Carbon Offset Claims: When They Count as Greenwashing Under EU Law

What the ECGT Actually Bans About Offsets

Let me be precise here, because the nuance matters. Article 3(1)(b) of Directive 2024/825 adds a new entry to the Unfair Commercial Practices Directive's blacklist. It prohibits:

"Making an environmental claim about the entire product or the entire business when it concerns only a certain aspect of the product or the trader's activity, including claims based on offsetting of greenhouse gas emissions."

Read that carefully. The ban targets claims that present the whole product or business as environmentally neutral when the only basis is offsets. Saying "our company is carbon neutral" when all you did was buy credits from a reforestation project in Indonesia — that is the specific behavior the ECGT targets.

What the law does not say is that you cannot mention offsets at all. You can still communicate that you invest in carbon removal projects. You can disclose offset purchases as part of a broader climate strategy. The restriction applies to making offsets the sole basis for an overarching neutrality claim.

This distinction trips up a lot of compliance teams. I have seen legal departments panic and strip all offset language from corporate communications, which is an overreaction. Others assume their existing "carbon neutral certified" labels are grandfathered in, which is dangerously wrong. Neither extreme is correct.

For the full list of restricted terms, see our guide to banned green terms and their alternatives.

Why the EU Drew This Line

The legislative intent behind the offset ban did not come from nowhere. A series of high-profile investigations — by The Guardian, Bloomberg, and academic researchers — demonstrated that a significant portion of certified carbon offsets failed to deliver their promised climate benefits.

A 2023 investigation into Verra's Verified Carbon Standard (the world's largest voluntary offset registry) found that over 90% of their rainforest offset credits were likely "phantom credits" that did not represent genuine carbon reductions. The South Pole scandal in the same year — involving the world's largest offset developer — revealed systematic overstatement of emission reductions from their flagship Kariba project in Zimbabwe.

The European Commission's own 2023 consumer survey found that 53% of environmental claims in the EU were vague, misleading, or unfounded. Offset-based claims were disproportionately represented among the worst offenders. When a consumer sees "carbon neutral" on a product, they reasonably assume the product's production generated zero emissions. That is almost never what happened in practice.

The EU also recognized an economic distortion. Companies spending relatively small amounts on offsets could claim the same "carbon neutral" status as competitors investing heavily in actual decarbonization — redesigning supply chains, switching to renewable energy, improving energy efficiency. The offset shortcut was undermining companies doing genuine work. For a broader look at how these penalties are structured, read our analysis of ECGT penalties and fines.

The VCMI Claims Code: What Offsets Can Still Do

The Voluntary Carbon Markets Integrity Initiative (VCMI) released its Claims Code of Practice specifically to address this mess. It provides a framework that, while not EU law itself, aligns well with what the ECGT permits and offers practical guidance for companies that want to continue using carbon credits responsibly.

The VCMI framework operates on a tiered system:

• Silver tier: The company must meet its near-term science-based targets AND purchase high-quality carbon credits covering at least 20% of remaining unabated Scope 1, 2, and relevant Scope 3 emissions.
• Gold tier: Same requirements, but credits must cover at least 60% of remaining unabated emissions.
• Platinum tier: Credits cover 100% of remaining unabated emissions, on top of meeting science-based reduction targets.

The critical word in every tier is "remaining." Offsets are only legitimate as a complement to actual emission reductions, never as a replacement. A company at Platinum tier has already cut emissions in line with a 1.5°C pathway and is using high-quality credits for what cannot yet be eliminated.

Under the VCMI framework, you cannot claim to be "carbon neutral." Instead, you would say something like: "We have reduced our emissions by 45% since 2019 in line with our SBTi-validated targets, and we invest in verified carbon removal projects for our remaining emissions." That is a fundamentally different — and legally defensible — statement.

For guidance on crafting this type of language, our ECGT-compliant green copywriting guide walks through specific phrasings.

SBTi Guidance: Beyond Value Chain Mitigation

The Science Based Targets initiative (SBTi) published its Corporate Net-Zero Standard with a concept it calls "Beyond Value Chain Mitigation" (BVCM). This is essentially what offsets become when done properly.

Under SBTi's framework, companies must first set near-term targets (5-10 years) to reduce Scope 1, 2, and 3 emissions by at least 42% (for 1.5°C alignment). They must also set long-term targets to reduce emissions by at least 90% by 2050. Only after meeting these reduction thresholds can a company "neutralize" remaining emissions through high-quality carbon removal — not avoidance credits, but actual removal from the atmosphere.

SBTi explicitly states that BVCM investments "should not substitute for or be counted toward the achievement of a company's near-term or long-term science-based targets." In other words, you cannot offset your way to compliance.

Where SBTi and the ECGT converge is on the communication side. Both frameworks reject aggregate neutrality claims. SBTi companies cannot claim to be "net-zero" until they have achieved their long-term 90% reduction target and are neutralizing residual emissions. Until then, they can say they are "committed to net-zero" or "on a science-based pathway to net-zero" — language that reflects progress without claiming a destination already reached.

This aligns directly with the EU substantiation requirements that demand environmental claims be supported by evidence proportionate to the claim made.

Case Studies: Airlines That Got Caught

Aviation provides some of the most instructive examples of offset-based greenwashing, precisely because flying is so carbon-intensive that offsets were the only way to make any kind of green claim.

KLM's "Fly Responsibly" Campaign (2024): The Dutch airline was ordered by an Amsterdam court to stop its "Fly Responsibly" advertising campaign. The court found that KLM's suggestion that customers could offset their flight emissions through its CO2ZERO program created a misleading impression that flying could be made environmentally sustainable. The ruling specifically noted that offset programs cannot compensate for the fundamental climate impact of aviation. KLM was also challenged for claims about sustainable aviation fuel (SAF), which represented less than 1% of its total fuel use at the time of the advertisements.

Lufthansa's "Green Fares" (2023-2024): Lufthansa introduced "Green Fares" that included SAF contributions and offset purchases. Consumer groups challenged these as misleading, arguing that labeling any flight product "green" misrepresents the environmental impact regardless of mitigation measures. Lufthansa eventually modified its language, though the rebranding remained controversial.

Delta Air Lines (2023): A class action lawsuit in the US challenged Delta's claim of being "the world's first carbon-neutral airline." The lawsuit alleged Delta's offset purchases — primarily from forestry projects — did not deliver the emission reductions claimed. While this case arose under US law, its reasoning parallels exactly what the ECGT now codifies.

These cases illustrate a pattern: the more carbon-intensive the industry, the harder it is to make credible offset claims. For a broader look at industry-specific risks, see our greenwashing by industry guide.

Case Studies: Fashion Brands Under Scrutiny

Fashion's relationship with offsets is different from aviation's but equally problematic. Where airlines offset because they cannot easily decarbonize, fashion brands often offset to avoid the harder work of fixing their supply chains.

H&M's "Conscious Collection" (2022-2024): The Netherlands Authority for Consumers and Markets (ACM) found that H&M's environmental sustainability claims — including those tied to its "Conscious" and "Conscious Choice" product lines — were insufficiently substantiated. While not purely an offset case, the investigation highlighted how fashion brands used a patchwork of environmental commitments (including offset purchases) to create an overall impression of sustainability that their products did not warrant.

Decathlon (2024): The French sporting goods retailer came under fire for marketing "eco-designed" products where the environmental benefit was partly based on offset investments rather than actual product design improvements. French consumer groups argued this violated emerging national rules on green claims that anticipated the ECGT.

SHEIN's "evoluSHEIN" Line (2024-2025): The ultra-fast fashion giant launched a supposedly sustainable line that combined recycled materials with carbon offset commitments. Regulators and NGOs immediately challenged the claim, noting the fundamental contradiction between ultra-fast fashion's business model (overproduction, high waste, long supply chains) and any meaningful sustainability claim, regardless of offset investments.

The common thread? Offsets served as a fig leaf. Companies used them to signal environmental responsibility without addressing the structural issues in their business models. The ECGT was designed precisely to stop this behavior. For more fashion-specific analysis, read our deep dive on fast fashion greenwashing claims.

What Legitimate Climate Claims Look Like Now

So you invest in offset projects and you want to communicate that. What can you actually say post-ECGT? Here are concrete examples, moving from non-compliant to compliant:

Do Not Say (Banned Under ECGT)

• "Carbon neutral product" (based on offsets)
• "Climate neutral company" (based on offsets)
• "This flight is CO2 compensated"
• "Net-zero company" (without meeting SBTi long-term target)
• "100% offset — zero climate impact"

Say Instead (ECGT-Compliant)

• "We have reduced our Scope 1 and 2 emissions by 38% since 2020. We also invest in Gold Standard-certified carbon removal projects for currently unavoidable emissions." (Specific, quantified, transparent)
• "Our science-based reduction targets are validated by SBTi. In addition to our reduction efforts, we invest EUR 2.1 million annually in verified reforestation projects in [location]." (Reduction first, offset as supplement)
• "This product's carbon footprint is 2.4 kg CO2e, a 30% reduction from our 2022 baseline. We fund carbon removal for residual emissions through [named program with verification link]." (Quantified footprint, measurable reduction, transparent offset)

The pattern is clear: lead with your actual reductions, be specific about the numbers, and position offset investments as supplementary rather than the basis of the claim. For a full framework on restructuring your environmental communications, our green marketing without greenwashing guide covers this in depth.

Practical Compliance Checklist for Offset Users

If your business currently uses carbon offsets as part of its environmental strategy, here is what you need to do before September 2026:

1. Audit Your Current Claims

Search your website, packaging, marketing materials, social media, and annual reports for any neutrality claims based on offsets. Our free greenwashing scanner can check your website in seconds. Pay special attention to landing pages, product descriptions, and about/sustainability pages.

2. Separate Reduction from Compensation

Document your actual emission reductions independently from your offset purchases. If you cannot demonstrate meaningful reductions without offsets, you have a substantiation problem that buying more credits will not fix.

3. Upgrade Your Offset Quality

If you continue purchasing credits, move toward carbon removal credits (direct air capture, biochar, enhanced weathering) rather than avoidance credits (avoided deforestation, renewable energy certificates). Removal credits are more defensible under EU scrutiny because they represent actual CO2 taken from the atmosphere.

4. Rewrite Your Communications

Replace every "carbon neutral" or "climate neutral" statement with specific, quantified claims about reductions achieved and supplementary investments made. Every claim should be independently verifiable. Check our full ECGT compliance checklist for step-by-step guidance.

5. Set Up Monitoring

Claims drift over time. Marketing teams create new copy, social media managers post without legal review, partner websites feature outdated language. Automated monitoring — like our ECGT compliance monitoring tool — catches these issues before regulators do.