Strict EU Regulations Impacts Hospitality Industry Calling on game changers to change their game.

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Greenwashing has now raised sufficient concerns for several governments to develop strict legislations.

The European Union has taken the lead with a serious gumption-packed legislation package to better protect and better inform the consumer to advance the green economy.

Two directives adopted by the European Council in early 2024 – the Green Claims Directive (GCD) and the Directive to Empowering the Consumers for the Green Transition (ECGT) – will compel all large businesses and SMEs in Europe and abroad that target the EU consumer to substantiate their environmental claims with scientific evidence and verification from “approved” schemes, labels and independent auditors. They complement two amended laws enforced since 2022 – the Unfair Commercial Practices Directive (UCPD) and the Consumer Rights Directive (CRD) – to battle greenwashing and demand better information on products, and the EU Corporate Sustainability Reporting Directive (CSRD) which modernises and strengthens the rules concerning the social and environmental information that companies have to report.

IS THE HOSPITALITY INDUSTRY PREPARED?

Many are still greenwashing and greenhushing! Few are building capacity and managing the risks!

One thing is clear – EU regulations already impact how hospitality businesses worldwide can market, communicate and report their sustainability and decarbonization efforts with serious penalties for non-compliance.

Today, to be a game changer, hotels will need to change their game. Hotels will need to be accountable, transparent and compliant to operate, to protect their reputation, to be an employer-of-choice, to get better rates for bank loans and insurance, and to engage stakeholder support. They are expected to take total responsibility for their impacts on people and planet, which should include serious climate action by reducing plus removing more GHG emissions than they emit to achieve Net Negative Emissions asap.

Hoteliers with properties anywhere in the world that target the EU consumer should be assured that much of this applies to them today and should be aware that more regulations are rapidly coming down the line at them and their operation,“ commented Sue Williams, a sustainability advisor and founder of Positive Hospitality and the ex-GM of Whatley Manor, the first hotel in the UK to achieve Net Negative Emissions with accountability and transparency in January 2024.

“We might not be in this mess if we had self-regulated earlier”, wrote Professor Xavier Font of the University of Surrey in his article The Impact of the Green Claims Directive for Sustainable Hospitality. By this, he is not referring to the small and voluntary uptake of sustainability ecolabels for the hospitality industry that we see today, and that has only marginally increased in the last 20 years.

“We need to work at scale, and for too long hospitality associations have been fighting government’s regulation and ignored society’s skepticism, resulting in many years’ worth of misleading and exaggerated claims of being natural, sustainable, eco, responsible, and most recently, carbon neutral,” observed Professor Font. ”It’s time to acknowledge and quickly act on the need to collectively set standards, measure and monitor the compliance of our own members, and not be afraid to de-list from our associations those bad apples that create a bad name for the sector, so we are collectively ready for the impending legislation.”

“In January 2024, the EU enforced the Green Claims Directive (GCD) to combat greenwashing by ensuring credible, comparable and verifiable environmental information, whether related to the attributes, impact, performance, or the entity offering a product or service. It applies to SMEs and large businesses in the EU and businesses outside the EU selling products or services to EU customers, irrespective of their physical location. In the tourism and hospitality sector, this entails that companies worldwide will fall under this legislation’s scope. This is a game changer.”

Professor Font examines the complexities of sustainable practices in the hospitality industry, “Not all sustainable tourism ecolabels will meet the criteria of being accredited and independently third-party verified, as the interpretation of this requirement remains open. The hospitality industry has generally failed to follow independently verified, robust scientific approaches to get its house in order, and then make claims. Few hospitality and tourism ecolabels adhere to a life cycle assessment approach that would meet the EU standards. Most assess whether a company is taking action on various issues but do not demand actual measurements of environmental improvements or comparisons against industry benchmarks.”

POLICY CONTEXT

Benedict van Ormelingen, the legal and policy officer consumer directorate at the European Commission, explained the policy context that led to the directives adopted in early 2024 – the EU Green Claims and Empowering Consumers for the Green Transition.

December 2019: European Green Deal

With the European Green Deal, the European Commission published a comprehensive strategy to transform the EU into a green economy and also review all EU policies to make them fit for the green transition. It highlights the consumer policy to help inform consumer to make an informed choice and be an active voice into the green transition. The strategic action plan aimed to boost the use of more sustainable resources, by moving to a circular economy, to restore biodiversity and reduce pollution.

November 2020: Circular Economy Action Plan and New Consumer Agenda

The Circular Economy Action Plan and a New Consumer Agenda better equip consumers with clear and reliable information on the environmental impact of a product or a service. It also requires to better protect consumers against misleading climate-related claims, a practice often referred to as “greenwashing”.

May 2022: Unfair Commercial Practices Directive

The Unfair Commercial Practices Directive (UCPD) prohibit unfair commercial practices in the form of misleading actions and omissions. The European Commission’s Guidance Notice on the interpretation and application of the UCPD provides specific information about the environmental claims to be considered misleading.

May 2022: Consumer Rights Directive

The Consumer Rights Directive (CRD) gives consumers the same strong rights across the EU. It aligns and harmonises national consumer rules on the information consumers need to be given before they purchase goods, services or digital content, and on their right to cancel online purchases, wherever they shop in the EU.

2022 EU Commission Survey

From 2022 onwards, the EU Commission Survey revealed alarming statistics. This led to amending two existing consumer laws – UCPD and CRD – and the enforcement of new directives in early 2024.

January 2024: Green Claims Directive

The Goal: To better protect consumer rights and promote environmentally-friendly decisions and create a circular economy that reuses and recycles materials.  Enforced in January 2024 and adopted by the European Parliament in March 2024 with an application deadline of January 2026 in EU member countries.

The Green Claims Directive was enforced to

– provide a common criteria on how companies should substantiate environmental claims,

– provide clear requirements to address the proliferation and credibility challenges of environmental labels, and

– provide a sound system of independent verification of explicit environmental claims to reduce the risk of ‘greenwashing’.

February 2024: Empowering Consumers for the Green Transition Directive

The Directive for Empowering Consumers for the Green Transition was enforced to enhance consumer protection against misleading green claims which explicitly bans claims based on the offsetting of greenhouse gas emissions, that a product has a neutral, reduced or positive impact on the environment in terms of greenhouse gas emissions.

The Goal: To provides better information to consumer on sustainability and reparability, fight misleading commercial practices and early obsolescence. Enforced in February 2024 with an  application deadline of 26 September 2026 in EU member countries.

Consumer Protection Cooperation

The Consumer Protection Cooperation (CPC) is a network of authorities responsible for the enforcement of EU consumer protection laws. Under the Consumer Protection Cooperation Regulation, and with the coordination of the European Commission, they can take action to address cross-border issues at EU level. Moreover, within the same framework, consumer associations such as European Consumer Organisation (BEUC) can post alerts about emerging market threats and their information is then directly accessible by enforcement authorities.

TARGETTED AMENDMENTS TO UCPD & CRD

Today, the Unfair Commercial Practice Directive (UCPD) still apply to commercial practices from Traders towards EU Consumer and the Consumer Rights Directive (CRD) still apply to contracts between Trader to EU Consumer to fight misleading commercial practices amounting to greenwashing and early obsolescence.

A trader under EU consumer law is a one-person business such as a freelancer or an influencer (a person that make revenue through content monetisation), or a registered company that is engaged in commercial practices towards consumers. According to the UCPD, these businesses need to observe and comply with consumer protection rules, just like any other business that communicates with consumers about their goods and services.

The EU is not changing the scope of intervention. The EU is just adding targeted amendments to make sure consumer laws are fit to the green transition. This will also solve many problematic practices where consumers do not understand exactly what the claim relates to.

The Black List will include specific rules and practices that are prohibited under all circumstances.

New Amendments to UCPD

1. New prohibitions on greenwashing:

a) Claims related to future environmental performance

EU Commission observed that this kind of claims are increasingly made.  For example: A company claim they will reduce emissions by a certain % by a certain date. Such claims will only be allowed if there is clear and verifiable proof underpinned by a detailed and realistic implementation plan that is verified by a third party expert. This will ensure that the commitment is meaningful, trust-worthy, transparent and adjusted in case the company is no longer on track.

b) Generic environmental claims

There is a prohibition of generic or vague environmental claims without verified proof of excellent environmental performance. This means that it no longer possible for a company to claim that its “green” or “environmentally friendly” or “nature friendly” if it cannot demonstrate and prove excellent environmental performance. The consumer should not be misled about the environmental and social characteristics and circularity aspects of a product.

c) Sustainability labels

There is a ban on displaying a sustainability label that is not based on an approved certification scheme or not established by public authorities.

“Certification scheme” means a third party verification scheme that certifies that a product, process or business complies with certain requirements that allows for the use of complementing, and the terms of which, including its requirements, are publicly available and meets the following criteria:

1. The scheme is open under transparent, fair and non-discriminatory terms to all traders willing and able to comply with the scheme’s requirements.

2. The scheme requirements are developed by the scheme owner in consultation with relevant experts and stakeholders

3. The scheme sets out procedures for dealing with non-compliance with the scheme’s requirements and provides for the withdrawal or suspension of the use of the sustainability label by the trader in case of non-compliance with the scheme’s requirements.

4. The monitoring of a trader’s compliance with the scheme’s requirements is subject to an objective procedure and is carried out by a third party whose competence and independence from both the scheme owner and the trader are based on international, Union or national standards and procedures.

The certification scheme must be transparent, fair and non-discriminatory to all Traders willing and able to comply with the scheme requirements.  The Traders’ compliance with the requirement needs to be monitored by a third party which is competent and independent from the certification scheme owner and the trader.

On claims based on GHG emissions offsetting schemes, a company can no longer claim that their product is climate neutral, climate positive or have a reduced climate impacts based on carbon offsetting projects outside the product value chain.  To clarify, this prohibition relates to a claim on products.  The Trader will still be encouraged and allowed to make claims linked to reduction in their own operation or a reduction of GHG in their own value chain with verification.

2. New prohibitions on early obsolescence

These practices are detrimental to the consumer and have a negative impact on the environment in the form of increased waste and increased use of energy and materials.  The directive address misleading commercial practices to ensure that the consumer does not receive misleading information so they can make an informed choice.

There will be a new harmonized label that will show the consumer how long the product will last, the existence of a legal guarantee, the availability of spare parts and repair maintenance, and the minimum period the consumer can expect software updates to be provided by the producer.

New Amendments to CRD

Consumers will be provided with better information at point of sale, both online and offline on sustainability (harmonised label), legal guarantee (harmonised notice), repair (spare parts, repair and maintenance) and software updates (minimum period).

GREEN CLAIMS DIRECTIVE

The EU Green Claims Directive (GCD) is a binding legislative act which Member States will have to transpose into their own laws and define how they will reach these goals to stop greenwashing. It affects SMEs and large companies within the EU and abroad targeting the EU consumer.

The GCD doesn’t replace previous EU directives but rather enhances them by working alongside the Unfair Commercial Practices Directive (UCPD), which already addresses misleading advertising and sales practices, including green claims.

The European Parliament and the Council revised the UCPD based on the “Directive on Empowering Consumers for the Green Transition,” enforced in February 2024. It aims to make the UCPD more effective against greenwashing by adding a blacklist of unfair practices and complements this by setting out specific rules for verifying and communicating environmental claims before they’re marketed.

The terms are not yet final. The European Council aim for a general approach after the June 2024 EU election.

As a standalone new directive, the GCD objective is to protect the consumer and companies from greenwashing, to enable consumers to make informed purchasing decision, to improve legal certainty, to boost the competitiveness of companies that are truly more sustainable, to increase credibility of green claims, and to accelerate the Green Transition.

The Scope – the GCD targets explicit claim made on a voluntary basis by businesses towards the EU consumer about a product’s performance and environmental impact or about the Trader itself for which there is no other EU rules on substantiating or communicating claims that are in place in a specific sector. The GCD is also a general framework that can be supplemented or replaced by more specific legislation in specific sectors. It includes standardised terminology for clarity, life cycle assessments for projects, and penalties for misleading claims. Ultimately it aims to restore trust in green initiatives, promote responsible environmental marketing, and ensure that green truly means green.

Key elements are:

1. Environmental claims

Substantiation and communication requirements – Claims can only be made if they are based on an assessment relying on widely recognized scientific evidence proving that the environment benefits are significant and identify tradeoffs between environmental impact based on the life cycle approach.

2. Regime for environmental labelling

– Based on certification schemes with independent and transparent governance.

– Ban of labels preventing aggregated scoring of overall impact – to be developed under EU law.

3. No new public, 3rd country or private labelling schemes allowed except if added value is demonstrated, to ensure that they are reliable, third party verified and regularly review. (Note: This is in line with the Empowering Consumers for the Green Transition Directive.) To avoid the proliferation of labels, there is a ban on establishing new public schemes on National and Regional level.

4. Preapproved by independent and accredited verifiers.

What other national regulations are similar to the Green Claims Directive?

Several countries have national laws that align with the new Green Claims Directive:

– Belgium: The Environmental Advertising Code

– Czech Republic: Czech Consumer Protection Act No. 634/1992

– Denmark: The Danish Marketing Act

– France: French Environmental Code

– Germany: Act Against Unfair Competition

– Hungary: Acts on Competition and Unfair Commercial Practices against Consumers

– Italy: Italian Consumer Code

– Finland: Finnish Consumer Protection Act

– Netherlands: Dutch Sustainability Claims Code

– Poland: Acts on Combating Unfair Competition and Unfair Commercial Practices

– Sweden: The Swedish Marketing Act

– UK: Consumer Protection from Unfair Trading Regulations

Some countries also offer specialized guidelines on environmental claims, such as Sweden, Denmark, Finland, and Norway with their Guidance from the Consumer Ombudsman, or Hungary’s Green Marketing Guidance.

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