Consumers worldwide want to go green. But as the demand for sustainable products is growing significantly, so too is greenwashing, the practice of deceptively marketing products and services as environmentally friendly. The EU and the U.S. can and should work together to address the challenges that greenwashing presents to consumers.
I had the pleasure of accompanying the BEUC team to Washington, DC, for the 2024 annual meeting of the Trans-Atlantic Consumer Dialogue (TACD). This network aims to bring together consumer advocates from the EU and the U.S. to discuss the future of consumer protection on both sides of the Atlantic. We organised a roundtable to find out whether trade rules block the way to sustainable consumption, and if so, what can be done to address those obstacles. Civil society joined in the discussion with government representatives from the U.S. and the EU. The conversation generated new ideas on how to better promote sustainable consumption.
Instead of being drowned in information, consumers need reliable labels
In a recent survey we conducted in Europe, North America, and Oceania, we found that a majority of consumers want to take action to reduce their environmental footprint. Industries have recognized the same demand and have sought a competitive advantage in promoting their products and services as green or sustainable, but often beyond reality.
From sustainable flying to fossil fuel companies offering green energy, consumers have seen it all. And it is getting increasingly difficult to evaluate sustainability claims.
Greenwashing practices are a common denominator in both the U.S. and the EU markets. Decision-makers and regulators on both sides of the Atlantic have tackled these issues differently. In the US, the Federal Trade Commission (FTC) issued the Green Guides (2012), which were designed to help marketers avoid making environmental claims that misled consumers. Additionally, the FTC can use its authority to bring cases against companies that use deceptive green marketing. In the EU, the European Commission has proposed a new horizontal law to ban misleading claims about the environmental merits of products and services. This law aims to eliminate any claims that cannot be substantiated, i.e. backed by science. Regardless of the approach, the goal is to protect consumers from greenwashing. Consumer groups on both sides of the Atlantic agree that legally banning certain claims is more effective. The flood of information can be overwhelming and unreliable.
We observe a similar intent to protect consumers and promote sustainability through the Right to Repair initiatives in the U.S. and the EU. Despite the legislative differences, both regions share common goals of extending product lifespans and prioritising repair over replacement. A clear repairability score would help consumers make sustainable choices without adding unnecessary information to the packaging. In the long term, this could help combat overconsumption and the resulting overproduction of disposable, unrepairable goods. It now depends on the political will to make repairability scores happen.
How existing trade rules can block the way to sustainable consumption
Trade tools are increasingly being used as obstacles to accessing sustainable consumer products. The latest U.S. National Trade Estimate Report on Foreign Trade Barriers (NTE Report) is a good example of this trend. This annual report by the U.S. Trade Representative (USTR) is widely recognized as a significant tool of influence in U.S. trade policy. While the report’s primary purpose is to identify and address foreign trade barriers impacting U.S. exports, it has often been used to shape perceptions and influence foreign policies. Despite its technical nature, the NTE report serves as a powerful instrument in trade negotiations, providing leverage by highlighting specific trade practices that the U.S. views as obstacles. This year, the NTE Report lists as barriers to trade many EU laws aimed at protecting the environment and empowering consumers in the green transition, such as the Deforestation-Free Supply Chain Regulation, Eco-design for Sustainable Products Regulation, the Digital Product Passport, or the Green Claims Directive. Public interest groups around the globe warn that it is not a good sign to see trade policy being used to undermine environmental regulations.
Another way trade rules can hinder access to sustainable consumer products is through Free Trade Agreements (FTAs). A recent, lesser-known trend in these agreements is the inclusion of secrecy rights for companies, covering software source code and algorithms. Labelled as “source code” in digital trade agreements, these provisions have appeared in several U.S. and EU-negotiated deals. Since most of today’s consumer devices are electronically enabled, consumer protection authorities need to easily access software tools—such as diagnostic software, firmware, or ‘digital keys’—to check if consumers can freely repair their devices. The problem with these new rules on source code in trade agreements is that they make this access very complicated for authorities. This could undermine their ability to protect consumers in the long run.
Legal trade remedies are also gaining ground. Several countries are threatening to launch litigation in the World Trade Organization (WTO) against the EU Carbon Border Adjustment Mechanism (CBAM) and deforestation law and they may challenge more of the laws passed to meet the 2030 climate goals. Trade rules were originally designed without considering climate or consumer preferences, making the outcome of such challenges uncertain. Historically, the WTO’s narrow interpretation of general exceptions has limited the government’s ability to enact public policies, including climate-friendly laws impacting trade. With successful applications in only two out of nearly 48 cases, justifying such measures under these exceptions has proven nearly impossible.
However, we should expect trusted trading partners not to undermine efforts for sustainable consumption.
To remedy the situation, TACD’s U.S. counterparts have proposed a Climate Peace Clause to prevent trade rules from hindering access to sustainable choices for consumers. This initiative involves binding commitments not to use trade and investment rules to challenge climate policies. Moreover, European consumer organisations have been asking for an interpretation protocol for WTO agreements as a result of the BEUC’s study on how to better align trade and Green Deal policies. This protocol would provide enough policy space for the EU and its partners to tackle climate change in their domestic legislation. This could contribute to preventing trade disputes over sustainability measures and avoiding the use of trade rules to block the way to sustainable consumption.
How EU-U.S. cooperation could help consumers make more sustainable choices
For the past few years, the EU and the U.S. have been cooperating on a limited set of issues such as critical raw minerals and dependence on China through the Trade and Technology Council (TTC). Among its outcomes, the TTC published the Joint U.S.-EU Catalogue of Best Practices on Green Public Procurement and launched the Transatlantic Initiative on Sustainable Trade (TIST). But, beyond this, the TTC has struggled to deliver substantial results that go beyond making trade easier for companies. Indeed, the TTC has primarily focused on liberalising trade by reducing regulatory barriers, rather than championing sustainable practices. The TTC’s efforts underscore the ongoing challenge of balancing economic liberalisation with the urgent need for sustainable development. It’s a reminder that much work still needs to be done to address consumers’ demand for more sustainable options in the transatlantic market.
There are numerous opportunities for cooperation between authorities, particularly in enforcement, as consumers on both sides of the Atlantic face similar challenges.
For instance, a recent campaign by Public Citizen highlighted Toyota’s greenwashing practices, such as the “Beyond Zero” exhibit – a marketing campaign that deceives consumers by advertising its gas cars as electric vehicles. The group sent a complaint to the FTC. On the other side of the Atlantic, BEUC, with 23 of its member organizations from 19 countries, filed a complaint to the European Commission and the network of consumer protection authorities (CPC) denouncing misleading climate-related claims by 17 European airlines. As a result, the CPC recently voiced concerns about suspected greenwashing practices from the highly polluting sector.
Current trade rules are significant roadblocks to sustainable consumption. The world urgently needs policies that facilitate a greener future rather than hinder this transition. Collaborative efforts, such as the proposed Climate Peace Clause and a WTO interpretation protocol are promising avenues for aligning trade with environmental goals. Industry cannot define green consumption. By working together, the EU and the U.S. can lead the way in creating a market where authentic sustainable choice is the norm.
This blog was first posted on Heinrich Böll Stiftung’s Washington DC’s website.