Last updated: May 27, 2026. Greenwashing rules are becoming more practical and evidence-based. Regulators are paying closer attention to vague environmental claims, net-zero statements, carbon-neutral claims, recycled-content claims, recyclable claims, sustainability labels, ESG fund names, and sustainability reports that make performance sound stronger than the evidence supports.
Short answer: businesses should treat every green claim as a claim that needs evidence. Before publishing, confirm what the claim covers, what evidence supports it, whether any qualifications are needed, whether the claim could mislead by omission, whether comparisons are fair, and whether the claim matches the full lifecycle or only one part of the product, service, or business.
This article is a practical overview, not legal advice. Greenwashing rules differ by market and sector, so companies should check local law before relying on a claim in advertising, reporting, sales materials, investor documents, or customer responses.
What counts as greenwashing?
Greenwashing happens when an environmental or sustainability claim gives a misleading impression. The claim may be directly false, but it can also be misleading because it is vague, exaggerated, incomplete, unsupported, or presented in a way that hides important limitations.
Examples include:
- calling a product "green", "eco-friendly", or "sustainable" without explaining the specific environmental benefit;
- claiming a business is carbon neutral without explaining the boundary, emissions calculation, reductions, offsets, and offset quality;
- describing a product as recyclable when recycling is not realistically available to many customers;
- highlighting recycled packaging while implying the whole product is recycled;
- using nature imagery or green labels to create an impression that the evidence does not support;
- comparing performance against a weak or unclear baseline;
- announcing net-zero targets without a credible plan or near-term action; and
- publishing sustainability metrics that cannot be traced back to source data.
The common rule across jurisdictions
Different regulators use different legal tools, but the practical standard is similar: environmental claims should be truthful, clear, specific, substantiated, and not misleading overall.
That means companies should be able to answer four questions before making a claim:
- What exactly are we claiming?
- What product, service, business activity, site, period, or boundary does the claim cover?
- What evidence supports the claim?
- Could a reasonable customer, investor, employee, supplier, or buyer understand the claim differently from what we intend?
If the answer is unclear, the claim probably needs to be narrowed, qualified, or supported with stronger evidence before it is used.
European Union: consumer green-claims rules
The EU has moved against vague and unsupported environmental claims through consumer protection law. Directive (EU) 2024/825, often described as the directive on empowering consumers for the green transition, entered into force in 2024 and amended EU consumer law to better address misleading green claims. It set a transposition deadline of 27 March 2026, so companies should check how the rules have been implemented in the relevant EU member states.
The practical direction is clear: generic environmental claims such as "green", "environmentally friendly", "climate friendly", or similar broad language are risky unless the company can demonstrate recognized excellent environmental performance or clearly explain the specific benefit. Claims about future environmental performance also need credible commitments and implementation plans rather than vague ambition.
The separate EU Green Claims Directive proposal has had a changing legislative path. Companies should not rely on old summaries that present its third-party verification requirements as settled final law. The safer approach is to monitor the latest EU status and, in the meantime, build the evidence file that any future substantiation regime would require.
United Kingdom: CMA Green Claims Code
In the UK, the Competition and Markets Authority's Green Claims Code remains an important reference for businesses making environmental claims. The code is built around six principles. Claims should:
- be truthful and accurate;
- be clear and unambiguous;
- not omit or hide important information;
- make fair and meaningful comparisons;
- consider the full lifecycle of the product or service where relevant; and
- be substantiated.
For a business, this means the claim review should look beyond wording. Images, labels, colors, context, qualifications, comparisons, and omissions can all shape the overall impression.
United Kingdom: FCA anti-greenwashing rule
For UK financial services, the Financial Conduct Authority's anti-greenwashing rule is especially relevant. FCA-authorized firms must make sure sustainability-related claims are fair, clear, and not misleading, and that they are consistent with the sustainability characteristics of the product or service.
This matters for ESG funds, sustainable investment strategies, green finance products, and other financial promotions. A sustainability claim in a fund name, factsheet, website, pitch deck, or client communication should be backed by the product's actual strategy, data, limits, and stewardship or investment process.
United States: FTC Green Guides
In the United States, the Federal Trade Commission's Green Guides explain how the FTC views environmental marketing claims under the prohibition on unfair or deceptive practices. The current Guides were revised in 2012 and have been under review, so businesses should monitor updates.
The Green Guides are especially useful for common product and packaging claims, including:
- general environmental benefit claims;
- carbon offset claims;
- certifications and seals of approval;
- compostable, degradable, and recyclable claims;
- recycled-content claims;
- renewable energy claims; and
- renewable materials claims.
The practical lesson is to avoid broad claims when a narrower claim is more accurate. Instead of saying a product is "green", say what is improved, how much, compared with what, and based on which evidence.
Australia: ACCC environmental claims guidance
In Australia, the Australian Competition and Consumer Commission has published guidance on environmental and sustainability claims. The ACCC's position is closely aligned with the general principle that environmental claims should be clear, accurate, evidence-backed, and not misleading.
Businesses should be careful with claims about carbon neutrality, net zero, recyclability, recycled content, compostability, certifications, renewable energy, sustainable sourcing, and emissions reductions. The ACCC also expects businesses not to hide important limitations or create a stronger environmental impression than the evidence supports.
Singapore: consumer claims and ESG fund disclosures
Singapore does not rely on one single greenwashing law for every business claim. Environmental claims can still be scrutinized under consumer protection, advertising, and sector-specific rules. The Competition and Consumer Commission of Singapore has warned about vague environmental claims such as "eco-friendly", "green", "natural", "conscious", or "responsible" where the actual environmental benefit is unclear or overstated.
For retail ESG funds, the Monetary Authority of Singapore has issued disclosure and reporting guidelines intended to reduce greenwashing risk and improve comparability for investors. The practical theme is the same: ESG claims should be clear, specific, substantiated, and consistent with the product or service being offered.
Claims that need extra care
Some sustainability claims are especially risky because they sound broad, technical, or future-facing. They should usually go through a stronger review before publication.
Carbon neutral and net zero claims
Carbon-neutral and net-zero claims should explain the boundary, emissions sources included, accounting method, reductions already achieved, role of offsets or removals, offset quality, target year, interim milestones, and what has not been included. A claim that depends heavily on offsets should not imply that the underlying emissions have disappeared.
Recyclable, compostable, and biodegradable claims
These claims should reflect real-world conditions, not only technical possibility. If a product is recyclable only where facilities exist, or compostable only in industrial composting facilities, that limitation should be clear.
Renewable energy and clean energy claims
Renewable electricity claims should be backed by contracts, certificates, supplier information, retirement evidence, or other relevant documentation. The claim should distinguish between electricity use, renewable electricity procurement, certificates, and broader decarbonization claims.
Recycled content and sustainable materials claims
These claims should state whether they apply to the product, component, packaging, or only a percentage of the material. A small improvement should not be presented as if the whole product is sustainable.
Supplier and value-chain claims
Claims about responsible sourcing, supplier emissions, human rights due diligence, or low-carbon supply chains should be backed by supplier data, screening methods, evidence, and boundaries. If the company has only screened a subset of suppliers, the claim should say so.
A practical green-claims review checklist
Before using an environmental claim, review it against this checklist:
- Is the claim specific enough?
- Does the claim say what product, service, site, period, or business activity it covers?
- Is the evidence current and traceable?
- Are assumptions, estimates, exclusions, and limitations documented?
- Could the claim mislead because of images, colors, labels, or context?
- Does the claim imply whole-product or whole-company performance when it only applies to one part?
- Are comparisons made against a fair and clearly stated baseline?
- Does the claim hide negative impacts or trade-offs?
- If offsets are used, is their role clearly explained?
- Has the claim been reviewed by the right owner before publication?
Build the evidence file before making the claim
Green claims should be supported before they are published, not reconstructed afterwards. A useful evidence file may include:
- the exact claim wording and where it will appear;
- the claim owner and reviewer;
- the product, service, company, site, reporting period, or boundary covered;
- source data and calculations;
- supplier evidence, certificates, contracts, or audit reports where relevant;
- methodology notes and assumptions;
- limitations and qualifications that need to appear near the claim;
- approval records; and
- review dates for refreshing or removing the claim.
This is where strong ESG data management and emissions data accounting become practical risk controls, not just reporting exercises.
How Keslio can help
Keslio helps teams prepare clearer, evidence-backed sustainability reporting and communications. This can include reviewing draft claims, organizing supporting evidence, preparing methodology notes, improving ESG data workflows, and aligning public claims with the actual data available.
For climate-related claims, Keslio can also support GHG emissions calculations and documentation. For sustainability reports, customer materials, and public-facing claims, Keslio's reporting and communications support can help reduce greenwashing risk while keeping the message practical and honest.
Need help checking a sustainability claim?
If your team is preparing a sustainability report, customer response, website claim, net-zero statement, or emissions-related communication, Keslio can help check whether the claim is specific, evidence-backed, and aligned with the underlying data. Keslio does not provide legal advice, but it can help prepare the data, evidence, and wording for legal or management review.
