Electric Vehicles May No Longer Be “Green” Under New EU Greenwashing Law

The European Union is in the early stages of negotiating the Green Claims Directive, a new law that aims to curb greenwashing and help consumers make greener choices. The proposal heavily regulates the environmental marketing practices of businesses, limiting what can be claimed. However, under the initial proposal, it is likely that electric vehicles, a staple of the green movement, will not be allowed to be advertised as environmentally friendly.

As global concerns rise over the impacts of climate change, there has been a significant increase in consumer interest in supporting businesses and products that are environmentally friendly. This rise in consumer interest, as well as pressures from financial investors and other parties, have pushed businesses to take climate friendly stances. However, there is a growing and reasonable concern that businesses are exaggerating their environmentally friendly actions in what is known as greenwashing.

Traditionally, greenwashing was done through marketing. When the customer base wanted environmentally friendly companies, companies benefited by making themselves appear greener. In recent years, the phrase climate washing has developed as a subset of greenwashing that directly addresses the exaggeration of claims relating to climate change and greenhouse gas emissions. For decades, greenwashing frustrated environmental activists who wanted actual change by companies. However, as environmental, social, and governance investing grew, so did the legal pitfalls of greenwashing. Shifting from just clever marketing campaigns to misleading investors and violating consumer protection laws.

There has been a general lack of regulation of greenwashing. However, as the Paris Agreement drives other climate related regulations, legal development in the area of greenwashing has increased as well. In February, the EU adopted the Directive on Empowering Consumers for the Green Transition, legislation that specifically targeted green and climate related claims. On June 18, the Council of the European Union announced that it adopted its position on the Green Claims Directive, a stricter companion to the Empowering Consumers Directive. The adoption of a position is the first stage of negotiations between the Council and the European Parliament for the final language of the Directive.

The Council position of the Green Claims Directive states: “If environmental claims are not reliable, comparable and verifiable, consumers and other market actors cannot fully leverage their purchasing decisions to reward better environmental performance.”

“It would be misleading to consumers if an explicit environmental claim or environmental label pointed to the benefits in terms of environmental impacts or environmental aspects while omitting that the achievement of those benefits leads to negative trade-offs on other environmental impacts or environmental aspects.”

This is a potential problem for electric vehicles and could expose some harsh realities about their environmental impacts.

The Paris Agreement requires signing states to obtain a goal of net zero GHG emissions by 2050. While it includes a broad range of changes, conversion from traditional combustion engine vehicles to electric vehicles has been one of the most visible signs of the climate change movement. Governments around the world, including the EU, have adopted policies mandating a complete transition from combustion to electric by 2035.

However, while the reduction in GHG emissions is a benefit of electric vehicles, the additional impacts on the environment have haunted them from both conservatives who oppose the transition and environmentalists looking for a better approach.

The batteries in electric vehicles use rare minerals, like cobalt and lithium. The process of mining of those minerals has drawn the ire of both human rights advocates and environmentalists. For climate change activists, the damage to the environment caused by mining is offset by the need to obtain net zero. However, not environmental activists share that opinion.

Electric vehicles have also drawn the criticism of conservatives, who believe they are just climate theater. A way for people to look like they are helping the environment, while making no real changes to their lives. This is reinforced by the argument that the power that is used to charge electric vehicles is, most likely, produced by power plants that use fossil fuels. Supporters generally dismiss this claim, noting that it is still a net reduction in GHG emissions.

Despite the clear environmental problems associated with electric vehicles, they are still generally praised as “green” and “environmentally friendly.” Which raises an interesting question as to whether they can still make that claim under the proposed Green Directive. As is, most likely not. That would be a major blow to advocates of electric vehicles.

There is a chance a carve-out can be included in the final Directive to exclude electric vehicles. The proposal currently exempts claims “relating to the availability of consumer information on fuel economy and CO2 emissions in respect of the marketing of new passenger cars.” That addresses the typical g/km or mpg claims, but does not appear to include broader marketing materials.

Notably, the European People’s Party gained seats in the June EU elections, in part for their criticism of green policies and the European Green Deal. The EPP has stated they intend to delay and amend the 2035 phase out of combustion engines. Making automotive manufacturers disclose the full environmental impact may help them in that argument.