For years, the easiest climate claim in consumer marketing was a label: buy carbon credits equal to a product's footprint, print "carbon neutral" on the box, move on. In the European Union, that approach ended this weekend.
- From 27 September 2026, EU consumer law bans product claims of "climate neutral", "carbon neutral" or "reduced impact" when they rest on carbon offsetting outside the product's own value chain.
- Generic words such as "eco-friendly" and "green" are banned unless backed by recognised excellent environmental performance, and the Commission's guidance says standalone terms such as "carbon neutral" can count as generic claims too.
- Future targets like "net zero by 2040" remain possible, but only with a detailed plan and regular verification by an independent expert.
- Describing what your company funded, accurately and specifically, is still allowed. Presenting that funding as neutrality is not.
- There is no grace period for products already on shelves.
- What changed, and when
- The offset ban
- Generic claims
- Whole-product claims and self-made labels
- Future claims: "net zero by 2040"
- Brand names, logos and colours
- What you can still say about carbon credits
- Who the rules apply to
- Transposition, enforcement and penalties
- What about the Green Claims Directive?
- A seven-step audit to run this week
- What this means for the voluntary carbon market
- Frequently asked questions
What changed, and when
The law behind the change is Directive (EU) 2024/825, usually called EmpCo or the Empowering Consumers for the Green Transition Directive. It entered into force on 26 March 2024 and amends two existing EU laws, the Unfair Commercial Practices Directive and the Consumer Rights Directive. Member states had until 27 March 2026 to write it into national law, and it binds companies from 27 September 2026, with no transition period for existing products.
The Directive works mainly by extending the EU's "blacklist": a list of commercial practices that count as unfair in all circumstances. A blacklisted practice does not need a case-by-case test of whether consumers were actually misled. If a claim falls on the list, it is unlawful.
The offset ban: the single biggest change for carbon credit programmes
The Directive explicitly prohibits claiming that a product has a neutral, reduced or positive greenhouse gas impact when that claim rests on offsetting outside the product's value chain, a rule that covers "climate neutral", "CO2 neutral", "carbon neutral", "climate positive" and similar wording.
Two details matter more than the headline.
First, the quality of the credits is irrelevant to this ban. A product marketed as carbon neutral because the company purchased carbon credits is blacklisted regardless of the credits' quality or verification standard. Credits that carry the ICVCM's Core Carbon Principles label, credits from any registry, removal credits and avoidance credits are all treated the same way for this purpose. The ban turns on the basis of the claim, not the integrity of what was bought.
Second, the ban applies to claims about a product's own impact. A claim that genuinely rests on reductions inside the product's value chain, such as a redesigned manufacturing process or a switch to lower-carbon materials, is a different matter. It is not blacklisted, but it still has to be accurate, specific and provable under the general rules on misleading practices.
Generic claims: "eco-friendly", "green", and now "carbon neutral" on its own
The second major ban targets vague words. Generic environmental claims such as "ecofriendly", "green" or "responsible" are prohibited unless they are clearly specified and substantiated.
"Substantiated" has a narrow meaning here. Recognised excellent environmental performance generally refers to the EU Ecolabel, officially recognised EN ISO 14024 Type I ecolabelling schemes, or top environmental performance under other applicable EU legislation. A company's own sustainability report does not qualify.
Carbon claims fall into this category as well. The Commission's 2026 guidance indicates that standalone terms such as "carbon neutral", "climate neutral", "carbon compensated" and "carbon positive" can be generic environmental claims. So even a neutrality claim that does not mention offsets can fail, if it offers no specific explanation and no recognised performance behind it.
The alternative is specificity. A claim that names the exact benefit in the same place, for instance "packaging made from 100% recycled cardboard", is not generic, provided it is true.
Whole-product claims and self-made labels
Two further bans catch many existing carbon programmes.
A claim about an entire product or an entire business is banned when it actually concerns only one aspect of it. A company that offsets its office electricity cannot describe itself, or its products, in terms that suggest the whole operation is climate neutral.
Labels are also restricted. Sustainability labels are now limited to those based on third-party certification schemes or established public systems. A "certified climate neutral" badge designed in-house, or issued by a scheme without independent third-party verification, no longer qualifies. Existing EU schemes do not automatically fill the gap either: EMAS registration evidences a verified environmental management system at organisation level, but it does not authorise a generic product claim or an offset-based neutrality claim.
Future claims: "net zero by 2040" is allowed only with proof
The Directive does not ban climate targets. It restricts how they are advertised. Claims about future environmental performance, such as reaching carbon or climate neutrality by a certain date, are prohibited when they are not backed by clear, objective, publicly available and verifiable commitments set out in a detailed and realistic implementation plan with allocated resources.
The plan also has to be checked. The trader must choose an independent expert able to monitor progress and give credible, objective and regular assessments, and the Directive does not prescribe a specific verification method. According to the Commission's guidance, the verification interval can reflect the nature of the commitments, and a QR code linking to the results can be enough as long as the information is easy to reach.
In practice, "net zero by 2040" on a website now needs three things behind it: a published plan with measurable interim targets, resources committed to it, and an independent verifier whose findings consumers can see.
Brand names, logos and colours count too
Many companies assume the rules apply only to explicit slogans. The Commission's guidance disagrees. It notes that brand or product names suggesting environmental benefits, such as "eco", "green" or "climate neutral", may count as environmental claims, and that visual elements like leaves, water or green colour schemes may imply environmental benefits when combined with text or logos.
The May 2026 update of that guidance sharpened this point, clarifying that names are assessed against an objective "average consumer" standard rather than a more subjective test. A brand called "ClimateNeutral Coffee" is exposed even if it never repeats the phrase in its advertising. A company called "Green Logistics" is less likely to be, if in context the average consumer would not read the name as an environmental promise.
What you can still say about carbon credits
This is the question most sustainability teams are now asking their legal departments, and the answer is more encouraging than the headlines suggest.
Contribution claims that describe what a company does, without implying product-level environmental impact, are permitted. The difference is the direction of the claim. "This product is climate neutral" makes a claim about the product's impact. "We funded the retirement of carbon credits from a forest protection project" describes an action the company took.
A contribution statement that holds up well tends to have four features:
- It is specific. It names the volume, the project or project type, the registry and the year. Illustrative example: "In 2025 we funded the retirement of 12,000 tonnes of carbon credits from a registered forest protection project in Peru, in addition to cutting our own emissions by 18% since 2021."
- It is verifiable. Every retirement it mentions can be matched to a registry record. Registry data is public for most major programmes, and CRBN.credit's projects database shows each tracked project's issuance and retirement record.
- It does not imply neutrality. No "offset", "neutralised", "balanced" or "compensated" language attached to a product or to the company's footprint.
- It sits beside real reductions. Presenting contributions as a substitute for cutting emissions invites the whole-business and generic-claim tests.
Credit quality becomes relevant again at this point. A contribution claim about a project later exposed as over-credited is still a misleading claim. Before publishing one, check the project the way a buyer would: its issuance against retirement history, its methodology's ICVCM status, and whether independent ratings exist. Our carbon offset due diligence checklist walks through each step.
Test a claim before you publish it.
The Green Claims Checker reads a sentence against the rules in force from 27 September 2026 and explains where the risk sits.
Who the rules apply to
The Directive covers business-to-consumer marketing in the EU single market, including products and traders from outside the EU, which means UK, US, Indian and other exporters selling to EU consumers need to review their EU-facing communications. Business-to-business practices fall outside the Directive's harmonised scope, although other EU and national advertising rules may still apply.
Existing stock is not exempt. The Commission's guidance says existing products must comply, which may mean covering or updating packaging or adding information at the point of sale. A pallet of boxes printed in 2025 with "climate neutral" on the front is a compliance problem today, not in 2027.
Late transposition, enforcement and penalties
Many member states missed the March 2026 deadline for writing the Directive into national law. As of June 2026, Germany (through its unfair competition law, the UWG) and Italy (through its Consumer Code) were among those that had fully transposed it. Where a country is late, the exact legal position depends on national law and how national courts read existing consumer protection rules, so companies should check the current situation in each market where they sell rather than assume a delay means a pause.
Germany is a useful signal of direction. In June 2024, before the Directive applied, Germany's Federal Court of Justice already ruled that an advertising claim of "klimaneutral" had to explain within the advertisement itself whether neutrality came from reductions or from offsetting. National courts were moving this way before EU law required it.
Penalties are set by each member state. Under the EU's consumer protection enforcement rules, fines for widespread cross-border infringements pursued in coordinated actions can reach at least 4% of a company's annual turnover in the member states concerned. Reputational cost usually arrives sooner: consumer groups and competitors can complain to authorities, and in several countries they can take companies to court directly.
The Commission's guidance document is not the final word. It expressly reflects the Commission's preliminary views and is not legally binding, and only the Court of Justice of the EU can interpret the Directive with binding force. In practice, courts and authorities regularly rely on such guidance, so treat it as the working standard until case law says otherwise.
What about the Green Claims Directive?
Some companies paused their preparations after reading that the EU's green claims law had been dropped. That confuses two different instruments. The separate Green Claims Directive proposal was dropped in June 2025, but the Empowering Consumers Directive is a separate, binding law that applies from 27 September 2026. The withdrawn proposal would have added detailed pre-approval of claims. EmpCo was already adopted and is now in force.
A seven-step audit to run this week
- Inventory every consumer-facing claim. Packaging, product pages, ads, social posts, email footers, sustainability pages, retail partner listings and customer service scripts.
- Flag every neutrality term. "Carbon neutral", "climate neutral", "CO2 neutral", "net zero" used about a product, "climate positive", "compensated", "offset".
- Trace each flagged claim to its basis. If any part of it rests on credits from outside the product's value chain, a product-level claim has to go.
- Check brand and product names, logos and colour schemes against the average consumer test.
- Replace generic words with specific, provable statements, or remove them. Keep the evidence file for each one.
- Rewrite carbon credit programmes as contribution statements with volumes, projects, registries and years, each traceable to a retirement record.
- For every future target you advertise, confirm that the implementation plan, resources and independent verification exist and are published.
What this means for the voluntary carbon market
Consumer neutrality labels were an important source of demand for low-cost credits. That channel is now closed in the EU for product claims, and buyers are shifting toward models where credits are bought as a contribution beyond a company's own reductions rather than as a way to erase its footprint.
The same direction appears in corporate target setting. The Science Based Targets initiative's new Net-Zero Standard V2.0, published in June 2026, keeps credits out of emissions targets and introduces a structured way to recognise contributions instead. Our guide to what SBTi V2.0 means for carbon credits explains how the two frameworks fit together.
For credit buyers, the practical consequence is that quality and traceability matter more, not less. A contribution claim is only as credible as the registry record and the project behind it.
Related reading. For the basics, see carbon offset credits explained. To prove the retirements behind a contribution statement, see how to prove your carbon credit retirements to an auditor.
Frequently Asked Questions
Is "carbon neutral" completely banned in the EU?
Claiming that a product or service is carbon neutral, climate neutral or has reduced climate impact on the basis of offsetting outside its value chain is banned from 27 September 2026. The Commission's guidance also indicates that standalone neutrality terms can be treated as generic claims, which need recognised excellent environmental performance or a specific explanation to be lawful.
Do high-quality or CCP-labelled carbon credits make a neutrality claim acceptable?
No. The ban depends on what the claim rests on, not on the quality of the credits. High-quality credits still matter for the credibility of contribution statements.
Can a company still say "net zero by 2040"?
Yes, if it has a detailed and realistic implementation plan with measurable, time-bound targets and allocated resources, verified regularly by an independent expert whose findings are available to consumers.
Does the Directive apply to companies outside the EU?
Yes, when they market products or services to consumers in the EU.
Does it apply to business-to-business marketing?
Business-to-business practices fall outside the Directive's harmonised scope, although other EU and national advertising rules may still apply.
Is there a grace period for existing packaging?
No. Products already on the market must comply, which may require relabelling, stickering or point-of-sale information.
What can companies say about carbon credits now?
Accurate, specific contribution statements that describe what was funded and retired, traceable to registry records, and that do not imply the product or company is neutral.
Sources
- Directive (EU) 2024/825, Official Journal of the European Union (eur-lex.europa.eu)
- European Commission, Q&A on the Directive on Empowering Consumers for the Green Transition, first published 27 November 2025 and updated 18 May 2026 (commission.europa.eu)
- EU Retail Platform, updated Q&A on the Directive (transition-pathways.europa.eu)
- Bird & Bird, EU Commission publishes FAQ on the Empowering Consumers Directive (twobirds.com)
- ClimatePartner, EmpCo implementation status (climatepartner.com)
- Obsidian Regulatory Intelligence, ECGT rules apply from 27 September 2026 (obsidianri.com)
A note on this article. This is general information about Directive (EU) 2024/825 and the European Commission's published guidance as of 28 September 2026. It is not legal advice. National implementation varies, so check the rules in each member state where you sell.