ECGT: Raw Materials, the Blind Spot

ECGT (EU 2024/825): raw materials are the riskiest, most valuable link. How Sutti secures upstream traceability in your supply chains.

1. The ECGT Directive: a turning point in the fight against greenwashing

The Empowering Consumers for the Green Transition Directive (EU 2024/825), known as ECGT, entered into force in 2024 and had to be transposed by EU member states by March 2026, with effective application beginning in September 2026. It amends two foundational pieces of European consumer law: the Unfair Commercial Practices Directive and the Consumer Rights Directive.

Its objective is easy to state but heavy in consequence: putting an end to vague, unsubstantiated, or unverified environmental claims. Generic terms like “eco-friendly,” “green,” or “carbon neutral” become prohibited unless they rest on accessible, third-party-verifiable, and up-to-date evidence. Self-declared sustainability labels, without independent certification, are also banned. More broadly, any comparative claim (“more sustainable than,” “less polluting than”) must now be backed by a transparent methodology and comparable data, as detailed by the European Commission.

What sets the ECGT apart from earlier texts is the reversal of the burden of proof. It is no longer up to an enforcement authority or a consumer to demonstrate that a claim is misleading: it is up to the company to prove, with documentation, that its claim is well-founded. In practice, this means every environmental statement must be traceable to dated data, ideally verified by an independent third party.

For companies that communicate about the origin, sustainability, or environmental and social impact of their products, the stakes are no longer just reputational. They have become a matter of direct legal compliance, with penalties that can reach 4% of annual turnover in some member states, echoing the GDPR model.

This shift lands in an already dense regulatory landscape — CSRD, CS3D, the EU Deforestation Regulation (EUDR) — which all converge on the same requirement: documenting what actually happens across value chains, rather than settling for surface-level commitments. The ECGT closes the last remaining exit: unsubstantiated communication.

2. Raw materials: the most valuable link, and the most exposed

Given this new evidentiary bar, not all value chains are equal. Field experience points to one recurring pattern: most transparency and traceability programs that companies deploy today concentrate on the easiest links to document — the flows between buyers, warehouses, logistics platforms, and distributors, generally what the industry calls tier-1 suppliers. These segments are useful for operational efficiency, but as Ksapa has documented, they are also the least exposed to ECGT non-compliance risk, precisely because they don’t themselves carry the environmental or social claim that the consumer reads on the packaging.

The claim that binds the company — “organic cotton,” “cocoa from fair-trade cooperatives,” “minerals extracted with respect for human rights” — actually plays out upstream: at the level of the raw material itself, its geographic origin, its production system, often the cooperative or smallholder that harvested or extracted it.

This is where a double phenomenon converges, making this segment strategic. On one hand, it’s the most commercially valuable link: it’s the story of origin, terroir, local know-how, or community engagement that fuels brand storytelling and justifies a price premium. On the other hand, it’s the most legally exposed link: this is precisely where data is hardest to obtain, most fragmented across thousands of smallholders, and therefore most likely to fail an ECGT compliance check.

In other words, companies have historically invested in traceability for the least risky segments and left under-documented the segment that carries most of the perceived value — and therefore most of the sanction risk. A national consumer protection authority’s inquiry, or a class action by consumers, is not going to scrutinize traceability between a regional warehouse and the point of sale. It is going to scrutinize the origin and sustainability claim printed on the product itself, and therefore trace back to the raw material. This same logic underpins the EU Deforestation Regulation, whose central requirement is precisely the geolocation of the plots of land where raw materials are grown — not downstream logistics links. As WRI explains, companies must collect supply chain information down to plot-level geolocation, a level of granularity few traceability systems covered until now.

Three categories of evidence are now expected at this level, and this is exactly where most current systems fall short:

• documented upstream traceability: precise geographic origin, identification of the production system, the cooperative, or the producer group;
• transparency on the resource’s actual impact: pressure on water, biodiversity, and soil, backed by measured rather than estimated data;
• transparency on the social conditions of the supply chain: respect for human rights, producers’ actual income levels, working conditions.

These three requirements are also the ones that, if unmet, expose supply chains most heavily to ECGT non-compliance risk — precisely because these are the topics where NGO, media, and informed-consumer scrutiny is strongest and best documented.

3. Sutti: documenting the upstream where risk and value converge

It’s on this critical link — generally the least covered by existing systems — that the Sutti platform was designed to intervene. Sutti was built to go get the data directly at the source, at the level of the producer, the cooperative, or the extraction site, rather than reconstructing it after the fact from intermediaries’ declarations.

Documented upstream traceability. A Sutti program establishes, supply chain by supply chain, the identity and location of the producers or cooperatives behind the raw material: name, geolocation, volume produced, farming or extraction method. This data is collected directly from field actors, using digital tools adapted to low-connectivity contexts, then structured to be usable in the event of an inspection. This isn’t a documentary reconstruction assembled from headquarters; it’s evidence built at the source, which matches precisely the standard of proof the ECGT calls for: verifiable, current, and tied to an observed fact rather than a declaration.

Transparency on the resource’s actual impact. Beyond origin, a Sutti program documents environmental impact indicators specific to each site or producer group: water use, farming practices affecting local biodiversity, pressure on soil. This data, collected close to the ground, allows a company to replace a generic claim — “low environmental impact” — with a quantified, localized figure, the only kind able to withstand the evidentiary scrutiny the directive demands. It also lets a company identify, ahead of any inspection, the parts of its supply chain where actual impact diverges from the marketing claim, and adjust its communication before a third party does.

Social conditions of the supply chain. Finally, a Sutti program documents producers’ working and pay conditions, building on the business and human rights advisory work Ksapa conducts more broadly with companies: respect for fundamental human rights, actual income levels compared to a subsistence or living income, on-site working conditions. This register has become one of the most scrutinized, as living-income issues for producers and child labor in agricultural or mining supply chains are increasingly well documented by NGOs and specialized media. A claim like “fair-trade supply chain” or “sustainable partnership with our producers” that couldn’t be backed by verified income or working-condition data now represents one of the highest ECGT non-compliance risks, precisely because it’s a topic under the strongest external scrutiny.

What sets this approach apart from conventional traceability systems is the deliberate choice to concentrate documentation effort where the commercial value of the claim and the legal risk of its absence of proof intersect — rather than spreading transparency effort evenly across the whole chain, including its least exposed segments.

In summary

The ECGT doesn’t just ban misleading claims: it requires companies to be able to prove, at any moment, what they state about a product’s origin and impact. For most supply chains, that proof plays out upstream, at the level of the raw material itself — the most valuable link for the brand, and the most exposed in the event of an inspection. Documenting traceability, actual resource impact, and social production conditions at that precise level, with data collected directly at the source, is no longer just a sustainability initiative: it has become a condition of regulatory compliance.