'Climate neutral' labels backed by offsets are now on the EU blacklist

'Climate neutral' on a product label, backed by offsets, is now on the EU blacklist.

What changed

Directive (EU) 2024/825, part of the EU's rules on empowering consumers for the green transition, amends the Unfair Commercial Practices Directive. It adds point 4c to the list of commercial practices that are considered unfair in all circumstances: 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.

Member States apply the new rules from 27 September 2026. Being on the blacklist means no case-by-case assessment of whether a consumer was misled: the practice itself is prohibited.

The reasoning

Recital 12 of the directive sets out the logic. Claims of this kind should rest on the product's actual lifecycle impact, not on offsetting emissions outside the product's value chain. The concern is that an offset purchased somewhere else does not change the footprint of the product the consumer is buying.

Why the focus shifts to the value chain

The directive puts attention on reductions inside the value chain, the emissions that actually make up a product's footprint: raw materials, suppliers, manufacturing and transport.

Insetting works in that space. It funds verified reductions inside a company's own value chain, and it is not offsetting. But Carbon3 is careful on the limits. Retiring inset credits does not by itself support a product claim. A product-level claim is a separate matter with its own requirements, and claim treatment depends on the applicable reporting framework.

What companies should take from it

For brands with 'climate neutral' or similar labels backed by offsets, the immediate task is reviewing what is on pack and in marketing. For the longer term, the direction is clear: the credible route is reducing the emissions that sit in the product's own lifecycle, with data that shows it.

Not legal advice; national transposing laws vary.