With the EU’s Empowering Consumers for the Green Transition (ECGT) Directive in effect beginning September 27, 2026, companies around the world that market to EU consumers should revisit their environmental claims. The ECGT Directive’s implications extend well beyond consumer-product packaging. It can affect airlines promoting “greener” flights or offering customers emissions-compensation options; hotels and tour operators advertising carbon-neutral stays or trips; retail banks marketing sustainable savings products or green mortgages; and energy suppliers promoting clean energy to consumers without clear explanation of the relevant tariff, fuel mix, or certificate structure. The ECGT Directive affects businesses anywhere that direct B2C commercial practices toward EU consumers.

Environmental claims must be examined holistically: is the overall message conveyed to the reasonable consumer specific, supportable, appropriately qualified, and consistent with the underlying evidence. That requires coordination among legal, marketing, sustainability, product, finance, and operations.

Environmental claims cannot be siloed within the marketing department: they are significant legal representations. The gap between “aspirational branding” and “factual substantiation” has become a primary target for class-action lawsuits and regulatory actions around the globe. A recent study found that 96% of companies making net-zero pledges exhibit greenwashing risk factors. That’s significant when almost two-thirds of the Forbes Global 2000 have net zero targets and 137 of 198 national governments have net zero targets.

For startups, the stakes are particularly high. A single greenwashing suit can drain early-stage capital and permanently tarnish a brand before it even scales. To move from vulnerability to defensibility, companies must treat climate claims with the same rigor as financial reporting.

The Pillars of a Defensible Climate Claim

To survive legal scrutiny, an environmental claim must be rooted in evidence rather than intent. If your company is claiming “Net Zero” status or “Carbon Neutrality,” its defense rests on four critical pillars:

• Measurable Targets: Vague promises are a liability. Claims must be backed by specific metrics, typically measured in tons of carbon dioxide equivalent (CO2e).

• Reliable and Verifiable Data: Self-reporting is rarely enough. Maintain evidence that supports the exact claim before publication. That may include lifecycle analysis, emissions-accounting records, technical testing, supplier data, independent certification, or third-party assurance.

• Timebound Commitments: A claim of “Net Zero” is meaningless without a roadmap. This includes near-term (2030) and long-term (2040/2050) milestones that show a clear trajectory of reduction.

• Documented Governance: Who is accountable? Legal defensibility is strengthened when environmental performance is tied to board-level oversight and internal controls.

What “Net Zero” Should Mean in a Defensible Claim

“Net zero” is not a single, uniformly defined legal term. Its meaning depends on the audience, context, jurisdiction, applicable standards, and the specific representation being made. In many jurisdictions, “Net Zero” implies a 90%-95% absolute reduction in emissions, with only the remaining 5%-10% emissions being offset. All credible net-zero frameworks share a common direction: deep absolute emissions reductions across the relevant value chain, with neutralization of only residual emissions through durable carbon removals. The “gold standard” for climate claims are based on:

1. The Science Based Targets initiative (SBTi)

The SBTi Corporate Net-Zero Standard is one of the most influential voluntary frameworks for corporate net-zero target setting. It calls for deep value-chain decarbonization.

• The Rule: To claim “Net Zero” under this standard, a company must achieve long-term deep decarbonization generally covering at least 95% of Scope 1 and 2 emissions and 90% of Scope 3 emissions. Its cross-sector pathway is informed by an economy-wide reduction of at least 90% by 2050 from a 2020 base year. The framework then contemplates neutralization of residual emissions through permanent carbon removal.

• Adoption: While SBTi is not a legal regime, many regulators (including the UK’s CMA and the New York Attorney General) have used a company’s adherence to (or departure from) SBTi standards as evidence of whether their climate claims are “credible” or “fraudulent.”

2. UN High-Level Expert Group (HLEG) – “Integrity Matters”

Commissioned by the UN Secretary-General to combat greenwashing, the HLEG 2022 report (“Integrity Matters”) established the criteria for “non-state entities” (companies and cities).

• The Rule: It explicitly states that “Net Zero” requires deep absolute emission reductions. It prohibits counting carbon offsets toward a company’s interim emissions reduction targets.

• Alignment: It aligns with the IPCC’s “1.5°C pathways,” which necessitate near-total elimination of emissions, leaving only a “residual” 5%-10% to be neutralized via permanent carbon removal.

3. EU Greenwashing (ECGT) & 2040 Climate Policy

The European Union has moved to codify these definitions into law through two major pieces of legislation:

• Empowering Consumers for the Green Transition (ECGT): Directive (EU) 2024/825 applies from September 27, 2026. Among other changes to EU consumer law, it prohibits claims that a product has a neutral, reduced, or positive environmental impact because of the offsetting of greenhouse-gas emissions. In practical terms, a product-level “carbon neutral,” “climate neutral,” or similar claim cannot be justified by purchasing carbon credits outside the product’s own value chain. This isn't a general ban on statements about climate targets, offsets, or investments—they can still be published, so long as they are substantiated, clear, and not misleading.

• The 2040 Climate Policy Context: The EU’s 2040 climate target calls for a 90% reduction in net greenhouse-gas emissions from 1990 levels by 2040, as part of the EU's path toward climate neutrality by 2050. While that target does not create a universal definition of “net zero” or require every company to achieve a 90% reduction before making a climate-related claim, it does reinforce the direction of travel: environmental claims should reflect measurable emissions reductions, not rely on broad climate language that outruns the underlying facts.

• Terms to Use with Caution: Generic terms, like “green,” "environmentally friendly," "sustainable," and “eco-friendly,” are high risk when used without significant backup in the EU (referred to as "recognized excellent environmental performance" in the ECGT) and in the US.

4. UK Competition and Markets Authority & Advertising Standards Authority

In the UK, the CMA (Green Claims Code) and the Advertising Standards Authority (ASA) have ruled against companies making “Carbon Neutral” or “Net Zero” claims that rely heavily on offsets.

• The Reasoning: Consumers generally understand “Net Zero” to mean the company has fundamentally changed its business to stop polluting. If a company has only reduced emissions by 20% and offset the rest, claiming “Net Zero” is considered a “material omission” of fact. The ASA’s carbon‑neutral and net‑zero guidance makes clear that claims based mainly on offsetting, without clear explanation of the limited role and quality of offsets, are likely to mislead; in a series of rulings, the ASA has treated unqualified “carbon neutral” statements as problematic where advertisers relied largely on cheap, avoidance‑type offsets and did not explain that they had made only limited absolute emissions cuts.

“Net Zero” versus “Carbon Neutral”

Environmental Claims Include Visual and Brand Signals

A claim can be made through product names, icons, color schemes, images, badges, seals, comparison graphics, website filters, and certification-style symbols. When evaluating claims, identify and review the total message conveyed—not just the most technically defensible reading of a sentence.

This matters in particular for proprietary sustainability labels. Under the ECGT Directive, sustainability labels are prohibited unless they are established by public authorities or based on qualifying certification schemes. A self-created “planet positive” badge or leaf symbol may create the impression of independent verification or broad environmental superiority that the company cannot substantiate.

The Past and the Future

Audit Legacy Claims, Not Just New Campaigns

For BTC companies facing the EU, compliance is not limited to claims created after September 27th. Companies should inventory existing website copy, product pages, packaging, social posts, sales collateral, retailer listings, app interfaces, FAQs, investor materials, and certification badges. Prioritize claims that are consumer-facing, broad, offset-based, comparative, or inconsistent across channels.

The appropriate response may be to revise, narrow, qualify, retire, or escalate a claim. It may also include updating digital content, revising future print runs, providing point-of-sale clarification, and preserving the evidence and legal analysis supporting the final wording.

A Future Climate Target Needs More Than a Date

“Net zero by 2030” or “climate positive by 2040” is not a neutral aspiration once it appears in consumer-facing marketing. Claims about future environmental performance should be supported by clear, objective, publicly available, and verifiable commitments; a detailed and realistic implementation plan; measurable and time-bound targets; and regular independent review. The legal and commercial test is simple: can the business show the operational path, resources, assumptions, accountability, and monitoring that its public claim assumes?

Green-Light vs. Red-Light Claims

Lessons to Avoid Greenwashing and Climatewashing Suits and Investigations

Be transparent. Explain when carbon neutrality is achieved through offsets and what kind of offsets. Avoid implying deep structural decarbonization when only modest reductions have occurred. Avoid broad “we are carbon neutral” messaging where only a subset of operations or products is covered.

Know the rules. Jurisdictions have different rules about what you can say, how you can say it, and what type of backup you need. A good rule of thumb across jurisdictions is to avoid generality and vagueness. 

Provide context. Don’t focus only on a single environmentally beneficial initiative when it’s not the only thing in your business or only a small portion of your business. Provide details or elements that show both low-carbon and high-carbon aspects of your business. Qualify anything that needs to be qualified to be clear.

Substantiate now. Get the backup (substantiation) for all numbers that you are going to use – in advance – and make sure that they match your other published numbers. Your CIM should match your website. It should match any reports you have created, white papers, and presentations. The same goes for every other claim in your materials and statements that you make when talking about your business or pitching your company. Keep documentation of the numbers, data, and claims.

Building a Foundation of Integrity

The goal isn’t to stop talking about your environmental progress: it is to be precise about what and how you communicate that progress.

For every material climate claim, your company should be able to produce a practical claim file: the exact words and visuals used; the relevant audience and jurisdictions; the claim’s scope and boundaries; the evidence and methodology; material assumptions and limitations; required qualifications; approvals; and the planned date for reassessment.

That record will not make an unsupported claim supportable. But it creates the discipline needed to catch overstatement before publication, align marketing with operational reality, and show regulators, customers, investors, and counterparties that environmental representations were made carefully and in good faith.

By focusing on documented governance and verified data, you turn your environmental strategy from a potential legal liability into a verified competitive advantage.

Note: This is an updated version of an article I wrote and published earlier in the year.

About the Author

Kristie M. Blase is a Shareholder at Frazer + Blase, P.C., a Chambers-spotlight-ranked corporate law firm with offices in New York and Houston. She draws on her global regulatory and commercial litigation experience to deliver actionable advice for investors, companies, and boards on risk evaluation, best practices, and strategic decisions.