A Blueprint for Compliant Environmental Advertising

Lawsuits and fines for misleading environmental claims already abound across the EU. Coupled with recent legislation, consumer demand for all things green could lead to a further increase in regulatory pressure and civil claims—including representative actions.[1]

Compliance with the EU Green Deal—specifically, the Directive empowering consumers for the green transition[2] and the Proposal for a Green Claims Directive[3]—will be key to mitigating litigation risk in the years to come.

But what makes an environmental advertising claim misleading?

In 2020, the EU Commission tasked a group of legal experts with assessing 150 selected environmental claims under the Guidance on the Unfair commercial practices directive (the “UCPD Guidance”). Of those claims, 53.3% (80/150) were deemed potentially misleading and 40% (60/150) were deemed unsubstantiated.[4]

It is therefore unsurprising that allegations of greenwashing, civil actions, and complaints against corporate actors have skyrocketed in the intervening years.[5] It is likewise unsurprising that many of those actions and complaints are based on consumer protection law.[6]

Regardless of the cause of action—misleading commercial practices, unfair competition, prospectus liability, and so on—these cases revolve around assessing environmental claims as generic, unsubstantiated, or inaccurate.

In Italy, the Court of Gorizia granted a claim for injunctive relief against a business that claimed it was producing eco-friendly microfibers.[7] Admittedly, this is the only Italian civil case on misleading environmental advertising that has garnered public attention to date. What is interesting about that decision is its simple conclusion—based on Section 12 of the Code of the Italian Advertising Self-Regulatory Body—that advertising claims that vaunt or suggest environmental or ecological benefits must be based on truthful, pertinent, and scientifically verifiable evidence.

The Italian Competition Authority has reached similar conclusions in high-profile regulatory cases concerning, among other things, the claim that a branded fossil fuel reduces greenhouse gas emissions by up to 40%.[8] As recently as March 22, 2024, the Italian Council of State rejected an appeal filed by a German car manufacturer in a case involving another sanction issued by the Italian Competition Authority that concerned, inter alia, inaccurate green claims based on the results of rigged emissions testing. The Council of State concluded that such advertising claims had the potential to influence consumers’ spending decisions and were therefore relevant in the context of the unfair commercial practice at issue.[9]

Finally, following a handful of decisions from the lower courts dealing with similar claims, the German Supreme Court is expected to rule on the requirements for use of the term “climate-neutral” in advertising. The next hearing is scheduled for April 18, 2024, and the decision is expected to provide meaningful guidance for advertisers across the EU—at least under the current legislative framework.[10]

In this context, the provisions of the Directive empowering consumers for the green transition[11] and of the Proposal for a Green Claims Directive[12]—although not yet applicable—provide a blueprint for credible and substantiated advertising of the environmental characteristics of a product. The provisions of the incoming legislation are much more detailed and include a list of examples of misleading environmental claims.

For example, the Directive empowering consumers for the green transition prohibits:

  • Claims of offsetting greenhouse gas emissions. (e.g., climate neutral, CO2neutral certified, carbon positive, climate net zero, climate compensated, reduced climate impact).
  • Claims based on a sustainability label that is not backed by a public certification system.
  • Generic claims that cannot be demonstrated (e.g., environmentally friendly, eco-friendly, green, nature’s friend, ecological, environmentally correct, climate friendly, gentle on the environment, energy efficient, biodegradable, biobased).
  • Claims that misrepresent compliance with basic legal requirements as a distinctive feature of a product or activity.

Since current legislation is not nearly as specific, advertisers would be well advised to seek guidance on the EU Green Deal, regardless of its entry into force. Indeed, most commercial practices that are expressly defined as misleading under the incoming legislation already constitute greenwashing under the general provisions of consumer protection law, and sanctions for such practices are not uncommon.

[1] Navigating the waters of class action: Exploring Italy’s implementation of EU Directive 2020/1828 introducing representative actions.

[2] Directive (EU) 2024/825 amending EU Directives 2005/29/EC and 2011/83/EU with regard to empowering consumers for the green transition through better protection against unfair practices and through better information—published in the Official Journal of the European Union on March 6, 2024, available here.

[3] COM/2023/16 Proposal for a Directive of the European Parliament and of the Council on substantiation and communication of explicit environmental claims (Green Claims Directive), available here.

[4] Environmental claims in the EU: Inventory and reliability assessment Final report, available here.

[5] See the EBA Progress Report on Greenwashing Monitoring and Supervision of May 31, 2023, available here.

[6] See Setzer, Joana, and Higham, C. (2023), Global Trends in Climate Change Litigation: 2023 Snapshot, available here.

[7] Court of Gorizia, November 25, 2021.

[8] The Italian Competition Authority hits the Italian oil-and-gas giant ENI with the highest possible fine in a “greenwashing” advertising case.

[9] Council of State, March 22, 2024, no. 2791.

[10] The press release is available in German here.

[11] The EU Directive empowering consumers for the green transition has been adopted: moving toward better protection against unfair practices and better information. The directive was adopted on February 28, 2024 and needs to be transposed into national legislation by March 26, 2026.

[12] Green claims: A new EU Proposal for a directive on substantiation and communication of explicit environmental claims.

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