In a major policy reversal, the European Commission has announced the withdrawal of the Green Claims Directive, a core pillar of the EU’s ESG framework and carbon neutral strategy under the Green Deal. The decision, confirmed at a June 20, 2025 press briefing, is expected to fragment environmental marketing regulations across the bloc and weaken efforts to combat greenwashing. 

Originally introduced in March 2023, the Green Claims Directive aimed to protect consumers by ensuring environmental claims were scientifically substantiated and independently verified. With studies showing that more than 50% of green claims in the EU were vague or misleading, the directive sought to impose EU-wide standards for corporate sustainability communications. 

However, mounting criticism from the European People’s Party (EPP)—the European Parliament’s largest political group—prompted the Commission’s withdrawal. The EPP argued that the directive imposed excessive regulatory burdens, lacked a thorough impact assessment, and risked creating disproportionate compliance costs for businesses already navigating extensive ESG reporting obligations. 

“The Commission intends to withdraw the Green Claims proposal due to the current context,” said spokesperson Maciej Berestecki during the announcement. The move reflects broader political shifts in the EU, where regulatory simplification and competitiveness are becoming top priorities. 

Without a unified EU-wide framework, responsibility for regulating environmental claims will now revert to individual member states, creating inconsistent rules, higher compliance costs for cross-border businesses, and a fragmented approach to greenwashing enforcement. This outcome threatens to undermine the EU’s broader carbon neutral strategy and diminish investor confidence in ESG transparency. 

As the Commission prepares a formal withdrawal notice, the decision raises fresh doubts about the EU’s ability to maintain credible ESG standards and coordinate effective carbon neutral policies across its internal market. 

Source : 

https://esgnews.com/european-commission-to-withdraw-greenwashing-regulation/