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EU plans law forcing companies to prove green claims are real - draft

FILE PHOTO: European Union flags flutter outside the European Commission headquarters in Brussels

By Kate Abnett

BRUSSELS (Reuters) - The European Union has drafted plans to require companies to back up green claims about their products with evidence, in a bid to fight greenwashing and misleading advertisements, according to a document seen by Reuters.

The draft legal proposal by the European Commission aims to clamp down on companies promoting their products as "climate neutral" or "containing recycled materials" if such labels are not substantiated.

EU countries would have to ensure environmental claims are proven against a science-based methodology, such as a "product environmental footprint" framework that tracks environmental impacts across 16 categories including the air and climate change.

"By fighting greenwashing, the proposal will ensure a level playing field for businesses when marketing their greenness," said the draft, which could still change before it is published.

The attempt to stamp out greenwashing comes after a Commission assessment of 150 claims about products' environmental characteristics in 2020 found that most - 53% - provided "vague, misleading or unfounded information".

Under the proposal, companies that claim their product has a positive environmental impact must also disclose if this causes an negative impact in another area.

Claims based on promises of future environmental performance must be backed up by milestones the company will achieve by specific dates. Companies whose claims rely on buying carbon credits to offset their own environmental impact would have to disclose this.

EU countries would need to establish a system to verify companies' claims, and impose penalties for non-compliance.

The draft document said the move would help consumers identify which products are truly eco-friendly and give proper credit to firms whose products have real environmental benefits.

The draft rules would cover all products and services sold in the EU, unless they are covered by comparable EU rules. "Green" investment products are already regulated the EU's taxonomy, a controversial labelling system facing legal challenges from the Austrian government and campaigners for allowing gas and nuclear energy to be labelled as green.

(Reporting by Kate Abnett; Editing by Angus MacSwan)