.svg)
The EU's Empowering Consumers Directive becomes binding on September 27, 2026. Here's what sustainability managers need to understand about the new rules, what's actually prohibited, and how to prepare your organization.
Key Takeaways
The Empowering Consumers for the Green Transition Directive (EmpCo) fundamentally changes how companies can communicate about environmental performance. From September 2026, generic green claims without substantiation will be prohibited across the EU. Product-level climate neutrality claims based solely on carbon offsetting will be banned outright. Only sustainability labels backed by official certification schemes or public authorities will be permitted. And future environmental commitments like "net zero by 2030" will require detailed implementation plans with independent verification.
These rules apply to all companies making environmental claims to EU consumers, regardless of size or location.
What Is the EmpCo Directive?
The Empowering Consumers Directive, officially Directive (EU) 2024/825, is an EU regulation designed to protect consumers from misleading environmental claims and give them reliable information for making sustainable purchasing decisions. The directive's full title is the "Directive on empowering consumers for the green transition through better protection against unfair practices and through better information."
Rather than creating an entirely new regulatory framework, EmpCo amends two existing pieces of EU consumer law: the Unfair Commercial Practices Directive (UCPD) from 2005 and the Consumer Rights Directive from 2011. This approach means the enforcement mechanisms are already in place. Competition authorities, consumer protection agencies, and courts across the EU already have the tools to act on violations.
The directive emerged from the European Commission's finding that over half of environmental claims examined in a 2020 study were vague, misleading, or unfounded, with 40% completely unsubstantiated. EmpCo is part of the broader European Green Deal strategy to achieve climate neutrality by 2050 while building a circular economy based on genuine sustainability rather than greenwashing.
Timeline: When Does EmpCo Take Effect?
The legislative process for EmpCo is already complete. The EU Parliament adopted the directive on January 17, 2024, and the Council of the EU approved it on February 20, 2024. The directive was published in the Official Journal on March 6, 2024, and entered into force at the EU level on March 26, 2024.
What remains is national implementation. EU member states must transpose the directive's requirements into their domestic laws by March 27, 2026. Companies then have until September 27, 2026 to comply with the new rules. There is no transition period after this date.
In Germany, the Federal Ministry of Justice published its draft amendment to the Act Against Unfair Competition (UWG) in late 2024, with the final law expected to incorporate EmpCo's requirements directly into existing competition law. Other member states are following similar paths, integrating the directive into their existing consumer protection frameworks.
What Exactly Is Prohibited?
EmpCo introduces a series of practices that will be considered automatically unfair under EU law. These "per se" prohibitions mean that certain marketing practices will be banned without requiring case-by-case assessment of whether consumers were actually misled.
Generic Environmental Claims Without Proof
Terms like "eco-friendly," "green," "sustainable," "natural," "biodegradable," "climate-friendly," or "environmentally conscious" will only be permitted if a company can demonstrate what the directive calls "recognised excellent environmental performance relevant to the claim." In practice, this means either holding a valid certification from an official scheme or being able to prove the claim with verifiable data.
The key change here is that the burden shifts to the company. You cannot use vague environmental language and then defend it by arguing consumers should have known it was marketing. If you claim something is "green," you must be able to show why it qualifies for that description.
Climate Neutrality Claims Based on Offsetting
This is the most significant change for companies with carbon strategies. EmpCo explicitly prohibits claiming that a product has a neutral, reduced, or positive impact on the environment in terms of greenhouse gas emissions when that claim is based on carbon offsetting outside the product's value chain.
This prohibition covers terms like "climate neutral," "CO2 neutral," "carbon neutral," and "climate positive" when the claimed neutrality relies on purchasing carbon credits rather than actual emissions reductions in the product's lifecycle. The rationale is that offsetting and reduction are fundamentally different mechanisms, and consumers cannot be expected to understand this distinction when they see a "climate neutral" label on a product.
Importantly, this does not mean carbon credits are banned or that companies should stop investing in climate projects. What's prohibited is making product-level neutrality claims based on that investment. The distinction matters enormously for how companies communicate about their climate strategies.
Self-Created Sustainability Labels
The directive restricts sustainability labels to those based on certification schemes established by public authorities or independent third-party verification systems. Company-created logos, seals, or badges that suggest environmental or social benefits will no longer be permitted unless they meet these requirements.
A certification scheme, under the directive's definition, must involve third-party verification that a product, process, or business activity meets specific requirements. The scheme's conditions and requirements must be publicly accessible. This effectively ends the practice of companies creating their own environmental badges without external accountability.
Unsubstantiated Future Environmental Claims
Statements about future environmental performance, such as "We will be climate neutral by 2030" or "100% renewable energy by 2025," will only be permitted if they meet specific conditions. The commitment must be clear, objective, and publicly available. It must be supported by a detailed implementation plan with measurable, time-bound targets. And it must be regularly verified by an independent third-party expert, with findings made available to consumers.
This requirement addresses the proliferation of net-zero pledges and sustainability targets that lack credible pathways to achievement. Companies can still make future commitments, but they must be prepared to show their work.
Misleading Partial Claims
EmpCo also addresses the practice of making broad environmental claims about a product or company when the benefit only applies to a specific component. If your product's packaging is recyclable but the product itself is not, you cannot advertise the overall product as "sustainable" based solely on the packaging. The claim must accurately reflect what it actually covers.---
What Does This Mean for Carbon Credits?
The prohibition on offset-based neutrality claims has created significant confusion about whether companies should continue investing in carbon credits. The answer is nuanced, and understanding what EmpCo actually prohibits is essential for developing a compliant climate strategy.
What Is Banned
Making claims that your product has neutral, reduced, or positive climate impact when that claim relies on carbon credit purchases. This covers product packaging, marketing materials, and advertising that suggests purchasing your product is climate-neutral because you've offset the associated emissions.
What Is Still Permitted
EmpCo does not prohibit carbon credit investments themselves. Companies can still purchase high-quality credits as part of their climate strategy. What changes is how you communicate about that investment.
Contribution claims remain viable. Rather than claiming your product is "climate neutral," you can communicate that your company supports verified climate projects. Statements like "We invest in certified forest conservation projects" or "We contribute to verified carbon removal initiatives" describe your actions without making claims about product-level neutrality.
Corporate-level climate communication on your website, sustainability reports, and investor materials can still discuss your offsetting strategy, particularly when positioned as part of a broader approach that prioritizes emissions reduction. The prohibition specifically targets product-level neutrality claims made to consumers, not all discussion of carbon credits.
as defined under frameworks like the Science Based Targets initiative remains a legitimate and encouraged practice. EmpCo does not discourage companies from taking responsibility for emissions they cannot yet eliminate. It simply requires honest communication about what that investment achieves.
The Strategic Shift
The practical implication is that carbon credits should be positioned as contributions to global climate action, not as licenses to claim product neutrality. This aligns with evolving best practices in corporate climate strategy, where the focus is increasingly on reduction pathways supported by contributions, rather than offsetting as a substitute for reduction.
For companies working with carbon credit providers, this means shifting toward communication strategies built on transparency, quality, and contribution rather than neutrality claims. Learn how to buy carbon credits with confidence. The credits themselves may remain the same, but the story you tell about them must change.
German Courts Are Already Enforcing These Standards
Companies operating in Germany should be aware that the legal landscape has already shifted. The German Federal Court of Justice (Bundesgerichtshof) issued a landmark ruling on June 27, 2024, in a case brought by the Wettbewerbszentrale, finding that advertising products as "climate neutral" without clear explanation of whether neutrality is achieved through reduction or compensation is misleading under existing competition law.
The court held that the term "klimaneutral" is inherently ambiguous because consumers could interpret it as either actual emissions reduction in production or mere compensation through offset purchases. Because these are fundamentally different mechanisms with different environmental implications, companies must clarify which approach underlies their claim, and this clarification must appear in the advertisement itself, not just on a linked website or QR code destination. Read our analysis of how this ruling affected Apple's carbon neutral claims.
This ruling means German companies face stricter enforcement standards now, before EmpCo's September 2026 implementation date. The Wettbewerbszentrale and other competition watchdogs have already begun challenging environmental claims that fail to meet these transparency requirements. Subsequent court decisions in late 2024 and early 2025 have reinforced this direction, emphasizing that emissions reduction is considered more significant than compensation and that advertising should reflect this distinction.
EmpCo vs. Green Claims Directive: Understanding the Difference
Discussions about EU greenwashing regulation often conflate EmpCo with the proposed Green Claims Directive. Understanding the distinction is important for compliance planning.
EmpCo is already law. It targets business-to-consumer communication and establishes what companies cannot say. It amends existing consumer protection directives and will be enforced through existing national mechanisms. Member states must implement it by March 2026, with rules applying from September 2026.
The Green Claims Directive was a separate proposal that would have established detailed requirements for how companies substantiate environmental claims before making them. Its most significant provision was mandatory ex-ante verification, requiring independent third-party approval before any environmental claim could be used in marketing. The directive would have applied to all voluntary environmental claims and labels.
However, in June 2025, the European Commission announced its intention to withdraw the Green Claims Directive proposal. The immediate trigger was political resistance, particularly from the European People's Party in the European Parliament, citing concerns about administrative burden on micro-enterprises. Italy withdrew its support, and trilogue negotiations were suspended. As of early 2026, the directive remains paused with no clear timeline for revival.
This does not mean companies can make environmental claims freely. EmpCo provides robust anti-greenwashing protections even without the Green Claims Directive. The main practical difference is that EmpCo does not require pre-approval of claims. Instead, it establishes prohibitions and allows enforcement authorities, competitors, and consumer organizations to challenge violations after the fact.
For compliance planning purposes, companies should focus on EmpCo's requirements, which are certain, rather than the Green Claims Directive, which may never take effect in its proposed form.
Implementation in Germany: Changes to the UWG
Germany is implementing EmpCo through amendments to the Act Against Unfair Competition (Gesetz gegen den unlauteren Wettbewerb, UWG). The Federal Ministry of Justice published its draft amendment in late 2024, with the final legislation expected to enter force by the September 2026 deadline.
The amended UWG will introduce statutory definitions for key terms including "environmental claim" (Umweltaussage), "generic environmental claim" (allgemeine Umweltaussage), and "sustainability label" (Nachhaltigkeitssiegel). It will also expand the existing "black list" of automatically unfair commercial practices to include EmpCo's specific prohibitions.
Some legal commentators have noted that the German draft goes beyond EmpCo's minimum requirements in certain respects. For example, the draft's definition of environmental claim references the broader concept of "business act" rather than EmpCo's narrower "commercial communication," potentially extending the regulation's reach. How courts interpret these provisions remains to be seen, but companies should be prepared for the possibility that German implementation may be stricter than other member states.
Penalties and Enforcement Risks
EmpCo strengthens existing enforcement mechanisms rather than creating new penalty structures. However, the consequences of non-compliance are substantial.
Member states must ensure that violations are effectively punished. While EmpCo itself does not specify penalty amounts, enforcement will flow through existing consumer protection and competition law frameworks. In Germany, violations of the UWG can result in injunctions, claims for damages, and administrative fines. For widespread infringements affecting consumers across multiple member states, fines can reach up to 4% of annual turnover or €2 million, whichever is higher.
Beyond direct penalties, the legal risk from competitors and civil society should not be underestimated. The Wettbewerbszentrale and similar organizations actively monitor environmental advertising and have initiated numerous proceedings against companies making questionable claims. Environmental NGOs like Deutsche Umwelthilfe have also increased their scrutiny of corporate climate claims, sending warning letters to companies with potentially non-compliant marketing.
Reputational damage may ultimately prove more costly than legal penalties. Research from the Nuremberg Institute for Market Decisions found that 72% of consumers avoid companies associated with false or questionable climate claims. Once a company is publicly associated with greenwashing, rebuilding trust is extremely difficult. The commercial incentive to comply is therefore significant even before considering legal enforcement.
Who Is Affected?
EmpCo applies broadly. Any company making environmental claims to consumers in the EU market falls within its scope, regardless of company size or location.
There is no small business exemption under EmpCo. While the proposed Green Claims Directive included provisions for micro-enterprises, EmpCo applies to all companies. A small organic food producer making sustainability claims on their packaging faces the same requirements as a multinational corporation.
Non-EU companies selling into the EU market are also covered. If your products reach EU consumers and carry environmental claims, those claims must comply with EmpCo regardless of where your company is headquartered.
Retailers bear responsibility alongside manufacturers. If you sell products with non-compliant environmental claims, you may face scrutiny even if you did not create those claims. The directive targets misleading commercial communication to consumers, and retailers are part of that communication chain.
Practical Preparation: What to Do Now
The September 2026 deadline is closer than it appears, particularly for companies with complex supply chains, extensive product lines, or significant marketing operations. Starting preparation now allows time for thorough review and thoughtful adjustment rather than rushed compliance.
Audit Current Claims
Begin by mapping all environmental and sustainability claims across your organization. This includes product packaging, website content, advertising materials, social media, press releases, and sales collateral. For each claim, document what evidence supports it and whether that evidence would satisfy EmpCo's requirements.
Pay particular attention to generic terms like "sustainable," "eco-friendly," or "green" that may appear throughout your communications. Also flag any climate neutrality claims, carbon offset references, and future environmental commitments.
Assess Your Labels
Review every sustainability label, badge, seal, or certification mark used in your marketing. For each, determine whether it is based on an official certification scheme with third-party verification or established by a public authority. Labels that fail this test will need to be removed or replaced with compliant alternatives.
Restructure Carbon Communication
If your current strategy involves claiming products are "climate neutral" based on carbon credit purchases, that communication approach must change. Work with your marketing and sustainability teams to develop alternative messaging focused on contribution claims, emissions reduction progress, and transparent discussion of your climate strategy. Explore our carbon management academy to understand how to build a compliant climate strategy.
This may require updating product packaging, which involves lead times for design, printing, and distribution. Starting this process early is essential.
Establish Verification Processes
For any future environmental commitments you wish to maintain, establish the documentation and verification infrastructure EmpCo requires. This means developing detailed implementation plans with measurable targets and arranging for independent third-party verification. Consider whether existing sustainability reporting processes can support these requirements or whether new systems are needed.
Train Your Teams
Ensure that marketing, communications, product development, and legal teams understand EmpCo's requirements. Create clear internal guidance on what claims are permitted and what approval processes apply to environmental messaging. Building compliance into day-to-day operations prevents problems from arising in the first place.
The Opportunity in Compliance
While EmpCo imposes new constraints, it also creates opportunities for companies with genuine sustainability performance. When competitors can no longer make vague or misleading claims, companies with substantiated environmental achievements gain competitive advantage.
The directive rewards specificity and transparency. Detailed, verifiable claims about emissions reductions, certified materials, or documented environmental improvements will stand out in a market where generic green language is prohibited. Companies that invest in actual sustainability performance and build the documentation infrastructure to prove it will be positioned to communicate effectively under the new rules.
For carbon credit procurement specifically, the emphasis on quality and transparency aligns with where the voluntary carbon market is heading. Credits with robust verification, clear additionality, and documented permanence become more valuable when they must support defensible communication strategies rather than blanket neutrality claims. High-quality carbon removal projects aligned with rigorous standards will be essential for companies building credible climate strategies.
Frequently Asked Questions
What is the EmpCo Directive?
EmpCo is the informal name for EU Directive 2024/825, officially titled the Directive on Empowering Consumers for the Green Transition. It amends existing EU consumer protection law to prohibit misleading environmental claims and strengthen requirements for sustainability communication.
When does EmpCo take effect?
The directive entered into force at the EU level on March 26, 2024. Member states must transpose it into national law by March 27, 2026. The rules become binding for companies on September 27, 2026.
When does the Green Claims Directive take effect?
The Green Claims Directive has been paused since June 2025 and may not take effect at all. The European Commission announced its intention to withdraw the proposal amid political concerns about administrative burden. Companies should focus on EmpCo compliance rather than the uncertain Green Claims Directive.
Can I still say "climate neutral"?
Product-level climate neutrality claims based on carbon offsetting will be prohibited under EmpCo. You can still discuss your company's climate strategy and carbon credit investments, but you cannot claim that purchasing your product is climate-neutral because you've offset the emissions.
Are carbon credits banned?
No. Carbon credit investments remain permitted and encouraged as part of corporate climate strategies. What's banned is making product neutrality claims based on those investments. Companies should shift toward contribution-based communication rather than neutrality claims.
Does EmpCo apply to B2B communications?
EmpCo primarily targets business-to-consumer communication. However, claims in B2B contexts can still be challenged under general competition law if they are misleading. The safest approach is to ensure all environmental claims are substantiated regardless of audience.
What happens if I don't comply?
Non-compliance can result in injunctions, fines, and damages claims through existing consumer protection and competition law enforcement. Competitors and consumer organizations can challenge violations directly. Beyond legal penalties, reputational damage from greenwashing allegations can significantly impact business performance.
Conclusion
The EmpCo Directive represents a fundamental shift in how companies can communicate about environmental performance in the EU market. Generic green claims, offset-based neutrality labels, and unsubstantiated future commitments will no longer be permitted. The era of vague sustainability marketing is ending.
For sustainability managers, this means rigorous review of current communications, restructuring of carbon credit messaging, and building the documentation infrastructure to support compliant claims. The September 2026 deadline leaves time for thoughtful preparation, but the scope of changes required for many organizations is substantial.
The companies that will thrive under these new rules are those with genuine sustainability performance and the systems to prove it. Clear, specific, verifiable claims backed by quality data and credible certifications will differentiate leaders from competitors who relied on ambiguous green language. In that sense, EmpCo is not just a compliance challenge but an opportunity to build competitive advantage through authentic sustainability communication.
This article provides general information about EU regulatory developments and should not be construed as legal advice. Companies should consult qualified legal counsel for guidance on specific compliance questions.