As per Reuters, the European Commission's proposal hopes to discourage companies from stating that their products are climate neutral or made with sustainable materials if these claims are not true.

One way that EU countries can track the sustainability factor of a certain product is through a "product environmental footprint" plan, which will follow the impact a product will have across 16 categories, such as air quality and climate change.

Officials said in the draft that "by fighting greenwashing, the proposal will ensure a level playing field for businesses when marketing their greenness."

The need of a stricter reporting framework comes as in 2020, the Commission said that out of 150 reviewed products, 53% of them provided insufficient or misleading information regarding sustainability.

Also, if a certain product is said by the company to have an environmental positive impact, it also has to mention if that particular product affects the environment in another way.

At the same time, future climate performance of a product or the company itself must be backed by a specific date by which officials need to have them completed.

Finally, should them rely on carbon credits to achieve environmental performance, firms must disclose this information.

EU countries will have to implement a system to verify companies and to penalize those who don't comply.

Officials said that, this way, customers should be able to better differentiate between products that truly have environmental benefits and those that don't.