Across several jurisdictions, eco-advertising and green marketing campaigns have become commonplace among businesses of all sizes and in all sectors. Understandably, advertising the environmentally-friendly attributes of a product or service - through slogans, trademarks, performance claims or various other marketing practices - appeals to consumers' growing concerns for the environment and calls for companies to 'go green'.
However, positioning products and services as having environmental benefits that don't actually exist can raise myriad legal and reputational concerns. False, misleading, overstated or unsubstantiated environmental advertising (often referred to as 'greenwashing') is largely prohibited under laws and standards that regulate areas of consumer protection and advertising. Marketing a product as 'eco-friendly', 'safe for the environment', or using other descriptors that highlight environmental attributes or benefits that are vague, exaggerated, deceiving, result in misinterpretations or cannot be substantiated can lead to legal consequences. As such, regulators are taking a much tougher stance on greenwashing than ever before.
The following article explores the regulation of greenwashing in
Regulation of greenwashing
In terms of legislation,
Advertising law
For example,
An advertisement is considered 'false' if it falls within any of the following circumstances:
- The products or services do not exist;
- The information on products or services are inconsistent with the actual situations in terms of the performance, function, place of origin, purpose, quality, specification, ingredients, price, producer, valid period, sales, awards of the products or the content, or in terms of any guarantee relating to the products or services, and such inconsistency has a substantial influence on purchase;
- Using scientific achievements, statistics, research results, abstracts, quotations and other information that is false or forged or cannot be verified as evidentiary material;
- Claiming false effects of the use of the products or services; or
- Other circumstances in which the consumers are deceived or misled by false or misleading contents.
Therefore, even though there are not explicit articles on the prohibition of greenwashing, there is still great emphasis put on the honest and truthful advertising of products and/or services, which encompasses the environmental aspect of false advertising.
Trademark law
There is no clear definition of green trademarks in
Although the relevant provisions on geographical indications in the Measures for the Registration and
Greenwashing in the financial sector
In the financial sector, 'greenwashing' refers to companies that obtain green financing under the guise of developing green projects, but are actually engaged in 'non-green' or even high-carbon, high-polluting projects.
In response to this situation, the financial supervision authorities at the national level have not yet issued specific guidance, but the local
In
The unification of green financial standards will go a long way towards avoiding the emergence of green projects that are artificially designed and packaged to meet green standards but are not fully green in nature. It will also facilitate financial institutions, green funds and other investment institutions in providing financing for truly green enterprises or green products.
In addition, the establishment of a green project bank will reduce the cost and risk of matching green projects with green funds from banks, in turn helping social capital to flow more to truly green sectors.
The green financial standards also impose disclosure requirements on companies and ensure that the principle of responsibility and ESG information is incorporated within the scope of environmental information disclosure.
In
Publication of the Code and guidance followed a review of hundreds of websites and the 'green' claims made on those websites. The results of the audit were startling, with the CMA finding that four out of 10 'green' claims made online could be misleading consumers. The CMA found vague claims and unclear language such as 'eco' and 'sustainable'; it found that businesses were hiding or omitting information and saw that, in some cases, brands were making up their own logos, which looked like some kind of third-party verification of their ecological credentials. The CMA's concerns with these practices led to the introduction of the Code.
The Code sets out six principles specifying that environmental claims must:
- Be truthful and accurate;
- Be clear and unambiguous;
- Not omit or hide material information;
- Only make fair and meaningful comparisons;
- Consider the full lifecycle of the product or their service; and
- Be substantiated.
These are practical principles that should help businesses make more compliant environmental claims across all media formats.
The new Code does not prevent businesses from making truthful environmental claims, but is aimed at letting brands who can tell substantiated green stories do so without being drowned out by others who make claims without a basis.
The Code and guidance is not new law. Rather, it flows from the underlying
In
The Canadian Code of Advertising Standards, which is published and regulated by
Increasingly, countries around the world, including
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The Consumer Protection (Fair Trading) Act (CPFTA), which protects consumers against unfair business practices such as deceiving or misleading, making of bogus claims, and gaining advantages knowing that consumers cannot judiciously understand the consequence of the transaction. Aggrieved consumers may lodge a complaint with the Competition and
- The Misrepresentation Act, which allows a consumer to recoup damages from the merchant (according to contractual agreements) following a misrepresentation lead business transaction.
- The Singapore Code of Advertising Practice requires that all advertisements to be legal, decent, honest and truthful.
- The MAS has also devised a blueprint for sustainable investing and financing, which includes (1) a
Green Finance Industry Taskforce (GFIT) taxonomy forSingapore -based financial institutions; (2) Project Greenprint, which aims to incorporate data and technology to marshal financing for ESG projects; and (3) mandatory climate-related financial disclosures for companies listed inSingapore . - In line with major global banks, DBS, OCBC, and UOB, the three major
Singapore banks, pledged to stop financing industries linked to climate change, such as new coal-fired power projects. - On the technology side,
Singapore has launched a new public artificial intelligence (AI) programme - the National AI Programme in Finance in late 2021, which includes an industry-wide AI platform, NovA!. NovA! aims to help financial institutions better assess companies' environmental impact and identify emerging environmental risks. - The IRFS Foundation Trustees announced three new initiatives to combat greenwashing: (1) create an
International Sustainability Standards Board (ISSB) to establish excellent sustainability disclosure standards to investors; (2) unify sustainability disclosure standards of theClimate Disclosure Standards Board and theValue Reporting Foundation ; (3) publish mock-up climate and general disclosure guidelines. - The
CFA Institute has implemented a global ESG disclosure standard for investment products to safeguard investors against greenwashing. - The Board of the
International Organization of Securities Commissions (IOSCO) launched a set of recommendations to regulate ESG-related products, as well as to provide financial and investor education in the realm of sustainability. - Furthermore, starting
January 2022 , all listed firms on theSingapore Exchange (SGX) must comply with new climate disclosure regulations. All issuers must include climate reporting in their sustainability reports on a 'comply or explain' basis. SGX recommends a list of 27 core ESG metrics to be used as a starting point for sustainability reporting, to help better align users and reporters of ESG information. - What is produced;
- What is promoted;
- What is monitored; and
- What they raise awareness about.
- In
April 2022 , the ASA found claims made by Tier (an electric scooter hire company) misleadingly implied that electric scooters caused no environmental damage2. Tier had used the following slogan: 'Be environmentally ... friendly. Take a TIER', with smaller text stating #changemobilityforgood. Tier explained their electric scooter service could be described as environmentally friendly because in their operations they used electric vans and electric cargo bikes for servicing (which had lowered Tier's carbon emissions), renewable energy for charging, recycled materials in production and decommissioned scooters were recycled. They also provided documentation noting their production facilities were certified to minimize environmental risks and results of the lifecycle assessment of their electric scooters inBerlin . The ASA ultimately treated the claim 'be environmentally friendly' as an absolute claim (rather than a comparison), and considered it would be interpreted as meaning the Tier electric scooter caused no environmental damage over the full lifecycle of the scheme. The ASA did not think Tier could substantiate this. -
In
February 2022 , the ASA considered complaints made about Innocent's claims that drinking its smoothies was good for the environment3. Innocent defended the complaints and said it was not making any specific environmental claims in the ad and, indeed, weren't making any claims at all but were rather talking about their company's ambitions and aspirational journey which they wanted the customer to join them on. Innocent also said that despite that, they were making strides towards using only a minimum amount of plastic while also supporting recycling. So, in their view, they did have some grounds to make environmental claims. The ASA disagreed and found that Innocent was making claims in its advertisements and considered that Innocent had created an impression that its products had a positive environmental impact. In order to support that impression, Innocent needed to hold evidence showing that its drinks have a net positive impact on the environment across their whole lifecycle. The ASA did not find that the steps Innocent had explained it was taking were sufficient to support a net positive impact across the whole lifecycle of the products. Therefore, the advertisements were ruled to be misleading, meaning they could not be run again. -
In
January 2022 , a complaint about an advertisement for a beverages company which featured the headline 'DELICIOUSLY REFRESHING, 100% RECYCLED' was upheld. The poster also featured small print that stated 'Bottle made from recycled plastic, excludes cap and label' and pack shots of the bottles, with a recycling logo and the text 'I'M 100% RECYCLED PLASTIC'. The ASA considered that consumers would understand that all components of the bottle were made entirely from recycled materials. Even with the small print, which the ASA thought may be overlooked by consumers, the qualification was insufficient to counter the strong impression and the ASA ruled the advertisement misleading. -
In
September 2020 , claims made in a TV advertisement for Quorn Thai Wondergrains were considered by the ASA4. Quorn claimed their product could reduce carbon emissions, and they used on-screen text that stated, "Quorn Wonder Grains. Awarded Carbon Reduction Footprint certification by theCarbon Trust for the full life cycle of the product. See Quorn.co.uk/TV for details". Quorn had an agreement with the independent certification body which benchmarked their carbon emissions and they had a commitment registered with that independent body to reduce those emissions over time. The ASA concluded that Quorn hadn't worded their claims specifically enough, with consumers likely understanding the claims to mean that if they consume the product, they themselves would be reducing their emissions as compared to a competitor product, which Quorn was not able to prove. - In 2013, the
Paris Court of Appeal upheld the interim relief judge's decision which held, concerning an advertisement of a vehicle in nature, outside of any traffic lane, that "by leading the public to believe that the possession of this type of vehicle is a permit to do anything in nature, the dissemination of this type of advertising obviously promotes behaviour that is contrary to the protection of the environment and the preservation of natural resources [...]. It appears that the existence of an unlawful disturbance caused by the broadcasting of the disputed advertisements is clear, a disturbance that the interim relief judge can put an end to". This decision is interesting, as it is not grounded on misleading advertisement but on a provision prohibiting the circulation of vehicles outside the roads classified in the public road domain, in order to preserve natural areas. -
On
March 2, 2022 , Greenpeace France and other not-for-profit organizations filed a lawsuit againstTotalEnergies alleging thatTotalEnergies' objectives to achieve a carbon neutral ambition by 2050, are misleading and solely for marketing purposes. This is the first action of its kind inFrance , and it will be interesting to know the outcome and understand French Courts' position on greenwashing. - On
February 21, 2022 , the Board held that the advertisement claiming that the elimination of over-wrapping of water bottles reduced the plastic used by 90% was mathematically false, and therefore contrary to the rules of advertising ethics. - DO follow the published regulatory guidance;
- DO remember that green claims can relate to products and services, processes or the activities of a business as a whole. They can be directed at consumers or businesses;
- DO remember that green claims can be express or implied and that all aspects of the materials will be relevant, including copy, imagery, overall presentation, supporting information, etc;
- DO ensure that claims are accurate and clear to understand;
- DO NOT use broad or absolute terms such as 'green', 'sustainable. and 'eco-friendly' without explanation, especially in instances where the product or service as a whole does not have a positive environmental impact or no adverse impact;
- DO be specific with claims;
- DO NOT make representations that are not substantiated and verifiable; claims must be based on robust evidence;
- DO NOT be vague or ambiguous; claims about the environmental benefits of a product or service should be precise;
- DO NOT make claims about a business' environmental ambitions unless the claims are in proportion to the business' actual efforts, there is a clear, documented and verifiable plan (which is detailed and realistic) as to how the business is going to meet those goals and the business monitors progress against that plan;
- DO NOT use claims or other representations that result in misinterpretations or could mislead;
- DO NOT hide information about the environmental impact of a product or service or only cherry-pick the positive environmental aspects;
- DO NOT exaggerate the environmental benefits;
- DO ensure claims are based on the full lifecycle of the product or service, unless the claim is worded explicitly to link to only part of the lifecycle;
- DO ensure that if qualifying information applies to the claim, it is set out clearly and does not contradict the main claim;
- DO NOT rely on space constraints as a defence;
- DO ensure information that cannot fit into the claim is easily accessible;
- DO NOT claim features or benefits that are necessary standard features or legal requirements as environmental benefits;
- DO only make fair and meaningful comparisons, with language setting out the basis for the comparison;
- DO not imply that a product or service is endorsed by a third-party organization if it isn't;
However, laws and regulations in
In the finance realm, the greenwashing of environmental, social, and governance (ESG) investment products to attract investments is becoming an issue of concern. Various organizations are working on regulations and standards to curb it, as detailed below:
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The
In
The Consumer Code provides for a general provision prohibiting misleading commercial practices, including misleading advertising. This is most commonly based on false allegations and misleading information as to the essential characteristics of a good or a service, including those comprising greenwashing marketing.
The Climate and Resilience Law was also recently enacted, adding a specific provision according to which the misrepresentation of "the scope of the advertiser's commitments, in particular with respect to the environment, the nature, the process or the reason for the sale or the provision of services" can qualify as a misleading practice.
Violation of such provisions is punishable by imprisonment of up to two years and a fine of €300,000.
The law also provides for a name and shame mechanism through which a Court may order that its decision be communicated to the public by any means.
The Climate and Resilience Law also requires the
These climate contracts are entered into with different advertising actors and contain five clauses relating to:
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What is measured;
Moreover, under the French Environmental Code, the affirmation, in an advertisement, that a good or a service is carbon neutral or the use of any formulation of equivalent signification or scope is prohibited, unless the advertiser makes information on greenhouse gas emissions easily available.
The violation of such provision is punishable by a fine of €20,000 for natural persons and €100,000 for legal persons.
Regulators' approach to greenwashing
The AMRs
The administrative agency responsible for supervising the acts of unfair competition and false advertising is the local AMR (Administration for Market Regulation). The AMR has jurisdiction to take action against parties violating the country's advertising law and anti-unfair competition law, to eliminate the impact within the corresponding scope, grant quasi-injunctions and impose fines. There have been a considerable number of enforcement cases of misrepresentation of 'environmental protection', 'green', etc. by the local AMR in various regions.
The Courts
In judicial practice, we generally see Chinese courts rule on the relevant 'greenwashing' acts on the basis of the anti-unfair competition law and consumer protection law. For example, there are published judgments showing that companies - in order to cater to consumers' demand for green building materials and environmentally-friendly furniture - illegally posted the certification mark of China Environmental Labelling Products on products that had not been certified by authoritative environmental protection institutions.
There have also been cases where companies have used 'green' or environmental concepts on their goods or services that are determined as not clearly defined or too broad, leading the general public and consumers to misunderstand the true meaning of the term or ignore its essential attributes. For example, food products or cosmetics claimed to be 'all natural', where in fact 'all natural' is not necessarily equivalent to 'green', as there are many natural substances that may be harmful to the human body or the environment. Over-advertising the 'all-natural' attributes of a product might, in such circumstances, mislead consumers into ignoring the product's other attributes.
In these cases, we see the defendants' greenwashing acts being negatively evaluated by the courts - leading to an order to stop the infringing acts and pay damages.
On
Among the provisions, the ones below set out strict carbon emission information disclosure and reporting obligations for enterprises, with the ultimate aim of promoting green development, effectively protecting the legitimate rights and interests of investors, and encouraging more capital and institutions to participate in climate investment and financing.
Article 5: "Dispute cases concerning the disclosure of environmental information by enterprises shall be handled in accordance with the law. Enterprises are encouraged to take the initiative to adapt to the requirements of green and low-carbon development, strengthen environmental responsibility awareness, and disclose environmental information in a timely, truthful, accurate and complete manner in accordance with law. If an investor files a lawsuit claiming damages on the grounds that he has suffered losses due to the failure of listed companies and debt-issuing enterprises to disclose, in accordance with the management requirements for corporate environmental information disclosure, carbon emission information on corporate carbon emissions, emission facilities, etc., information on the forms, amounts, investment, etc. of annual financing as well as information on financing investment projects in response to climate change, ecological environmental protection, etc., and if this is in accordance with the provisions of the law, the court shall determine that listed companies and bond-issuing companies shall bear the corresponding infringement liability, so as to ensure that funds are invested in climate-friendly green low-carbon projects, the legitimate rights and interests of investors are effectively protected, and a fair and just climate investment and financing market order is maintained."
Article 17: "Cases involving disputes over greenhouse gas emission reports shall be handled in accordance with the law. Where a major greenhouse gas emitting unit refuses to fulfil its obligation to report greenhouse gas emissions or falsifies, fabricates, conceals or omits greenhouse gas emission data, the administrative organ's administrative penalties on such unit shall be supported in accordance with law. Where a technical service organisation maliciously conspires with a major greenhouse gas emitting unit to falsify, fabricate, conceal or omit greenhouse gas emission data, thereby causing damage to others, and the victim's claim for infringement damages shall be supported in accordance with the law; and where a crime is committed, it shall be investigated for criminal liability in accordance with the law."
In addition, the SPC published the Opinions together with 11 typical cases, including a case involving the offence of damaging computer information systems. In this case, the defendants interfered with the sampling of the computer system, which was installed in the company, for monitoring the quality of the environment. The defendants destroyed and tampered with/ falsified environmental monitoring data and altered parameters, with the aim of affecting the effective monitoring of exceeding gaseous pollutants by the environmental supervision authorities.
Undoubtedly, the Code and the CMA's approach to environmental claims will influence other
The CMA and Trading Standards have broad enforcement powers in relation to the underlying consumer law and, on top of that, the
The ASA can take action against misleading advertisements and businesses could face legal action from consumers themselves for breaches of consumer protection law.
We have not yet seen regulatory action from the CMA since the introduction of the Code, but the ASA in particular has been active in this area over the past couple of years, and notably since the beginning of 2022 (when the Code took effect). Recently, the ASA has considered the following complaints about environmental claims:
The ASA has also published specific guidance on misleading environmental claims and social responsibility in
Notable examples of the
Ad Standards also administers complaint procedures for inaccurate, deceptive or otherwise misleading environmental representations. Consumers and competitors can submit complaints to Ad Standards, which, if accepted, are managed in accordance with the Ad Standards Consumer Complaint Procedure or Advertising Dispute Procedure, respectively. Ad Standards' decisions regarding prohibited greenwashing may result in a request to amend or withdraw the offending advertising, as well as a published summary of the decision (which under certain circumstances may identify advertiser).
Greenwashing is an evolving area of regulation in
Greenwashing, the act of making false or misleading claims about the environmental benefits of products or services, is not a new phenomenon in
One recent, high-profile example involves the Alliance to End
Greenpeace has called AEPW an industry scam designed to allow for endless plastic production. AEPW responded to the criticism by explaining that Renew Oceans' termination occurred due to complications caused by COVID-19. It also published an article, 'Why proper waste management is more important than going plastic-free', to argue against means of reducing plastic production. These claims themselves received further criticism for being unfounded, for example an ocean clean-up organisation commented that "(the article) made AEPW seem like a plastic industry lobby group'.
Although laws to combat greenwashing in
In
Beyond legal sanctions, the Advertising Ethics Board (Jury Déontologique de la Publicité) is also equipped to issue opinions on the compliance of an advertisement. The Board reviews complaints from natural or legal persons, and issues an opinion which can be used as evidence in a litigation:
Practical tips
When looking to produce and use ads, slogans, logos or packaging that highlights the environmental attributes of a product or service, the following tips should be kept in mind to help avoid accusations of greenwashing and associated legal and reputational risks:
For more information, we recommend our on-demand webinar Greenwashing: Don't get caught out, where you will hear from
This article was co-authored by
Footnotes
1.
2. Please see the full decision here: ASA Ruling on
3. Please see the full decision here: ASA Ruling on
4. Please see the full decision here: ASA Ruling on
5. Available here: Advertising Guidance - misleading environmental claims and social responsibility -
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