Greenwashing: how the new European regulation affects companies and brands

When sustainability is no longer just marketing

During years, the term greenwashing has been used to describe situations in which a company presents a product, service or brand as more sustainable or environmentally friendly than it actually is. Traditionally, this phenomenon was mainly confined to the reputational sphere and was associated with marketing campaigns that exaggerated — or distorted — the environmental impact of a product. In that context, the consequences were primarily public — criticism from consumers, media pressure or loss of trust — rather than formal sanctions or legal action.

However, the regulatory framework has evolved and, with it, the scope of the term has also changed.

On 28 February 2024, Directive (EU) 2024/825 was approved, amending, among others, Directive 2005/29/EC on unfair commercial practices and strengthening consumer protection against misleading practices in the context of the ecological transition. This regulation expands control over environmental claims and requires Member States to transpose it before 27 March 2026, with application required, at the latest, from 27 September 2026.

Spain has already initiated this process through the Draft Sustainable Consumption Law. Although it is still going through the parliamentary process, its content anticipates the standard that will become legally enforceable once it enters into force.

The most significant development is not only the tightening of controls over explicit environmental statements, but also the expansion of the very concept of an environmental claim. The regulation defines this as any message or representation suggesting that a product, service, brand or company has a positive — or less harmful — impact on the environment. This is not limited to what is said in an advertising campaign: it may also include product names, brands or elements of commercial communication that influence consumer perception.

Under this new framework, greenwashing may arise where brand architecture, the trade name or corporate positioning project an environmental expectation to consumers that is not objectively substantiated.

In practice, this means that a word included in a trade name, a term with ecological connotations incorporated into a brand or a repeated corporate message may be examined from the perspective of the reasonable perception of the average consumer — in other words, the reasonable expectation created when environmental qualities are suggested.

For example, if a product is marketed using terms such as “eco” or “green”, the legal analysis is not limited to verifying whether the advertising is accurate, but also assesses whether such wording may lead consumers to believe that the product possesses certain environmental qualities.

Consumer protection regulations do not require extreme sensitivity or a forced interpretation, but they do protect against representations that may mislead consumers regarding environmental characteristics relevant to the purchasing decision.

Once the future Sustainable Consumption Law enters into force — in any event, no later than September 2026 — this standard will become fully enforceable. This will require companies to review not only their campaigns, but also their commercial identity, from the perspective of consistency and verifiability.

Ultimately, greenwashing has ceased to exist exclusively within the reputational sphere and has become fully integrated into the field of regulatory compliance. Scrutiny is no longer limited to what is stated in a specific campaign, but may extend to the way a company builds and projects its identity in the market.

In cases of non-compliance, mechanisms relating to unfair competition, administrative sanctions for breaches of consumer regulations and even collective actions brought by consumer associations or competent authorities may be triggered.

Therefore, in a market where sustainability increasingly shapes economic behaviour, anticipating this analysis is not only a matter of communication consistency, but also a requirement of legal diligence and proactive regulatory risk management.