Creating a sustainability label in accordance with European environmental regulations —both for public administrations and for companies— requires an analysis of European rules and national legislation. Directive (EU) 2024/825 has placed sustainability labels at the centre of the new legal framework against greenwashing.
Sustainability labels are considered commercial practices, since they influence the consumer’s decision, and are therefore subject to the obligations and prohibitions of European law on consumer protection and unfair commercial practices. A poorly designed label can lead to serious consequences such as sanctions, withdrawal of the label and even administrative or corporate liability when it causes harm, for both companies and public bodies. In this article, we analyse the most recent European regulations on sustainability labels, explain how to correctly comply with their requirements and clarify the practice of greenwashing.
What is a sustainability label and what Is its legal framework?
Directive (EU) 2024/825 defines a sustainability label as any trust mark, quality mark or equivalent, public or private, that aims to distinguish or promote a product, a process or a company based on its environmental, social or both types of characteristics. This definition expressly incorporates labels within the concept of “environmental claims,” considered messages that create a positive impact on the environment and that directly influence the consumer’s decision.
The display of a label constitutes a commercial practice and, as such, must comply with the requirements of truthfulness, transparency and verifiability imposed by the European Directive. Directive 2024/825 adds to Annex I of prohibited practices the display of sustainability labels that are not based on a certification scheme or that have not been established by a public authority, thus prohibiting the proliferation of self-issued or unsupervised labels.
Differences between a label, an eco-label and a certification scheme
A label, an eco-label and a certification scheme fulfil different functions and therefore have different requirements. The sustainability label is a trust mark —public or private— that communicates to the consumer that a product, service or company meets certain environmental or social criteria. It is, therefore, a commercial practice. The eco-label, on the other hand, is usually regulated by specific sectoral legislation and corresponds to concrete environmental parameters defined by technical standards such as ISO. These normally require a prior technical assessment in order to be displayed.
Lastly, the certification scheme constitutes the technical basis that allows a private sustainability label to be granted. It must be managed by an independent and competent body, accredited in accordance with Regulation (EC) No 765/2008 and with standards such as ISO 17065, which guarantee the impartiality of the assessment process. A label without a certification scheme, or without third-party auditing, not only lacks legal value but may be considered a prohibited misleading practice.
What is considered greenwashing and how to avoid It?
Greenwashing —or ecological whitewashing— occurs when an entity communicates environmental or sustainability characteristics that are not real, verifiable or accredited, thereby misleading the consumer. Directive (EU) 2024/825 redefines this concept with much greater precision by classifying it as an unfair commercial practice whenever environmental information is not supported by objective evidence.
Which practices are expressly prohibited by the EU
Directive (EU) 2024/825 includes clear prohibitions to prevent sustainability labels and environmental claims from creating confusion. By way of example, the following are considered unfair —and therefore prohibited— practices:
Vague and imprecise claims
The use of generic terms such as “eco,” “green,” “natural,” “responsible” or similar, without providing verifiable evidence, constitutes a misleading practice. The Directive prohibits any message that is not supported by documentation and verifiable metrics and that cannot be checked.
Unjustified comparisons
Comparisons implying that a product is better or “less harmful” than another may only be made if there is an objective technical basis. Any comparison lacking support may be considered a deceptive act.
Self-generated labels without auditing
The Directive adds an explicit prohibition to Annex I, the “black list” of unfair practices:
“Displaying a sustainability label that is not based on a certification scheme or has not been established by a public authority.”
This automatically invalidates any label created by a company without independent auditing and without a third-party verification system in accordance with standards such as ISO 17065 or Regulation (EC) No 765/2008.
Reputational, economic and legal impact of greenwashing for entities
The impact of greenwashing also affects reputation and trust. Sustainability has become a factor that directly influences brand perception and the purchasing, recommendation or investment behaviours of consumers. Below, we analyse some of the risks of ecological whitewashing.
Reputational impact
A poorly designed label or a false environmental claim can destroy consumer trust and seriously damage institutional or corporate image. Sustainability is an “intangible with high reputational impact,” and any inconsistency leads to a loss of credibility and public rejection.
Economic impact
Sanctions can be substantial. In Spain, for example, the LGDCU provides for fines of up to €2,000,000 or 4% of annual turnover, in addition to possible compensation for damages caused to consumers or third parties, as we will see later.
Legal impact and liability
A poorly managed label may entail liability, especially if the lack of verification or control causes harm or confusion among users. Entities must take extreme care with certification systems, the selection of verifiers and control protocols, because any failure may lead to consequences.
Differences between public sustainability labels and private labels
Directive (EU) 2024/825 introduces a fundamental difference between labels created by public authorities and those created by private entities. This distinction is crucial for understanding which obligations, controls and safeguards each model must comply with. Both public and private labels are considered “environmental claims,” which means that all of them —including public administrations— are subject to the obligations of truthfulness, verifiability and transparency established in the legislation.
However, the Directive includes a legal exception for labels created directly by public bodies, which allows administrations to establish their own label without having to comply with all the requirements imposed on private certifications. This exception, nevertheless, does not remove the duties of control, objectivity and transparency that must be respected to avoid engaging in misleading practices.
Labels created by public authorities. What exception does Directive 2024/825 allow?
Directive (EU) 2024/825 expressly prohibits displaying a sustainability label that is not based on a certification scheme, except when such label has been established by a public authority. This exception appears both in the articles and in Annex I of the Directive. The legal basis of the label derives from the institutional legitimacy of the authority itself, not from external accreditation. However, this exception does not exempt administrations from complying with the rest of the requirements arising from the Directive.
Private labels and how they differ from public labels
Unlike labels created by public administrations —which benefit from inherent institutional legitimacy— private labels do not benefit from this exception. They must necessarily be based on a certification scheme managed by an independent and accredited body, in accordance with Regulation 765/2008 and technical standards. This entails certain requirements such as periodic audits and publication of criteria, as we will see below.
Requirements and recommendations for creating a sustainability label
Below, we analyse the requirements and recommendations for creating a private sustainability label:
Certification system with external auditing
The most important element of any label is a certification system assessed by an independent and accredited third party. This requirement derives both from Regulation (EC) No 765/2008 and from European technical standards and international accreditation norms. The ISO/IEC 17065 standard defines the requirements that bodies certifying products, services or processes must meet. This standard guarantees evaluator independence, absence of conflicts of interest, consistent procedures and objective criteria.
Regarding Regulation (EC) No 765/2008, without accreditation, a certification system lacks legal recognition. This regulation is complemented by ISO 17065, which sets out assessment methodologies, monitoring parameters, technical indicators and conditions for periodic review. Lastly, the Directive requires the full publication of the criteria, methodology, scoring system and evaluation processes of the label (measurable and non-generic criteria, public and updated documentation, free access to relevant information, technical justification of all requirements).
“The award criteria, the assessment process and the audit reports must be accessible to the public.”
Periodic supervision (annual or biannual audits)
A sustainability label cannot be granted indefinitely; it should be accompanied by a continuous control mechanism that includes audits (e.g., annual or biannual), review of documentation and monitoring of compliance with criteria.
“Auditing by an independent third party is recommended, even for public labels, in order to guarantee objectivity and avoid conflicts of interest.”
Procedure to suspend or withdraw the label in case of non-compliance
According to our experience, every label should include a formal procedure for suspension or withdrawal, based on non-compliance with criteria, substantial changes in the activity, falsified documentation or lack of truthfulness. This procedure should be regulated, together with the criteria for revocation, time limits and appeals. The absence of an effective withdrawal mechanism may create legal liability, especially for entities acting as the awarding authority of the label.
How to create a sustainability label
European accreditation standards have significantly raised the requirements for creating a sustainability label. Below is a guide (as an example) with the steps for creating a sustainability label in accordance with European Union law.
Define the purpose and scope of the label
The first step is to determine what the label aims to certify and what its scope of application will be. In addition, the sector to which it is addressed must be specified (commerce, industry, public services, etc.) as well as the conditions that will be required. It is important to have a clear definition and avoid confusing interpretations, to ensure that the label does not suggest that it certifies something that it does not actually assess.
Create criteria based on international standards
Every international sustainability label must be based on internationally recognised standards. To this end, it is advisable to rely on standards such as:
- ISO (competence and impartiality of certification bodies)
- National accreditation authorities (verifiable criteria for sustainability labels)
- GSTC criteria
These standards provide the necessary foundation for the label to be supported and verifiable by any auditor.
Design a fair and non-discriminatory certification system
A sustainability label must offer equal access to anyone who wishes to apply for it. This implies public eligibility criteria and fair evaluation processes. A transparent procedure must be ensured, where any entity that meets the requirements can apply for the label under equal conditions.
Independent auditing body
The audit, and the auditing process, is essential in the creation of the label. It is recommended to choose a certification body accredited in accordance with Regulation (EC) No 765/2008, with experience in the sector to which the label is addressed and completely independent from the creator. If the label is created by a public administration, it is also possible to rely on an independent third party to provide additional reinforcement.
Publication of the requirements
The mandatory criteria, the assessment methodology, the required documentation, the obligations, time limits, validity and renewal, and the bodies responsible for granting the label must be approved through the appropriate legal instrument, and its communication must ensure that it does not fall into the practice of “greenwashing.”
Establish a control and sanctions system
A system should be established that includes periodic audits (annual or biannual), random or extraordinary checks, monitoring of commitments, infringements and sanctions, temporary suspension and permanent withdrawal of the label.
Transparent communication
Finally, it is essential to define how the label will be communicated to avoid exaggerated or misleading claims. Communication must comply with the scope of the label, publication of verifiable evidence, prohibition of generic claims (“eco,” “green,” “100% sustainable”) without justification, guidelines for logo use and visual identity manual. Communication must always be based on objective information, avoiding any practice that may mislead the consumer or be considered greenwashing.
Legal liability and sanctions for a poorly designed sustainability label
Designing a sustainability label without complying with European regulations can lead to significant consequences. Directive (EU) 2024/825 opens the door to economic sanctions, liability and immediate withdrawal of the seal. In addition, both public administrations and private companies are subject to obligations to avoid incurring greenwashing. Below are the liabilities and sanctions arising from a poorly designed or poorly communicated label.
Liability of public administration
A public label is not exempt from control, even if it enjoys institutional legitimacy, and may incur liability if the label causes damage to third parties (for example, consumers misled or companies harmed by a label).
Sanctions for companies under the national law of each member state
Companies that use a non-compliant label or that communicate without verifiable support are exposed to significant consequences, which must be specified and developed by each Member State (once the Directive has been transposed within the established deadlines). By way of example, sanctions for unfair commercial practices may be contemplated, including financial penalties, withdrawal of the label and prohibition of future use, obligation to rectify advertising, or compensation for damages.
Sanctioning procedures and withdrawal of the sustainability label
In addition to generating liability, there may also be consequences in the administrative sphere as well as in the contractual sphere, such as:
Initiation of sanctioning proceedings by consumer authorities
Competent authorities may initiate a procedure ex officio or as a result of a complaint.
Suspension of the label
If non-compliance is detected, the sustainability label may be temporarily suspended while the facts are investigated or deficiencies corrected.
Permanent withdrawal of the label
In serious cases, the label may be withdrawn permanently. This implies the removal of the label from all media, the requirement to withdraw advertising, mandatory communications to clients and consumers, and significant loss of reputation for the affected entity.
Success and practical cases involving sustainability labels
We have built a strong track record advising companies and public administrations on sustainability projects, environmental certification and regulatory compliance. Lawyers have participated in the creation of bespoke labels for both public and private entities, guiding them throughout the entire process. We have also helped companies redesign their sustainability strategies to avoid greenwashing risks, obtain international certifications and strengthen their reputation with clients, investors and authorities. Thanks to an approach based on the new European requirements, our clients have successfully implemented sustainability systems that comply with the regulations, giving them an advantage over other entities.
For example, a well-known hotel chain with more than 25 establishments in France and Portugal sought to create an internal sustainability label to differentiate its hotels and communicate its environmental commitment. However, its initial proposal showed significant risks. We helped the chain define measurable criteria based on international standards, create a certification system with external audits, and design transparent communication. In less than six months, the chain launched a label fully compliant with European regulations. The label was adopted by 80% of its hotels in the first year, improved customers’ perception of sustainability and allowed the company to position itself as a benchmark in responsible tourism.
Take the next step towards a sustainability label that complies with regulations
If your organisation wants to create, review or strengthen a sustainability label, now is the time to take a decisive step. In an increasingly demanding regulatory context, having a label that complies with European law is the best way to strengthen your reputation and stand out from the competition.
At Arthur & Marin, we support you from the initial analysis through to practical implementation, helping you define criteria, establish independent audits and communicate safely. Take the next step with expert guidance in regulatory and environmental law, and turn your label into a true guarantee of trust.
Contact us at info@arthurmarin.com or +32 465 345 345, and we will provide tailored advice.
💡 Turn your environmental commitment into a sustainability label. Avoid risks, gain trust and strengthen your reputation.
Frequently Asked Questions (FAQ) about sustainability labels and greenwashing
What exactly is a sustainability label?
It is a mark that certifies that a product, service or entity meets certain environmental or sustainability criteria. To be valid, it must be based on public, verifiable and audited criteria.
What is the difference between a sustainability label and an eco-label?
An eco-label is usually regulated by official standards and assesses specific environmental criteria. A sustainability label may cover broader aspects, such as social impact or governance, but it must always be verifiable and transparent.
What is considered greenwashing under European regulations?
Any environmental communication that is vague, exaggerated or false and misleads consumers, as well as the use of unverified labels or labels without an independent certification system.
What requirements must a sustainability label meet to be legally compliant?
It must rely on an accredited certification system, be based on international technical standards, include periodic audits and publish its criteria in an accessible manner.
Can public administrations create their own sustainability label?
Yes, but they must comply with strict obligations of transparency, objectivity, verification and equal access, even if they are not required to have an accredited certification body.
Is a label without external auditing valid?
No. Directive (EU) 2024/825 expressly prohibits self-declared labels or labels without an independent certification system, except for specific exceptions granted to public bodies.
Can a company claim to be “100% sustainable” if it has a sustainability label?
No, unless it can prove with complete and verifiable evidence that it is literally 100% sustainable, which is extremely unlikely. Such claims are considered greenwashing.
What information must always accompany the use of a sustainability label?
Its scope, the criteria assessed, the certifying entity, the date of the most recent audit and the evidence supporting the label.
Can a label be withdrawn if the company fails to meet the criteria?
Yes. Any serious label must include a formal procedure for suspension and withdrawal in cases of non-compliance, falsification of documents or lack of audits.
How can you determine whether a sustainability label is reliable?
Check that it has external audits, public criteria, full transparency, an accredited certification body and updated evidence available for review.
