EU Greenwashing Regs Get Sharper Teeth
Under new EU greenwashing regulations, companies making false or misleading sustainability claims could face hefty penalties as the Empowering Consumers for the Green Transition Directive takes effect on September 27. The most brazen scofflaws should expect fines of up to a 4% of the company’s annual gross income, product recalls, and possible class-action lawsuits, under the directive.
Though the Directive sets a framework, it leaves the precise levels of those penalties to each European Union member state, Mateusz Leźnicki, a senior associate at global law practice Dentons’ Warsaw office, told Global Finance. “That said, the stakes are high — in a number of jurisdictions, penalties for large-scale greenwashing directed at consumers can reach up to 10% of a company’s annual turnover, with personal liability for individual managers on top.”
Related: Sustainable Finance Awards 2026: Environmental Rollbacks Ding Markets
The complete penalty landscape is still evolving as implementing the directive into local commercial regulations is an ongoing process. Germany and Italy already have implemented the enabling legislation, while France, Belgium, and Poland are in advanced stages of transposing the directive into national law.
Historically, France, Germany, the Netherlands, the Nordic countries, and Poland have been the most active enforcers in this space, while the Central and Eastern European markets have been less developed, Leźnicki said.
“The full penalty landscape will only become clear as member states complete their transposition, which remains ongoing in many jurisdictions,” he added. “We are closely monitoring developments across all EU jurisdictions for our clients, as the situation is highly dynamic.”
Prohibited Practices
The Directive’s list of 12 prohibited practices includes the use of “empty” marketing terms associated with sustainability, like “green,” “environmentally friendly,” “energy efficient,” and “biodegradable,” that cannot be demonstrated. It also now requires that any sustainability-related claim made by a company about its product be verified by an independent third party. Other issues addressed by the Directive include planned obsolescence and limitations on aftermarket repairs.
The blacklisted practices hit almost every aspect of a business, including marketing, sales and distribution channels, sales and product teams, product development, supply chains, finance and corporate communications, according to a joint Web posting by My Green Labs, a non-profit that supports sustainable scientific research, and global law firm Eversheds Sutherland.
Impact on Financial Services
Companies outside manufacturing should pay close attention, as the directive covers any commercial communications containing environmental claims, including those made by financial institutions.
“For financial products specifically, the picture is more nuanced: Retail-facing financial products marketed with sustainability or ESG claims may fall within scope where dedicated sector-specific regulation — such as SFDR [the E.U.’s Sustainable Finance Disclosure Regulation] — does not already cover the ground,” said Leźnicki. “The boundaries here are still being tested, and the interaction between the Directive and financial services regulation is exactly the kind of question companies should be seeking specific legal advice on before September 2026.”
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