Climate Neutral Claims Are Banned: The End of Offsetting

On offsetting, the words that go, and where a product's virtue is permitted to live

One sentence of European law closes the market's most convenient shortcut. Directive (EU) 2024/825 adds to Annex I of the Unfair Commercial Practices Directive, the blacklist of practices prohibited in all circumstances, this entry: "Claiming, based on the offsetting of greenhouse gas emissions, that a product has a neutral, reduced or positive impact on the environment in terms of greenhouse gas emissions."

Blacklisted means blacklisted. There is no defence of good faith, no case by case weighing of consumer harm, no survey to commission. The claim is either made or it is not. The directive sets its own clock: Member States were to adopt and publish the transposing measures by 27 March 2026, and "shall apply those measures from 27 September 2026."

This institution has already read the September 27 ban in full. This study reads one line of it, because that line holds most of the exposure and because the industry is auditing for it in the wrong way.

The words that go, and why a word list will not save you

The directive's recitals name the claims it means. The examples given are "climate neutral", "CO2 neutral certified", "carbon positive", "climate net zero", "climate compensated", "reduced climate impact" and "limited CO2 footprint".

Four of those seven do not contain the word neutral. Two of them sound like measurements.

That is the part a compliance sweep misses. "Reduced climate impact" and "limited CO2 footprint" read as arithmetic. They appear on the list because the prohibition does not attach to the wording. It attaches to the basis. A claim of reduced impact resting on retired credits is caught. The identical sentence resting on a measured reduction inside the value chain is not. Two products can carry the identical sentence and only one of them is a blacklisted commercial practice.

A team that searches its copy for "neutral" will therefore clear a page that is still exposed, and will file itself compliant. The audit that works runs the other way. For every environmental sentence in market, establish what it is standing on.

Two ledgers, and the sentence that moves a number between them

Offsetting keeps two ledgers. The first records what a product's making and moving actually emitted. The second records what the company paid for somewhere else: forestry, cookstoves, avoided deforestation, renewable capacity. The two are not joined by physics. They are joined by a sentence.

What the directive prohibits is that sentence, and in one direction only. A company may still say what it funds. It may describe its investment in climate projects, name them, publish the volumes. What it may no longer do is carry the result across and fasten it to the object, so that a bag or a bottle arrives at the counter already absolved.

This is the Hollowed Object in its administrative form. The object is asked to carry a virtue that never touched it, and the carrying is performed entirely by language. The credit was retired in a registry. The claim is worn on the product. The distance between those two facts is exactly the space the law has now closed.

Read structurally, offsetting was a Semantic Burden transfer performed on the atmosphere. A meaning generated in one place is made to settle on an object in another, and the object's own record is never consulted.

The courts arrived two years early

The legislature was not the first institution to reach this conclusion. Two European courts got there first, and their reasoning is more instructive than the statute, because it shows what a judge does with the claim when it is placed in front of them.

On 20 March 2024 the District Court of Amsterdam ruled on advertising by the airline KLM, in proceedings brought by Fossielvrij NL (ECLI:NL:RBAMS:2024:1512). The court held that fifteen of the nineteen claims it examined were misleading and unlawful. On the airline's "CO2ZERO" offering its finding was narrow and severe: there is no direct link between a customer's contribution and the emissions of the flight. The claim was not condemned as bad arithmetic. It was condemned as a promise about a relationship that did not exist.

Three months later, on 27 June 2024, the German Federal Court of Justice decided I ZR 98/23, concerning the confectionery manufacturer Katjes and its advertising of products as "klimaneutral". The court held the term ambiguous. It can mean that emissions were reduced in production, or that emissions were compensated afterwards, and those are different promises. An advertisement that does not resolve the ambiguity on its own face is misleading. The explanation had been placed behind a QR code on the packaging. The court held that this was not enough.

The explanation must travel with the claim. A link to the explanation is not the explanation.

For a category that has spent a decade moving its substantiation onto a landing page, that is the operative sentence in this entire body of law.

Enforcement is already running, and it reached fashion first

September 27 is not the start of enforcement. It is the removal of the argument.

In August 2025 the Italian Competition Authority fined Infinite Styles Services Co. Ltd, the Dublin company operating Shein's European website, one million euros for misleading and omissive environmental claims. The authority found the company's emissions statements, including an intention to reduce greenhouse gas emissions by 25 percent by 2030 and to reach zero emissions by 2050, were presented in vague and generic terms while its reported emissions rose. It also found that claims around a collection marketed on its environmental qualities could lead consumers to believe the products were fully recyclable, which the fibres used and the available recycling systems do not support.

That decision was taken under consumer law as it already stood, before 2024/825 applies anywhere. What the September date changes is not whether a regulator may act. It changes what a defence can consist of. Today an authority must establish that a claim misled. After September it need only establish that the claim was made.

What a brand may still say

The directive is not a prohibition on speech about the environment. It is a prohibition on speech the object cannot support. Three things survive, and they are worth stating precisely, because the reflex in a compliance meeting is to delete everything.

A specific, substantiated claim about the product survives. A claim confined to the aspect it actually concerns survives, and the directive separately prohibits making an environmental claim about the entire product or the entire business when it concerns only a certain aspect of that product or a specific activity of that business.

A claim about future performance survives under a condition the directive spells out in full. It must rest on "clear, objective, publicly available and verifiable commitments set out in a detailed and realistic implementation plan that includes measurable and time-bound targets and other relevant elements necessary to support its implementation, such as allocation of resources", and it must be "regularly verified by an independent third party expert, whose findings are made available to consumers".

Read that clause slowly. It is a specification for a document, not for a sentence. A 2040 target now costs a plan, a budget line, an auditor, and publication.

What does not survive is the generic claim. The directive separately blacklists a generic environmental claim where the trader cannot demonstrate recognised excellent environmental performance relevant to the claim, and it defines a generic claim as one where the specification is not provided in clear and prominent terms on the same medium. That is the German court's principle written into statute: the qualification stands beside the claim, or the claim is not made.

One correction, because this is widely reported wrongly. The separate Green Claims Directive, the proposal that would have built a general substantiation and verification regime, has not been formally withdrawn. The Commission announced an intention to withdraw it on 20 June 2025, and the proposal was still listed as pending in the Commission Work Programme adopted on 21 October 2025. None of that touches Directive (EU) 2024/825, which was adopted in 2024, is binding, and applies on schedule. A brand waiting to see what becomes of the Green Claims Directive is waiting on the wrong instrument.

A conclusion post-luxury reached first

Strip the compliance vocabulary and the September rule says something simple. A product may be described by what it is and by what was done to make it. It may not be described by what was purchased on its behalf.

That is not a new idea. It is the position this institution has held since the framework was written, and it is why the arrival of the product passport and this prohibition are one event seen from two sides. The first builds the place where an object's record is kept. The second removes the substitute that allowed the record to go unkept.

Material Singularity holds that an object's claim to significance is inseparable from its material and its making. A neutrality bought elsewhere is the precise opposite: a claim to significance separable from the object by design, transferable, priced per tonne, and identical on every product it is printed on. The category built a moral vocabulary on a value available in bulk, and it is being taken away by a consumer protection directive rather than by a critic.

Coda

This study takes no position on whether carbon markets do good. Credits fund real projects, and the argument about their integrity is not settled here.

What is settled, on 27 September 2026, is narrower and harder. A product may no longer be sold as neutral on the strength of them. Every environmental claim standing in the European market has until then to establish what it rests on, and the claims that rest on offsets do not become weaker on that date. They become unlawful.

The record is above. The judgment is the reader's.