EU greenwashing directive takes effect; fines can exceed 4% of turnover

The EU's Empowering Consumers for the Green Transition Directive took effect on 27 September 2026; the most serious violations can draw fines above 4% of annual turnover, according to ESG News. National authorities, not a single EU regulator, run enforcement.

Unsupported sustainability labels are banned, as are claims that a product is neutral, reduced or positive on greenhouse gas impacts when those claims rest on carbon offsetting. Terms such as "eco" and "sustainable" face restrictions where a company cannot demonstrate the environmental performance its marketing implies, and companies cannot present compliance with minimum legal environmental requirements as a distinctive sustainability advantage.

A company advertising future net-zero performance must support the claim with a publicly available implementation plan, with independent experts verifying the commitments and their findings made publicly accessible, according to ESG News.

EU regulators published a common understanding setting out a proportionate approach to goods manufactured, ordered, distributed or placed on retail shelves before the September deadline. ESG News reports that the guidance recognises the difficulty of replacing packaging and labels across large retail inventories but should not be read as a blanket exemption.

That leaves companies to separate existing inventory from newly produced materials and to monitor how individual member states apply the rules. For manufacturers and retailers, the practical work will land on packaging spend, inventory management and supplier contracts.

Penalty exposure will vary by member state. The 4% figure is a potential ceiling for the most serious violations rather than a set tariff on mislabeling, and allegations, penalty levels and the treatment of legacy stock will be decided authority by authority.