Proposal for a Directive on Green Claims

Proposal for a Directive on substantiation and communication of explicit environmental claims (Green Claims Directive)

On 22nd of March 2023 a proposal of the Directive of the European Parliament and of the Council on substantiation and communication of explicit environmental claims (Green Claims Directive) has been published by the European Commission.

This proposal is based on Article 114 of the Treaty of the Functioning of the European Union (TFEU), which applies to measures that aim to establish or ensure the functioning of the internal market, while taking as a base a high level of environmental protection

The proposal aims to ensure the functioning of the internal market for economic actors operating in the internal market and consumers relying on environmental claims. The measures proposed in this Directive will increase the level of environmental protection, while leading to further harmonisation regarding the regulation of environmental claims, and would avoid market fragmentation due to diverging national approaches that were introduced or would be introduced in the absence of rules at EU level.

The Proposal of the Directive states that penalties can be imposed: Member States shall ensure that when penalties are to be imposed in accordance with Article 21 of Regulation (EU) 2017/239449, the maximum amount of such fines being at least at 4 % of the trader’s annual turnover in the Member State or Member States concerned.

The Directive shall not apply to sustainability information involving messages or representations that may be either mandatory or voluntary pursuant to the Union or national rules for financial services, such as rules relating to banking, credit, insurance and re-insurance, occupational or personal pensions, securities, investment funds, investment firms, payment, portfolio management and investment advice


European Green Deal

European Green Deal: Carbon Border Adjustment Mechanism (CBAM) Agreement

European Green Deal Announcement

Agreement reached on the Carbon Border Adjustment Mechanism (CBAM)
Brussels, 13 December 2022

The Commission welcomes the political agreement reached this morning between the European Parliament and the Council on the Carbon Border Adjustment Mechanism (CBAM). The CBAM is the EU’s landmark tool to put a fair price on the carbon emitted during the production of carbon intensive goods that are entering the EU, and to encourage cleaner industrial production in non-EU countries.

Today’s agreement will be complemented by the revision of the Emissions Trading System (ETS), with negotiations taking place later this week, and that will align the phase-out of the allocation of free allowances with the introduction of CBAM to support the decarbonisation of EU industry.

Climate change is a global problem that needs global solutions. As the EU raises its own climate ambition, and as long as less stringent climate policies prevail in many non-EU countries, there is a risk of so-called ‘carbon leakage’. Carbon leakage occurs when companies based in the EU move carbon-intensive production abroad to countries where less stringent climate policies are in place than in the EU, or when EU products get replaced by more carbon-intensive imports.

By making sure that a price is paid for the embedded carbon emissions generated in the production of certain goods imported into the EU, the CBAM will make sure the carbon price of imports is equivalent to the carbon price of domestic production, thereby ensuring that the EU’s climate objectives are not undermined. The CBAM is designed in such a way that it is compatible with WTO rules.

President von der Leyen said: “I welcome the political agreement reached this morning on the Commission’s proposal for a Carbon Border Adjustment Mechanism. This is a central part of our European Green Deal, preventing the risk of carbon leakage. It is a huge step forward, as we raise our climate ambitions.”

Key elements :

The CBAM will initially apply to imports of certain goods and selected precursors whose production is carbon intensive and at most significant risk of carbon leakage: cement, iron and steel, aluminium, fertilisers, electricity and hydrogen. With this enlarged scope, CBAM will eventually – when fully phased in – capture more than 50% the emissions of the ETS covered sectors. Under this political agreement, the CBAM will enter into force in its transitional phase as of 1 October 2023.

The gradual phasing in of CBAM over time will allow for a careful, predictable and proportionate transition for EU and non-EU businesses, as well as for public authorities. During this period, importers of goods in the scope of the new rules will only have to report greenhouse gas emissions (GHG) embedded in their imports (direct emissions), without making any financial payments or adjustments. The agreement foresees that indirect emissions will be covered in the scope after the transitional period, on the basis of a methodology to be defined in the meantime.

Once the permanent system enters into force, according to a schedule to be defined in the revised EU ETS rules currently under negotiation, importers will need to declare each year the quantity of goods imported into the EU in the preceding year and their embedded GHG. They will then surrender the corresponding number of CBAM certificates. The price of the certificates will be calculated depending on the weekly average auction price of EU ETS allowances expressed in €/tonne of CO2 emitted.

A review of the CBAM’s functioning during its transitional phase will be concluded before the entry into force of the definitive system. At the same time, the product scope will be reviewed to assess the feasibility of including other goods produced in sectors covered by the EU ETS in the scope of the CBAM mechanism, such as certain downstream products and those identified as suitable candidates during negotiations. The report will include a timetable setting out their inclusion by 2030.

Next steps

Given the close links between the new CBAM and the review of the EU ETS, currently under negotiation in ‘trilogue’ between the co-legislators, the final technical details of the mechanism’s functioning will need to be clarified. Once the text has been finalised, the European Parliament and the Council will have to formally adopt the new Regulation before it can enter into force.

Download here for full announcement

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Organic Certifications

Organic Produce Certifications – European Commission’s decision to delist Five Certifications Bodies from India over high levels of ETO

ETO level higher than permissible limits – Reason for Delisting

The European Commission has decided to derecognise five certifying bodies (CBs) from giving clearance or ratifying exports of Indian organic products for their failure to meet the ethylene oxide (ETO) norms in consignments, particularly sesame (til/gingelly).

A draft of the European Union Committee on Organic Production (COP) on derecognising the five CBs or certifying agencies was issued in October for comments from various stakeholders. These comments were taken up last week before it took a final call.

With all the European Union (EU) members supporting the move, the COP decided to derecognise the five CBs – four from the EU and one from the US – on November 30.

The decision comes despite hectic lobbying by the EU, the US trade bodies and consultants against any action against the five. Instead, they sought action against the Agricultural and Processed Food Products Export Development Authority (APEDA).

The EU derecognised the five CBs, which certified over 80 per cent of the organic products exports to the EU, as they had certified some 90 shipments against which the EU Organic Farm Information System (OFIC) issued notifications for ETO level being excess than permitted level 0.1mg/kg.

The five CBs are ECOCERT India Pvt Ltd, CU Inspections Ltd, Indian Organic Certification Agency (Indocert), Lacon Quality Certifications Pvt Ltd – all based in EU – and the US-based OneCert International Private Ltd.

The blacklisting will come into force from January 1, 2022, and will be valid until APEDA removes them from the “high risk category” list they have been placed after being found at fault.

APEDA, which is the competent authority in India to supervise organic certification processes, has also suspended OneCert’s accreditation for one year, while ECOCERT, CU Inspections, IndoCert have been barred from registering any new processor or exporter.

In addition, APEDA has also asked Aditi Organic Certifications to not register any new processor or exporter. The five CBs have also been imposed ₹2-5 lakh penalties.

In its draft, the EU COP said, “Since October 2020, a large number of consignments totalling thousands of tonnes allegedly organic sesame seed contaminated with ethylene oxide have been imported from that third country, in particular from operators controlled by the control bodies supervised by India…”

ETO is considered carcinogenic for humans by the EU and a few other countries, and it is strictly monitored to ensure that shipment of any product conforms to the norms. In the case of India, the presence of the chemical exceeded far more than the permitted level, which the EU felt posed a health risk to its consumers.

The EU derecognition of the five agencies also means that their names should not appear in APEDA’s list of CBs recognised by it. The derecognition is unlikely to affect exports of organic products – as feared by the EU and US trade bodies – from India as there are 28 other CBs, Indian and foreign, that can fill in the void.

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Global focus on Product/Service Quality and Safety has undergone a dramatic change after the pandemic crisis across the globe. Quality and Safety of Global Public Goods call for International Alignment of Standards, Certifications, Testing norms etc to ensure that Consumers Health, Safety and Wellbeing is not compromised.

Responsible Production is the Global Call of Action and the it’s the Responsibility of the Global Markets to ensure availability of Responsible Supply Chain as a Consumer Welfare measure.  Global economy is moving towards Borderless Economy and many countries will have market access to global markets due to supply chain shortages. The countries which assure Authentic and Responsible Supply Chains will have strong acceptance across the globe.

We, in India too are seeing a huge surge in exports as well as in imports of Products and Services and how do we ensure that Consumers are assured of Quality and Safe Products and Services in domestic as well as in International Markets.

European Union is the largest market for Indian Exporters and businesses strive hard to create market space for their products and services. Earning and Retaining Customer Loyalty, Recognition and Reputation at market place is not an easy ride for any business. Its the reasonability and duty of industry bodies, industry associations to work in coordination with Regulators like APEDA and ensure that wrong trade practices by businesses, Certification Agencies should be questioned.

Regulators, Accreditation Bodies, Certification Agencies, Industry , Consultants are the key stakeholders to this process and all have to work in alignment , incordination to ensure that Responsible Supply Chains are made available for domestic as well as for global markets.

Issuance of Certifications is an Assurance to the market place that Products that are Certified for Quality are Safe for Consumption. When this process gets compromised, consumers faith and trust on Quality will erode.