New EU Rules Change How 'Climate Neutral' Can Be Advertised
Starting 27 September 2026, it becomes illegal across the EU to market a product as "carbon neutral" or "climate neutral" based purely on carbon offsetting. Here's what's changing, and why.
Two directives, one deadline
Two pieces of EU legislation get mixed up in the news:
The Green Claims Directive was a broader proposal requiring independent verification for environmental claims. The European Commission paused it in 2025 over concerns about the burden it would place on small businesses.
The Empowering Consumers for the Green Transition Directive (ECGT) is already law. Adopted in 2024, folded into national law by March 2026, it takes full effect on 27 September 2026.
The ECGT is the one that changes what companies can say. It updates existing EU consumer protection rules to target greenwashing.
The core rule: offsets can't carry a "neutral" label anymore
A company can no longer claim a product has a neutral, reduced, or positive climate impact if that claim rests solely on purchased carbon credits. From September, such claims will only be allowed if they reflect verified reductions across a company's own operations and supply chain. Offsetting can cover what's left over. It can't substitute for the reduction itself.
The directive also bans:
Vague terms without proof. Words like "eco-friendly," "green," or "sustainable" need certified evidence of outstanding environmental performance behind them.
Unverified in-house eco-labels. Companies can't invent their own green seal. Labels need independent, recognized certification.
Vague future promises. A pledge like "net zero by 2035" needs a published, time-bound transition plan, monitored by an independent third party.
Penalties: national authorities can fine companies up to 4% of their annual turnover in that country, and bar repeat offenders from public contracts.
Why the rule exists
"Carbon neutral" became a marketing shortcut. An offset can fund a valuable project, a wind farm, a restored forest, a clean water well, but it doesn't change the emissions a product or flight produced. Regulators decided that labeling something "neutral" blurred that distinction for consumers, especially when there was no way to check the substance behind the claim.
European courts have already moved in this direction. Cases involving airlines' offset-based "carbon neutral" flight claims and companies' use of the word "sustainable" for products that only partially earned it have been struck down under existing consumer protection law. The stricter EU-wide standard follows the same logic.
What this means for offsetting, and for us
This isn't a ban on carbon offsetting. It's a ban on using offsets to claim something didn't happen. Buying certified carbon credits to support forest protection, clean water projects, or renewable energy stays a legitimate form of climate action. Emissions reductions still need funding wherever they happen.
The language changes. Credible climate communication means reducing first, being clear about what's actually being offset, and never presenting a purchased credit as if it erased the emissions at the source. That's the standard we hold ourselves to already, and the one we think the whole industry should be judged against.
The takeaway
Expect fewer blanket "climate neutral" labels on products from late September onward, and more specific, substantiated language about what a company reduced versus what it offset. Funding real, certified projects doesn't change. What changes is that companies now have to be honest about the difference between reducing emissions and compensating for them.
This article is for general information and isn't legal advice. If your organization needs to assess compliance with the ECGT directive, consult a qualified advisor.
Sources
- Senken — Green Claims Directive: Current status and what companies should do now
- Dcycle — EU Green Claims Directive 2026: what your company needs to know
- Thrust Carbon — Navigating EU Green Claims Regulations: What you need to know
- Inside Energy & Environment — The European Commission's New Green Claims Guidance: What Businesses Need to Know
- Asuene — EU ECGT Directive: How to Substantiate Your Green Claims
- Carbon Gap — Green Claims Directive – Status, Trilogue, and Adoption Timeline
- Tappr — EU Green Claims Directive: Status, Requirements & What Brands Must Know
- Green Initiative — The EU Green Claims Directive: What Companies Need to Know About Environmental Accountability in 2026
- Arbor — What is the EU's ECGT Directive? A Business Guide for 2026
- Tocco Earth — EU Green Claims Directive (GCD), Explained In 5 Minutes