# Compliance basis — the rules GreenLight checks against

GreenLight grounds every verdict in real EU/France regulation. This page documents the
legal basis and the certification mechanics the agent reasons over. **Regulations and
enforcement cases below are real and sourced; the demo's product line and supplier
certificates are synthetic (and labelled as such in the app).**

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## 1. The binding rule — ECGT Directive (EU) 2024/825

The "Empowering Consumers for the Green Transition" Directive amends the **Unfair
Commercial Practices Directive (UCPD, 2005/29/EC)** and is the core rule GreenLight enforces.

- **Entered into force:** 26 March 2024
- **Transposition deadline:** 27 March 2026 (passed)
- **Applies from:** **27 September 2026** — including to existing stock

**What it prohibits:**
- **Generic environmental claims** — "eco-friendly", "green", "climate neutral", "carbon
  neutral", "sustainable", "eco", "biodegradable" — unless **recognised excellent
  environmental performance** is demonstrated (e.g. EU Ecolabel).
  - Directive example: *"climate-friendly packaging"* = generic (prohibited); *"100% of the
    energy used to produce this packaging comes from renewable sources"* = specific (allowed).
- **Self-invented sustainability labels** — only labels based on a recognised third-party
  certification scheme or established by a public authority are allowed.
- **Aspirational claims** ("carbon neutral by 2030") — only with clear, verifiable,
  independently-checked implementation plans and measurable targets.
- **Specific quantified claims** (e.g. "70% recycled polyester") — allowed only if
  substantiated by evidence.

## 2. Penalties

Under the Omnibus/Modernisation Directive (EU) 2019/2161, Member States must allow fines of
**at least 4% of the trader's annual turnover** in the Member State(s) concerned for
widespread cross-border infringements, or **at least €2 million** where turnover cannot be
determined. National ceilings stack on top (e.g. France DGCCRF up to €100k or 80% of ad
spend; Italy AGCM up to €10M; UK CMA up to 10% of global turnover). Penalties can also
include revenue confiscation and exclusion from public procurement.

## 3. Enforcement is already happening

- **Shein / ISEL:** **€40M** (France, DGCCRF, 3 Jul 2025) for deceptive commercial practices —
  including environmental claims it could not substantiate ("responsible company", "−25%
  greenhouse-gas emissions") — plus a separate **€1.098M** (France) for non-compliance with
  environmental-information obligations. The European Commission also found Shein in breach of
  EU consumer law (May 2025).
- **H&M / Decathlon:** forced by the Dutch ACM to drop "Conscious" / "Ecodesign" labels;
  donations of €500k / €400k.
- **ASOS / Boohoo / George at Asda:** binding commitments to the UK CMA.

## 4. Certification mechanics (how recycled-content claims are substantiated)

Textile recycled claims are backed by **Textile Exchange** standards:
- **GRS (Global Recycled Standard):** ≥20% recycled content (≥50% to use the consumer logo);
  adds social/environmental/chemical requirements.
- **RCS (Recycled Claim Standard):** ≥5% recycled content; content-only.
- **Chain of custody = two documents:**
  - **Scope Certificate (SC):** proves the supplier is *able* to produce certified goods.
  - **Transaction Certificate (TC):** proves a *specific shipment* complies — **this is the
    one that actually substantiates a claim.**

> A valid Scope Certificate does **not** substantiate a specific product claim without a
> matching Transaction Certificate. GreenLight checks for the TC and the covered percentage.

**Why the numbers matter (market baseline):** per the *Textile Exchange Materials Market Report
2025*, recycled polyester was ~**12%** of all polyester in 2024, and **~98%** of it comes from
**plastic bottles** — **textile-to-textile** recycled fibre is **<1%** of the whole fibre market.
So a high recycled-content claim, especially one implying textile waste, is extraordinary and
should be backed by a shipment-level Transaction Certificate — exactly the gap GreenLight catches.

## 5. Coming next (not yet mandatory)

- **ESPR (Reg. (EU) 2024/1781) → Digital Product Passport** — textiles are a priority
  category; the delegated act is expected ~2027 with mandatory DPP ~2028–2029. GreenLight
  pre-fills DPP fields ahead of that. *(DPP is not yet mandatory for textiles.)*
- **ESPR unsold-goods destruction ban** — applies to large enterprises from 19 July 2026.
- **France anti-ultra-fast-fashion law** — adopted 29 June 2026 (per-item malus + ad
  restrictions on ultra-fast-fashion platforms).

> Note: the separate **Green Claims Directive** proposal is effectively withdrawn / in limbo
> (since June 2025) and is **not law** — GreenLight does not enforce it. The binding regime is
> Directive (EU) 2024/825.

## Sources
EUR-Lex (Dir. 2024/825; Dir. 2019/2161; Reg. 2024/1781); European Commission ECGT FAQ;
Textile Exchange (GRS/RCS, SC/TC templates ASR-204/205; Materials Market Report 2025); national
authorities ACM, AGCM, DGCCRF, CMA; ESPR Working Plan 2025–2030.