 The Financial Dimension

The financial consequences of green claims enforcement are not limited to regulatory fines. The indirect costs — legal defence, management time, reputational remediation, rebranding of non-compliant materials, and potential loss of ESG-labelled investment mandates — can significantly exceed the direct penalty.

More significantly, organisations that are found to have made unsubstantiated green claims face scrutiny of their broader sustainability posture. An enforcement finding in one area frequently triggers requests for assurance and verification across all sustainability communications. Investors, customers, and rating agencies revise their assessments. ESG scores are recalculated. The cascading effect of a single non-compliant claim can be disproportionate to the claim itself.

4.2 The Governance Dimension

Directors and senior executives are increasingly personally accountable for the accuracy of sustainability disclosures. Under CSRD, the directors of in-scope companies are collectively responsible for ensuring the completeness and accuracy of the sustainability report. Under corporate due diligence requirements in multiple jurisdictions, boards are expected to oversee the management of material ESG risks — including the risk of misleading claims.

This is not a theoretical liability. The trend across jurisdictions is toward director-level accountability for sustainability governance failures. Organisations that lack clear governance structures for approving green claims — including defined accountability, documented review processes, and audit trails — are exposing their boards to personal risk, not just corporate risk.

Section 5: What Good Looks Like: Five Principles for Defensible Claims

Compliant, defensible green claims share common characteristics. The following five principles reflect the requirements of the major regulatory frameworks and provide a practical framework for assessing whether a claim is publication-ready.

Section 6: Building a Claims Review Process

The five principles above require operationalisation. An organisation that has sound sustainability data but no structured process for reviewing claims before publication is still exposed. The following elements are essential to a functioning green claims governance framework.

6.1 Claims Inventory and Classification

The first step is to understand the scope of the problem. Most organisations do not have a comprehensive inventory of the green claims they make across all channels. Building that inventory — cataloguing claims by channel, content type, claim category, and supporting evidence — is foundational to managing compliance risk.

Once inventoried, claims should be classified by risk level. Claims that are specific, quantified, and based on third-party verified data carry lower risk. Claims that are generic, broad-scope, or qualitative carry higher risk and require greater scrutiny. Under the EmpCo Directive, any unspecified generic claim in EU B2C channels is a priority for immediate review.

6.2 Pre-Publication Review

No green claim should be published without a structured pre-publication review. At minimum, this review should include: legal review for compliance with applicable consumer protection, advertising standards, and financial services regulation; sustainability review to verify that the claim is accurate, specific, and supported by underlying data; sign-off from a named individual with clear accountability; and documentation of the review, the evidence relied upon, and the approval.

For high-stakes claims — net zero commitments, carbon neutrality claims, supply chain sustainability claims, claims in investor-facing documents — independent external review should be considered standard practice rather than an optional enhancement.

6.3 Periodic Review of Published Claims

Claims are not static. Underlying data changes. Business activities change. Regulatory requirements evolve. A claim that was accurate and compliant when published may become inaccurate or non-compliant over time. Organisations need processes to periodically review published claims — particularly on websites and in standing marketing materials — to ensure continued accuracy and compliance. The September 2026 application date of the EmpCo Directive creates an immediate trigger for reviewing all EU-facing generic claims.

6.4 Governance and Accountability

Clear accountability is essential. Who in the organisation owns green claims compliance? Who has authority to approve claims in different categories and channels? How does that person engage with marketing, communications, legal, and sustainability teams? In larger organisations, a cross-functional green claims review committee — with representation from legal, sustainability, communications, and relevant business lines — provides the governance architecture needed to manage this risk systematically.

Section 7: The Case for Independent Review and Assurance

The principles and processes outlined above require expertise, time, and ongoing investment. For many organisations, building and maintaining that capability internally is not realistic. Even for organisations with those resources, independent external review provides a level of objectivity and defensibility that internal review alone cannot.

When a regulatory inquiry is raised or a claim is challenged, the organisation that can demonstrate that its claims were reviewed by an independent third party, against a defined methodology, is in a materially stronger position than one that cannot. Independent review of green claims provides:

• An objective, expert assessment of whether a claim is accurate, specific, substantiated, and proportionate

• Identification of high-risk claims that require amendment, qualification, or withdrawal before publication

• Documentation of the review process that can be produced as evidence in the event of regulatory scrutiny

• Ongoing monitoring as regulatory requirements evolve across jurisdictions

• Board-level confidence that sustainability communications meet the standard required by regulators, investors, and customers

Speeki Green Claims Review

Speeki is an ISO 17021-1 accredited ESG assurance and certification body operating across more than 100 countries, accredited through COFRAC (France) and ANAB (United States). We have developed a dedicated Green Claims Review subscription service designed to give organisations ongoing access to expert, independent review of their sustainability claims before publication.

The service covers all claim types and channels — websites, investor communications, marketing materials, annual reports, product labels, and executive communications — and is calibrated to the regulatory requirements of the jurisdictions in which each client operates.

Because Speeki is an assurance body and not a consulting firm, our review is fully independent. Speeki does not provide consulting services to any organisation. Our sole function is independent assurance and certification, and that structural independence is what gives our review opinions their value.

To learn more about Speeki's Green Claims Review service, visit speeki.com or contact our team.

Conclusion

The Governance Test

The transition from voluntary to regulated sustainability claims is one of the most significant governance shifts affecting corporate communications in a generation. Organisations that treat green claims as a marketing matter — governed by brand guidelines rather than legal and compliance frameworks — face a materially different risk environment today than they did three years ago.

The question is not whether an organisation makes green claims. Almost every organisation that engages with sustainability topics in any public forum makes green claims of some kind. The question is whether those claims are accurate, specific, substantiated, proportionate, and approved through a governance process that can withstand regulatory scrutiny.

The cost of getting this right is manageable. The cost of getting it wrong — in regulatory fines, legal defence, reputational damage, and the loss of hard-earned ESG credibility — is not.

Before any sustainability claim is published, ask: if a regulator reviewed this claim tomorrow, could we demonstrate the evidence that supports it, the process by which it was reviewed, and the person who approved it? If the answer is no, the claim is not ready to publish.

About Speeki

Speeki is an ISO 17021-1 accredited ESG assurance and certification body, operating across more than 100 countries with offices in Singapore, the United Kingdom, and France. Speeki provides independent ESG assurance, sustainability certification, and governance assurance services to organisations across all sectors and geographies. Speeki's accreditation is granted by COFRAC (France) and ANAB (North America).

Speeki operates on a strict independence model. Speeki is not a consulting firm and does not provide advisory or implementation services to any organisation. Our exclusive focus is independent assurance and certification.

For enquiries regarding Speeki's Green Claims Review service or ESG assurance, contact us at speeki.com.

This whitepaper is provided for general informational purposes only. It does not constitute legal advice. Organisations should obtain specific legal and regulatory advice relevant to their jurisdiction and circumstances before relying on the information contained in this document.

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