The European hospitality sector enters an era of accountability, compliance and transparency around sustainability as legislators take action to enforce, approve and apply regulations to battle greenwashing and protect consumers and the environment.

It is a test of leadership, commitment and values … to confront the realities of the climate crisis head-on and take the opportunity to reinvent the luxury hospitality industry, to take charge with purpose and challenge outdated systems, to foster a culture of sustainability and integrate them into strategic planning, to inspire others through effective communication and focused action, to ingrain compliance in the company’s values and operations, to gain a competitive advantage and to increase asset value.

Q4 2025 UPDATE – EUROPEAN UNION SUSTAINABILITY RELATED LAWS

1. Empowering Consumers for the Green Transition Directive (ECGTD), will become law by March 27, 2026, and applied in all EU Member States from September 27, 2026.

It aims to give consumers the tools and information necessary to make informed sustainable purchasing decisions and prevent misleading claims and practices such as greenwashing and early obsolescence, plus enforce penalties and fines.

ECGTD forbid vague environmental claims and the display of unreliable voluntary sustainability logos, which means that companies will no longer be able to declare that they are ‘green’ or ‘sustainable’ or ‘environmentally friendly’ if they cannot demonstrate that they are. In addition, unfair commercial practices linked to early obsolescence will be prohibited, such as false claims about the sustainability of an asset. Penalties can include fines, and in some cases, criminal penalties, with the specific amounts varying by member state.

Sustainability has three pillars – environmental, social and financial.  Any sustainability related claims should be verified by a third party expert (an auditor with an accredited Conformity Assessment Body) and should be independent and free from any conflicts of interest with the company being audited and sustainability certification scheme being audited.

Are companies outside the EU affected by ECGTD?

– Companies and individuals in the UK and Switzerland that make voluntary environmental claims to EU consumers or supply products to the EU with such claims are affected by the ECGTD (to be enforced in March 2026).

– Companies based in the EU will be affected by ECGTD and “liable for a fine” if they promote any companies based outside the EU that are greenwashing.  Examples of companies that promote hotels include tour operators, travel agencies (ie. Booking.com, Expedia, or Airbnb), airlines, marketing alliance organizations, PR agencies, publications, etc.

– Any company based outside the EU attending an Event or Conference on EU territory will also be affected by ECGTD and “liable for a fine” if they are found to be greenwashing. Examples of Travel, Tourism and Hospitality events – ITB Berlin, or Luxury Travel Mart in Cannes)

– To be “liable for a fine” means that a company is legally obligated to pay a sum of money as a penalty when found guilty of an offense or has violated a rule or law.

As an umbrella directive, ECGTD amended two directives designed to combat greenwashing and promote more sustainable consumption, and complements the upcoming Green Claims Directive:

a. Amendments to the Unfair Commercial Practices Directive (UCPD):

– Updated to address misleading environmental claim and expand the list of misleading practices.

– Strengthened the “blacklist” of unfair practices by expanding the list of practices that are automatically considered unfair, such as displaying sustainability labels not based on official certification schemes.

– Banned generic environmental claims by prohibiting:

1. claims that are based solely on environmental characteristics (i.e. conscious, sustainable, or responsible), as these terms imply other aspects like social characteristics.

2. claims related to carbon offsetting or greenhouse gas emissions offsetting, such as climate-neutral, CO2 neutral certified, or reduced climate impact.

3. claims about the future sustainable performance of a product without providing a detailed and verifiable implementation plan on how they will achieve it

4. sustainability labels that are not certified by a recognized certification scheme or established by government bodies.

5. practices that lead to early obsolescence, such as withholding information about software updates that limit a product’s functionality or presenting products as repairable when they are not.

b. Amendments to the Consumer Rights Directive (CRD):

– Updated to include product durability, repairability, and software updates for digital goods

– Ban on specific misleading practices

– Enhanced information requirements

– Harmonised notice and label

– Verification and transparency

2. Green Claims Directive (GCD), proposed in March 2023, aim to combat greenwashing by restricting the use of sustainability labels to those based on official certification schemes or established by public authorities to eliminate unreliable voluntary labels, and requiring companies to substantiate voluntary environmental claims with scientific evidence and undergo independent verification. It complements the ECGTD.

In late June 2026, an EU Commission spokesperson confirmed that the GCD has NOT been formally withdrawn and reconfirmed that microenterprises (companies with less than 10 employees) will be exempted. When the GCD is eventually adopted, it aims to introduce more strict rules for substantiating environmental claims. Despite the delay, companies must still comply with the existing legal framework on environmental claims – the ECGTD and the amended UCPD.

3. The Omnibus Proposal, launched by the European Commission on the 26th of February 2025, includes amendments to the Corporate Sustainability Reporting Directive (CSRD), the Corporate Sustainability Due Diligence Directive (CSDDD), the Carbon Adjustment Mechanism (CBAM), the InvestEu Regulation, and accompanied by a draft Taxonomy Regulation Delegated Act for public consultation.

Until these amendments are approved, the existing legislation must be followed by large and SME businesses.

Corporate Sustainability Reporting Directive (CSRD) require companies to report their sustainability impacts, striving to achieve better corporate transparency and achieve standardization between existing international frameworks.

At the end of February 2025, the EU Commission adopted the ‘Omnibus I’ package to simplify EU legislation in the field of sustainability and proposed to simplify EU rules and thus boost EU competitiveness in a proposal called ‘Stop-the-clock’ directive on April 14, 2025. It postpones:

– by one year, the application of certain due diligence requirements and transposition deadline, and

– by two years, the entry into application of the CSRD requirements for large companies that report from financial year 2025 and 2026 (so‑called “wave two” and “wave three” companies), as well as listed SMEs. A targeted “quick fix” amendment was also adopted to reduce burden for companies that had to start reporting for financial year 2024 (commonly referred to as “wave one” companies).

The Omnibus package aim to remove ~80% of companies from the mandatory CSRD reporting requirements and introduce a Voluntary Sustainability Reporting Standard (VSME) for non-listed Small and Medium-sized Enterprises (SMEs) and micro businesses, to help them respond to increasing requests for sustainability evidence from larger companies and financial institutions, and facilitate access to sustainable finance.

Corporate Sustainability Due Diligence Directive (CSDDD) aims to ensure that companies take responsibility for the sustainability of their supply chains in both EU and non-EU companies. Transposition, the process whereby EU Member States incorporate directives into their national legal systems, has been delayed by one year to July 24, 2028.

Carbon Adjustment Mechanism (CBAM) is the EU’s environmental policy tool for fair carbon emissions pricing during the production of carbon-intensive goods that are entering the EU, and to encourage cleaner industrial production in non-EU countries.

InvestEu Regulation is a part of the European Commission’s economic policy measures supporting investment, structural reforms and fiscal responsibility.

Taxonomy Regulation tasks the EU Commission with establishing the actual list of environmentally sustainable activities by defining technical screening criteria for each environmental objective through delegated acts.  EU Taxonomy is a common classification system to define what is ‘sustainable’ so investments can be directed towards sustainable businesses and activities.

4. European Climate Law legislates the goal of the European Green Deal for Europe’s economy and society to become climate-neutral by 2050, which means achieving Net Zero GHG emissions for EU Member States as a whole, mainly by cutting emissions, investing in clean technologies and protecting the environment. The law compels businesses to integrate sustainability into their core operations and sets the intermediate target of reducing net greenhouse gas (GHG) emissions by at least 55% by 2030 and 90% by 2040 compared to 1990 levels.

In June 2025, a new proposal to amend the European Climate Law encourage reliance on carbon removal technologies (such as BECCS and DACCS) and permit carbon offsetting to reach the EU greenhouse gas emission reduction targets.

5. EU Whistleblowing Directive establishes rules and procedures to protect ‘whistleblowers’, individuals who report information they acquired in a work-related context on breaches of EU law.  It aims to encourage reporting of wrongdoing and strengthen the effectiveness of EU law by safeguarding whistleblowers’ freedom of expression. The directive entered into force on the 16th of December 2019 and was applied in all EU Member States by 2024.

The directive cover reports on breaches of rules on animal health and welfare, consumer protection, environmental protection, financial services and products, food and feed safety, national corporate tax, product safety and compliance, protection of privacy and personal data, prevention of money laundering, public health, public procurement, security and information systems, and transport safety.

Q4 2025 UPDATE – SWITZERLAND SUSTAINABILITY RELATED LAWS