New EU Directive Elevates Transparency for Sustainability Labels
At ETKO, we believe that genuine sustainability requires uncompromising transparency. A recent update from the European Union is set to reinforce this principle across the market. The newly published Directive (EU) 2024/825 introduces strict requirements to combat greenwashing and ensure that environmental and social claims are backed by rigorous, independent verification.
Here is a breakdown of the key updates affecting how businesses display sustainability labels:
The Demand for Transparency: Sustainability labels can relate to many characteristics of a product, process, or business, making it essential to ensure their transparency and credibility.
Prohibition of Unverified Labels: The displaying of sustainability labels that are not based on a certification scheme, or which have not been established by public authorities, should be prohibited.
Trader Responsibilities: Before displaying a sustainability label, the trader should ensure that the certification scheme meets minimum conditions of transparency and credibility according to its publicly available terms. This includes the existence of objective monitoring of compliance with the scheme's requirements.
Mandatory Third-Party Monitoring: Objective monitoring must be carried out by a third party. The competence and independence of this third party from both the scheme owner and the trader must be ensured based on international, Union, or national standards, such as demonstrating compliance with ISO 17065.
Public Authority Exceptions: The displaying of sustainability labels remains possible without a certification scheme when such labels are established by a public authority. Examples include logos awarded for compliance with Regulations (EC) No 1221/2009 or (EC) No 66/2010.
Certification Marks: Some certification marks can operate as sustainability labels if they promote a product, process, or business with reference to environmental or social characteristics. However, a trader should only be able to display such marks if they are established by public authorities or based on a certification scheme.
Exclusions: Voluntary market-based and public standards for green and sustainable bonds are subject to specific laws and do not primarily target retail investors; therefore, they should not be considered sustainability labels under this Directive.
Support for SMEs: It is important that public authorities promote measures to facilitate access to sustainability labels for small and medium-sized enterprises.
How ETKO Can Help
As an accredited and independent certification body, ETKO provides the rigorous third-party verification required by these new European standards. Partner with us to ensure your sustainability claims are credible, transparent, and fully compliant with Directive (EU) 2024/825.
