New Greenwashing Rules: Navigating the ECGT & EBA Updates

For years, companies across various sectors—from fast-moving consumer goods to complex financial services—have leaned on vague sustainability claims to attract environmentally conscious consumers. However, the regulatory landscape in the European Union is undergoing a massive transformation.

Two major regulatory updates are changing the framework: the Directive on Empowering Consumers for the Green Transition (ECGT) and the European Banking Authority's (EBA) revised Guidelines on product oversight and governance (POG). Together, they establish a framework that will force companies to substantiate every "eco-friendly" claim they make. Here is a deep dive into what is changing and how businesses must prepare.

The ECGT Directive (EmpCo) – A New Era for Consumer Markets

The ECGT Directive (Directive (EU) 2024/825 on empowering consumers for the green transition) introduces targeted amendments to existing consumer protection laws, namely the Unfair Commercial Practices Directive (UCPD) and the Consumer Rights Directive (CRD). The Directive was adopted by the co-legislators on 28 February 2024 and Member States had time until 27 March 2026 to transpose the Directive into national legislations. The Act is applicable from 27 September 2026, targeting vague, misleading, and unfounded environmental claims.

Under the provisions of ECGT amending the UCPD, making a generic environmental claim is prohibited unless the trader can demonstrate "recognised excellent environmental performance" relevant to that claim.

• What is a generic claim?: Examples include phrases like 'environmentally friendly', 'eco-friendly', 'green', 'nature's friend', 'ecological', 'climate friendly', and 'biodegradable'.

• How to prove excellence?: Traders can demonstrate this excellence through compliance with the EU Ecolabel (Regulation (EC) No 66/2010), officially recognized national/regional EN ISO 14024 type I ecolabelling schemes (like the Nordic Swan or Blue Angel), or top environmental performance in accordance with other applicable Union laws (i.e. in accordance with Energy Labelling Regulation).

One of the most significant changes concerns carbon offsetting claims. The Directive prohibits claiming that a product has a neutral, reduced, or positive impact on the environment based on the offsetting of greenhouse gas emissions outside the product's value chain.

• No more "Climate Neutral" flights via tree planting: Claims such as 'climate neutral', 'carbon positive', or 'climate compensated' are banned if they rely on buying carbon credits (like funding a reforestation project) rather than actual emission reductions within the product's own lifecycle.

• Actual improvements only: Claims of reduced impact are only allowed when based on the actual lifecycle impact of the product in question. Companies can still advertise their investments in carbon credit projects, provided this information is presented transparently and is not misleading, and complies with other applicable laws.

The ECGT Directive's definition of an environmental claim is broad. It includes any message or representation in any form, including text, pictorial, graphic, or symbolic representations.

• Artwork matters: Designing packaging with green leaves, water drops, or nature-related icons can be interpreted by consumers as implicit environmental claims. That in combination with a claim made in written form or with a logo, depending on the context and presentation, could fall under the directive's scope.

• Trademarks are not exempt: Brand names and product names—even if protected by intellectual property rights—can be affected. If a brand name uses words like 'green', 'eco', or 'climate neutral' in a way that implies an environmental benefit, it may constitute an environmental claim. Member States can even refuse or invalidate trademarks that breach these consumer protection rules.

The Financial Sector Under Scrutiny – New EBA Guidelines

While the ECGT Directive impacts the broader consumer market, the financial sector faces its own targeted regulatory change. The European Banking Authority (EBA) has updated its Guidelines on Product Oversight and Governance (POG) for retail banking products to explicitly integrate Environmental, Social, and Governance (ESG) features and greenwashing risks. Following the recent publication of the Final Report, the Guidelines are being translated into all official EU languages and will apply from 11 January 2027.

The updated POG Guidelines apply to manufacturers and distributors of retail banking products. Notably, the scope has been extended and now the guidelines explicitly cover consumer credit provided by non-bank creditors under the Consumer Credit Directive (CCD). This ensures that both traditional banks and alternative lenders are held to the same high standards when offering retail products.

The POG provides updates concerning the Management Responsibility and Staff Competence:

• Proactive prevention: The manufacturer’s management body should put in place sound processes not just to manage risks after they occur, but to actively identify and prevent greenwashing practices.

• Trained personnel: Senior management should ensure that staff involved in designing products are competent, appropriately trained, and understand the product's features and risks, explicitly including those related to ESG features.

Financial institutions can no longer treat ESG as a generic marketing add-on. If a product has ESG features (e.g., a "green" mortgage), these features should be integrated into the product's design and target market assessment. Furthermore, manufacturers should ensure that a product with ESG features is deemed appropriate for the specific interests, objectives, and characteristics of the identified target market.

One of the most impactful changes in the EBA guidelines is the heightened responsibility placed on distributors. They can no longer simply act as passive conduits for the manufacturer's marketing materials.

• When products with ESG features are offered and sold, distributors should ensure that sustainability-related communication is fair, clear, and not misleading.

• Distributors share the obligation to ensure that sustainability claims are accurate, substantiated, up to date, and provide a fair representation of the product's or institution's profile. While manufacturers remain the primary source of information, distributors act as a critical checkpoint to mitigate greenwashing risks before the product reaches the consumer.

Conclusion

The convergence of the ECGT Directive and the updated EBA POG Guidelines marks the definitive changes in the approach towards greenwashing." For businesses, the mandate is clear: vague marketing, irrelevant claims, and unsubstantiated future promises are now massive regulatory liabilities. Whether you are selling consumer goods or retail banking products, sustainability claims must now be treated with the same rigor, accuracy, and evidentiary backing as financial reporting.

👉 [LINK] Click here to access the Questions & Answers - Directive on empowering consumers for the Green Transition (30 June 2026).

👉 [LINK] Click here to access the EBA Guidelines on product oversight and governance (POG) for retail banking products (30 June 2026).

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