The way businesses communicate their environmental impact is changing. From 27 September 2026, Member States must apply new EU rules under Directive (EU) 2024/825, often called the Empowering Consumers for the Green Transition Directive. The legislation strengthens consumer protection against misleading environmental claims and introduces tougher requirements around sustainability labels, generic green claims and certain carbon-related claims.
For businesses already investing in measuring emissions, reducing their carbon footprint and supporting climate action, the changes have understandably created questions. Is carbon neutrality being phased out? Should businesses stop talking about being carbon neutral? Are environmental badges becoming a thing of the past?
The reality is more nuanced and, in many ways, more positive. The EU has not simply introduced rules against carbon neutrality. It has raised the bar for environmental claims more broadly, with a clear direction of travel: environmental claims should be specific, transparent, substantiated and capable of verification. For businesses taking credible climate action, that is a good news.
“ The ban should not prevent a trader from making environmental claims about its entire business, provided that those claims are accurate and verifiable and that they do not overstate the environmental benefit ”
Table of contents
The EU is raising the bar for environmental claims What has changed for carbon-neutral claims? Carbon neutrality was never the end of the journey. And it still isn't. Greater scrutiny can make credible claims more meaningful A badge should be the beginning of the story, not the end This direction extends beyond the European Union The three question test The future of carbon neutrality is greater transparency Carbon Neutral Britain™
The EU is raising the bar for environmental claims
The new legislation is much broader than carbon neutrality. It addresses the way businesses communicate environmental performance generally, including the use of broad terms such as green, eco-friendly, environmentally friendly, climate friendly and carbon friendly.
The concern is relatively straightforward. A broad environmental statement can create an overall impression that goes considerably further than the evidence behind it.
The Directive therefore makes a distinction between generic environmental language and specific, substantiated claims. For example, the Directive explains that "climate-friendly packaging" would be a generic claim, while saying that "100% of energy used to produce this packaging comes from renewable sources" would be a specific one (Directive (EU) 2024/825, recital 9). The second tells the consumer something much more specific about what has actually been achieved.
This gives us a useful indication of where environmental communication is heading. Specificity matters. Evidence matters. Context matters. Rather than seeing this purely as a restriction on green communication, we believe it represents an important opportunity to improve it.
What has changed for carbon-neutral claims?
One particularly important part of the legislation concerns products and services. The new rules prohibit claims that a product or service has a neutral, reduced or positive greenhouse-gas impact when that claim is based on offsetting greenhouse-gas emissions outside the product's value chain.
The Directive gives examples including "climate neutral", "CO₂ neutral certified", "carbon positive", "climate net zero" and "climate compensated". The reasoning behind this is important. If a consumer sees a product labelled carbon neutral, they may reasonably understand that claim as describing the environmental characteristics of the product itself. In reality, the product may still generate greenhouse-gas emissions, while carbon credits have been used to compensate for those emissions elsewhere.
The EU therefore wants a clearer distinction between reducing the greenhouse-gas impact associated with the product itself and compensating for emissions through activity outside its value chain.
But this is where an important part of the legislation can easily be lost in the headlines. he specific prohibition on offsetting-based neutrality claims concerns products. The European Commission's own guidance on the Directive is explicit:
"The prohibition in Annex I point 4c does not apply to claims based on offsetting at company level, however such claims remain subject to other relevant provisions of the UCPD." (European Commission Q&A) The Directive itself adds that the prohibition "should not prevent companies from advertising their investments in environmental initiatives, including carbon credit projects, as long as they provide such information in a way that is not misleading" (Directive (EU) 2024/825, recital 12).
That is an important distinction. The EU isn't telling organisations to stop communicating their environmental achievements. It is demanding greater credibility from the claims they make. That cuts both ways. The same Commission guidance notes that generic claims such as "carbon-neutral" and "climate neutral" are subject to the rules on generic environmental claims, and are prohibited unless the trader can demonstrate recognised excellent environmental performance relevant to the claim. A claim stops being generic when its specification is provided in clear and prominent terms on the same medium (European Commission Q&A). In practice, a company that describes itself as carbon neutral to consumers needs to explain, right alongside the words, what the claim covers and how it has been achieved.
Carbon neutrality was never the end of the journey. And it still isn't.
Perhaps the most important part of this discussion is understanding what responsible organisational carbon neutrality should actually represent. Carbon neutrality should never mean: Measure emissions. Buy carbon credits. Job done.
An organisation first needs to understand its greenhouse-gas footprint. Measuring emissions helps identify where environmental impacts occur and where meaningful reductions can be made. Those findings should inform reduction strategies. Progress can then be measured over time, allowing organisations to continue reducing emissions and working towards longer-term decarbonisation and net-zero objectives.
Where emissions remain, organisations may also choose to finance climate action outside their value chain through high-quality carbon credits, provided the role those credits play is communicated clearly and transparently. Carbon neutrality therefore should not be positioned as an alternative to emissions reduction. It can be one step within a much longer climate journey.
At Carbon Neutral Britain, we believe climate action should encompass that wider journey: understanding emissions, reducing them, taking responsibility for those that remain, reporting progress transparently and continuing to work towards deeper reductions. Becoming carbon neutral doesn't mean an organisation has finished. It means there is still somewhere to go.
Greater scrutiny can make credible claims more meaningful
There is an understandable concern that tighter environmental regulation could make businesses reluctant to communicate their environmental achievements at all.
That would be unfortunate. Businesses making substantial investments in sustainability have long shared the marketplace with vague environmental terminology, self-created green claims and language that can make genuine environmental action difficult to distinguish from clever marketing.
When almost anyone can make a green claim, businesses doing the harder work can struggle to demonstrate the difference. Greater scrutiny has the potential to change that.
If environmental claims increasingly need to be specific, transparent, substantiated and verifiable, organisations that have invested in understanding their emissions and can demonstrate the evidence behind their claims should be better positioned to communicate their progress credibly.
This doesn't automatically make every carbon-neutral claim credible. Nor does certification remove the responsibility of businesses to communicate accurately.
But it does move environmental communication towards something we strongly support: proof. That is why we don't believe the future is about making fewer environmental claims. It is about making better ones.
A badge should be the beginning of the story, not the end
Environmental performance is complicated. Communicating it doesn't always have to be. A sustainability report might contain dozens of pages of methodology, emissions data, reduction plans, carbon-credit information and environmental targets. Customers, employees and suppliers cannot reasonably be expected to study all of that whenever they encounter a business.
This is where credible certifications and environmental marks can continue to play an important role. A badge can communicate something in seconds. But those few words should be supported by evidence.
Behind a credible environmental claim should sit the methodology, measurements, boundaries, actions and evidence that explain exactly what has been achieved.
The EU's new rules themselves recognise a role for sustainability labels while introducing requirements designed to improve their credibility. The Directive establishes requirements around certification schemes, including publicly available terms, procedures for dealing with non-compliance, and monitoring of compliance by a third party independent of both the scheme owner and the trader (Directive (EU) 2024/825, Article 1).
This points towards an important future for environmental communication. Businesses shouldn't necessarily have to choose between a simple environmental mark and pages of technical information.
The answer can be: A clear claim on the surface. Transparent evidence underneath.
This direction extends beyond the European Union
Although Directive (EU) 2024/825 applies within the European Union, it is not only a matter for EU companies. The Commission confirms that the rules apply to commercial practices aimed at consumers in the Single Market, whether traders originate inside the EU or outside it, while business-to-business communication falls outside the Directive's scope (European Commission Q&A).
The underlying principle will also already be familiar to businesses in the UK. The UK Competition and Markets Authority's Green Claims Code sets out principles that environmental claims should be truthful and accurate, clear and unambiguous, should not omit or hide important information, and should be substantiated.
The CMA's guidance also addresses claims such as carbon neutral and net zero, including the importance of explaining what businesses are doing to achieve them and being transparent about the role of carbon offsets. Our guide to the Green Claims Code explains how those principles apply in practice, and how UK enforcement has changed.
Different jurisdictions may take different regulatory approaches, but the broader direction is becoming increasingly clear:
If you make an environmental claim, you should be prepared to explain and substantiate it. Responsible businesses should not fear that principle.
They should embrace it.
The three question test
When people ask us whether something "counts" as offsetting, we suggest three plain questions. They work for a charity scheme, a tree planting offer, a supplier's green tariff or anything in between.
Was a tonne counted? Has someone calculated the reduction or removal with a recognised methodology, against a defined baseline?
Was it checked by someone independent? Has a third party verified that figure under a recognised standard?
Was it retired in your name? Can you see a registry record, with a serial number, showing that the tonne has been retired for you and nobody else?
If the answer to all three is yes, you've offset. If any answer is no, you've made a contribution. That might be a very good one, but it shouldn't be described as offsetting.
This is the test we apply ourselves when we look at projects for our clients, and it's why we put so much weight on registry evidence and retirement records. You can see the projects we support on our projects page.
The future of carbon neutrality is greater transparency
Environmental language will continue to evolve. So will standards, legislation, methodologies and expectations. But businesses will still need ways of communicating genuine environmental progress. Customers want to understand it. Employees care about it. Procurement teams increasingly request evidence. Supply chains need reliable environmental information. Organisations themselves need meaningful ways to demonstrate progress towards their environmental objectives.
What is changing is the standard those claims are expected to meet.
A green claim shouldn't simply sound good. It should mean something, it should have vidence behind it. And it shouldn't imply more than the organisation has actually achieved. That principle applies whether the words being used are green, sustainable, carbon neutral, climate friendly or net zero. For carbon neutrality specifically, we believe the direction should be clear:
Measure rigorously. Reduce continuously. Take responsibility for remaining emissions. Communicate transparently. Provide evidence. And keep going.
Carbon neutrality was never supposed to mean an organisation's climate work was complete. It is part of a much longer journey towards reducing our collective impact on the climate.
Greater scrutiny should therefore not be seen simply as a threat to credible carbon neutrality. It is also an opportunity to distinguish meaningful climate action from environmental claims that cannot withstand scrutiny.
Because the future of climate communication shouldn't be built on bigger promises. It should be built on better proof
Carbon Neutral Britain™
Join over 1,000 British businesses leading the way in credible, science-based climate action. The Carbon Neutral Britain™ Certification helps organisations measure, reduce, and offset their carbon emissions with integrity. Built on internationally recognised standards, our process ensures real impact, not greenwash.
What do we offer:
Scientific measurement of your carbon footprint
Verified carbon offsetting with high-integrity global projects
Bespoke carbon reduction strategies tailored to your business
Official certification to demonstrate your climate commitment
Join the movement for real, responsible net zero progress, led by science, not slogans.
Has the EU banned carbon neutrality?
No. The new EU rules do not introduce a general ban on organisations making carbon-neutral claims. One specific prohibition concerns claims that a product or service has a neutral, reduced or positive greenhouse-gas impact where that claim is based on offsetting emissions outside the product's value chain. The European Commission has confirmed that this prohibition does not apply to offsetting-based claims at company level, although those claims remain subject to the wider rules on misleading and generic claims.
Can a company still describe itself as carbon neutral?
The product-level prohibition does not apply to whole-company claims. But when talking to consumers, an unqualified "carbon neutral" is treated as a generic environmental claim, which is prohibited unless its specification is given in clear and prominent terms on the same medium, or the trader can demonstrate recognised excellent environmental performance. In practice, a company should say what its claim covers, the period and emissions included, and the role of reductions and carbon credits, alongside the claim itself.
Why has the EU restricted carbon-neutral claims on products?
The EU is concerned that consumers could interpret an offset-based carbon-neutral product claim as meaning that the product itself has no greenhouse-gas impact. The new rules seek to prevent claims that create that impression when the claimed neutrality actually depends on offsetting emissions outside the product's value chain.
Does this mean carbon offsetting has been banned?
No. The legislation does not generally ban businesses from financing climate projects or purchasing carbon credits. The Directive expressly allows companies to advertise their investments in carbon credit projects, provided the information is not misleading. The relevant restriction concerns how certain offsetting-based claims about products and services are communicated to consumers.
Does the Directive apply to UK businesses?
It can. The rules cover commercial practices aimed at consumers in the EU, regardless of where the trader is based. UK businesses marketing to EU consumers should review those communications against the new rules. Business-to-business communication sits outside the Directive, although other laws still apply, and UK consumer marketing remains subject to UK consumer law and the CMA's Green Claims Code.
