Is greenwashing illegal in the EU? Until 27 September 2026, mostly case by case: an environmental claim was assessed under the general misleading-practices rules, and the answer depended on evidence, context, and prominence. Since that date the answer is categorical. The Empowering Consumers for the Green Transition Directive, EmpCo, has added a set of environmental practices to the UCPD blacklist of practices unfair in all circumstances: generic green claims without recognised excellent environmental performance, sustainability labels not backed by a certification scheme or public authority, and carbon neutrality claims built on offsetting. The scale of the exposure is not speculative. When the European Commission and national authorities swept websites for green claims, more than half of the claims examined lacked sufficient evidence, and in 42% of cases the authorities had reason to believe the claim could be false or deceptive.
For an acquirer the date matters more than the doctrine. A target marketed on sustainability is earning something from that positioning: a conversion rate, a price premium, a retail listing, a customer segment that chose it over a cheaper alternative. If the claims behind the positioning fail the blacklist test, the positioning has to be rebuilt or retired, and the margin it supported has to be re-earned some other way. A target that has not yet rebuilt its positioning is being priced on a marketing stack the law has already reclassified.
The GP3 pillar has mapped four manufactured conversion signals so far: the reference price that makes the price look like a bargain, the review base that makes the product look trusted, the exit friction that makes leaving harder than staying, and the interface design that steers the choice. The green claim is the fifth, and in some categories the strongest: the story that makes the price acceptable.
What Changed on 27 September 2026
The blacklist additions. Annex I of the UCPD gained new entries, unfair in all circumstances, no case-by-case assessment required:
- Generic environmental claims where the specification is not provided in clear and prominent terms on the same medium: environmentally friendly, eco-friendly, green, nature’s friend, ecological, climate friendly, gentle on the environment, energy efficient, biodegradable, biobased, and their relatives. The claim survives only if the trader can demonstrate recognised excellent environmental performance relevant to it, of the kind an EU Ecolabel or an equivalent top-tier scheme establishes.
- Whole-product claims for partial improvements: an environmental claim about the entire product or the entire business when it in fact concerns only one aspect of it.
- Uncertified sustainability labels: any sustainability label not based on a certification scheme or established by public authorities. A badge the brand designed for itself, however sincere, is now a blacklisted practice.
- Offset-based neutrality claims: claiming that a product has a neutral, reduced, or positive greenhouse-gas impact based on offsetting. Climate neutral, carbon neutral, CO2 compensated: banned as product claims regardless of how reputable the offset provider is.
- Legal requirements dressed as differentiation: presenting a requirement imposed by law on all products in the category as a distinctive feature of the offer.
- A family of durability practices: unsubstantiated lifespan claims, presenting goods as repairable when they are not, and withholding information about software updates that degrade the product.
The general clauses have widened. UCPD Articles 6 and 7 now name environmental and social characteristics and circularity aspects among the features a consumer must not be misled about, and future-performance claims (net zero by 2035, plastic free by 2030) are misleading unless backed by a publicly available implementation plan with measurable targets and independent third-party verification. A pledge on a homepage is now a substantiation obligation.
The Consumer Rights Directive has gained information duties. Pre-contractual information now extends to durability guarantees, repairability, and software-update commitments, under a harmonised notice and label regime. For a webshop this lands directly in the product page template.
The Directive That Stalled, and the One That Did Not
Some targets, and some sellers’ advisers, still treat EU greenwashing rules as perpetually postponed, because the instrument that made headlines, the Green Claims Directive with its detailed substantiation and pre-verification machinery, stalled in June 2025 when the Commission announced its intention to withdraw the proposal and the final trilogue was cancelled. That reading confuses the two instruments. EmpCo was adopted in March 2024, is not affected by the Green Claims Directive’s fate, and has applied since 27 September 2026 through the same national enforcement regimes that police fake discounts and fake reviews, with the same penalty framework, reaching fines of at least 4% of turnover for widespread infringements under the CPC Regulation. Courts have not waited either: the German Federal Court of Justice ruled in 2024 that advertising a product as klimaneutral is misleading unless the advertisement itself explains whether the neutrality comes from genuine emission reductions or from offsetting.
The Premium That Does Not Transfer
The mechanics follow the pattern this pillar has now traced four times, with one difference of degree. The manufactured signals described so far mostly inflate conversion. The green claim inflates price. Sustainability positioning is one of the few stories that lets a commodity product charge a non-commodity price, and that premium sits directly in GM3: the P&L records strong contribution after marketing, and the marketing-efficiency layer reads it as brand strength. Nothing records that the premium is rented from a set of claims whose statutory expiry date has already passed.
Under new ownership the exposure converts to cost through three channels at once. The claims have to come down or be substantiated: copy rewritten, badges removed or put through certification, offset-based neutrality retired. The physical estate follows the digital one: claims printed on packaging, labels, and inserts mean artwork changes and, for a target holding deep inventory, packaging write-offs on stock that can no longer be sold as labelled. And the premium itself comes under test: if the eco range reverts to unlabelled pricing, the buyer discovers how much of the margin was product and how much was story. A target whose claims are certified, specific, and substantiated carries none of this, which is precisely why the distinction belongs in the price rather than in a post-closing surprise.
For white-label targets the exposure compounds upstream. A brand that sources generically and labels sustainably is making claims its supplier relationships may not support, the same structural gap the Digital Product Passport analysis maps for product data: the claim lives in Stockholm, the evidence lives with a manufacturer who has never heard of it.
Why This Slips Through Due Diligence
Green claims sit in nobody’s workstream. Legal diligence reads contracts, policies, and disputes, not product-page adjectives and packaging artwork. ESG diligence, where it exists, examines the company’s own footprint and reporting, not the legality of its advertising vocabulary. Commercial diligence treats the premium as evidence of brand equity, which is the one explanation the seller will volunteer. And the target’s own team rarely believes it has a problem, because the claims were made in good faith, in language the whole category used, under rules that assessed them case by case. The blacklist does not ask about good faith.
The timing makes it worse. A process that started before 27 September 2026 spans the application date: claims that were arguably lawful at the management presentation are per-se unlawful at closing. A process starting after it inherits the same problem, because the target’s claims were written under the case-by-case regime and few brands rewrote their product pages, packaging, and ads on the day. Diligence that tests the marketing stack against the regime the claims were written under is testing against a statute book that no longer applies.
What Outside-In Analysis Can Detect Before the Data Room
- Building a claim inventory across product pages, category pages, packaging visible in product photography, marketplace listings, and paid ads: every environmental adjective, badge, and percentage
- Testing each sustainability badge against its scheme: whether a certification scheme exists, whether it is third-party, and whether the target’s use of it is current and verifiable
- Flagging the blacklist vocabulary (eco-friendly, biodegradable, climate neutral and relatives) wherever it appears without prominent specification on the same screen
- Identifying offset-based neutrality claims and the offset provider behind them, since these are now blacklisted regardless of substantiation
- Checking future-performance pledges against what is published: is there an implementation plan, with dates, and an independent verifier named
- Comparing current pages against archived versions to see whether claims are being scrubbed mid-process, which answers a diligence question the data room never would
- Estimating the share of the catalogue merchandised on sustainability, as a proxy for how much revenue sits behind the claims
- Reading reviews for purchase-reason language, to gauge whether customers cite sustainability, and would notice its retreat
None of this establishes a breach; that assessment belongs to counsel and to authorities. What it establishes is how much of the target’s pricing power is attributable to claims that need substantiation, certification, or retirement, and what remediation would cost across copy, artwork, and inventory.
The Pre-LOI Question Every PE Fund Should Ask
A sustainability-led brand is selling its premium as brand equity, and sometimes that is exactly what it is: certified, specific, substantiated, and durable. The question that separates the two cases: if every claim that fails the EmpCo blacklist test came down tomorrow, from the product pages, the packaging, and the ads, what price does this catalogue command, and what does the contribution margin look like at that price?
A premium built on certified performance survives the transaction and the statute both. A premium built on adjectives expired on 27 September 2026, and the buyer who has not priced the difference is the one who pays it.
This analysis is part of Tronvik’s GP3 Waterfall methodology, focused on GM3 marketing-efficiency mapping. Nothing in this article constitutes legal advice. To initiate an outside-in green-claims screen on a specific acquisition target, contact info@tronvik.com.