Understanding EmpCo: What It Means for Climate Claims and Carbon Markets
October 20, 2026
Climate Strategy & Policy
Since 27 September 2026, the EU's Empowering Consumers for the Green Transition Directive, also known as EmpCo or ECGT, has been applicable across the European Union. The directive introduces significant changes in how companies communicate their climate action to consumers, with direct implications for climate claims, including those relating to carbon credits. For companies, the key change is not what they can do to address climate change, but what they can say about it.
What Is EmpCo?
EmpCo's main objective is to amend two existing consumer directives: the Unfair Commercial Practices Directive (UCPD) and the Consumer Rights Directive (CRD). Rather than replacing these frameworks, it introduces targeted changes to regulate environmental claims, early obsolescence, and consumer information.
One important point is that the directive mainly covers communication with consumers, meaning that business-to-business communication is outside its scope. Mandatory corporate sustainability reporting, including disclosures primarily directed towards investors under frameworks such as the CSRD, is also generally outside the directive. However, this distinction becomes less clear when companies reuse information from corporate reporting in consumer-facing marketing.
What Does EmpCo Actually Change?
EmpCo regulates mainly how climate action is communicated, rather than the environmental activities themselves. Companies can still reduce emissions, finance climate projects, purchase carbon credits, and develop long-term climate strategies. What changes is what companies can tell consumers about those activities, with the aim of preventing unfair commercial practices and greenwashing.
Among the most important new rules:
- Generic environmental claims such as “climate neutral” or “environmentally friendly” face strict requirements and, in many cases, cannot be used without recognised excellent environmental performance.
- Implicit environmental messages, including images, colours, product names, and other visual elements associated with environmental benefits, can also count as environmental claims.
- Future-oriented environmental claims require a detailed implementation plan, measurable targets, and regular independent verification.
- Offset-based claims suggesting that a product has a neutral, reduced, or positive environmental impact in terms of greenhouse gas emissions are prohibited.
- Sustainability labels must be established by public authorities or based on certification schemes involving independent third-party verification.
- The Consumer Rights Directive also introduces additional information requirements relating to durability, reparability, guarantees, and software updates.
The Biggest Change for Carbon Markets: Product-Level Offsetting
While companies can still support carbon credit projects and report these investments transparently, the most significant implications for carbon markets come from what EmpCo says about offsetting.
The key change concerns product-level claims. Under the directive, companies cannot claim that a product has a neutral, reduced, or positive impact on the environment in terms of greenhouse gas emissions based on the offsetting of those emissions.
In practice, this means that companies can no longer calculate the emissions associated with a product, purchase credits corresponding to those emissions, and use this as the basis for communicating the product as “carbon neutral.”
This is a significant change for one of the traditional uses of carbon credits in consumer-facing communication. But it does not mean that all product-level climate claims are prohibited. A claim that a product has a neutral, reduced, or positive greenhouse-gas impact can still be possible when it is based on the product's actual lifecycle emissions and supported by appropriate evidence, rather than compensation outside the product's value chain.
What About Company-Level Claims?
There is an important distinction here: the specific prohibition on offset-based claims does not apply to claims based on offsetting at company level. Companies can therefore still communicate about their use of carbon credits as part of a broader corporate climate strategy. However, these claims remain subject to the wider UCPD requirements, including rules on misleading claims, generic environmental claims, and future environmental performance.
In other words, not being covered by the specific offsetting prohibition does not automatically make a claim compliant. Companies will still need to consider what they are claiming, what evidence supports the claim, and how an average consumer would understand the message.
What Does This Mean for Carbon Markets?
EmpCo does not prohibit companies from purchasing carbon credits. Instead, it changes one of the ways those credits can be used in consumer-facing communication. The impact may therefore be less about eliminating demand and more about changing how and why companies use carbon credits.
As product-level offset claims become more restricted, carbon credits may play a greater role within broader corporate climate strategies, including climate contribution and the financing of high-quality mitigation and removal projects.
At the same time, companies seeking credible product-level climate claims will have a stronger incentive to focus on actual emissions reductions within their own value chains.
This could also increase the importance of quality, transparency, and traceability across carbon markets. If companies continue to communicate about the climate projects they finance, they will need to ensure that these statements are accurate, well substantiated, and not misleading.
A Shift in How Climate Action Is Communicated
EmpCo should therefore not be viewed as a restriction on carbon credits. Its broader effect may be a shift in how companies distinguish between different forms of climate action. There is a growing need to be clearer about what companies reduce, what they finance, and what they can credibly claim as a result.
For companies, this means placing greater emphasis on emissions reductions and robust evidence, while considering carbon finance as part of a broader climate strategy rather than as a shortcut to a consumer-facing “carbon neutral” claim.
Sources: Directive (EU) 2024/825; European Commission, DG Justice and Consumers, Questions & Answers on the ECGT Directive, September 2026.
About the Author
Astrid Manciu, Senior Manager Markets & Policy at FORLIANCE
Astrid Manciu is Senior Manager Markets & Policy at FORLIANCE, specialising in voluntary carbon markets, climate policy and nature-based solutions. She regularly takes part in international carbon market discussions, such as the IETA European Climate Summit.
