Recital 7

(7)Sustainability labels can relate to many characteristics of a product, process or business, and it is essential to ensure their transparency and credibility. Therefore, the displaying of sustainability labels which are not based on a certification scheme, or which have not been established by public authorities should be prohibited by including such practices in the list in Annex I to Directive 2005/29/EC. Before displaying a sustainability label, the trader should ensure that, according to the publicly available terms of the certification scheme, it meets minimum conditions of transparency and credibility, including the existence of objective monitoring of compliance with the requirements of the scheme. Such monitoring should be carried out by a third party whose competence and independence from both the scheme owner and the trader are ensured based on international, Union or national standards and procedures, for example by demonstrating compliance with relevant international standards, such as ISO 17065 ‘Conformity assessment – Requirements for bodies certifying products, processes and services’ or through the mechanisms provided for in Regulation (EC) No 765/2008 of the European Parliament and of the Council ⁴ . The displaying of sustainability labels remains possible without a certification scheme when such labels are established by a public authority, or where additional forms of expression and presentation of food are used in accordance with Article 35 of Regulation (EU) No 1169/2011 of the European Parliament and of the Council ⁵ . Examples of sustainability labels established by public authorities are logos awarded when complying with the requirements of Regulations (EC) No 1221/2009 ⁶ or (EC) No 66/2010 ⁷ of the European Parliament and of the Council. Some certification marks, as defined in Article 27 of Directive (EU) 2015/2436 of the European Parliament and of the Council ⁸ , can also operate as sustainability labels if they promote a product, process or business with reference, for example, to its environmental or social characteristics or both. The trader should be able to display such certification marks only if they are established by public authorities or based on a certification scheme. That rule complements Annex I, point (4), to Directive 2005/29/EC, which prohibits the making of a claim that a trader, the commercial practices of a trader or a product have been approved, endorsed or authorised by a public or private body when that is not the case, or the making of such a claim without complying with the terms of the approval, endorsement or authorisation. Voluntary market-based standards and voluntary public standards for green and sustainable bonds do not primarily target retail investors and are subject to specific laws. For those reasons, those standards should not be considered to be sustainability labels under this Directive. It is important that public authorities, as far as possible and in compliance with Union law, promote measures to facilitate access to sustainability labels for small and medium-sized enterprises.