Greenwashing – a never-ending story?

Environmental advertising is becoming more and more important in today’s competitive environment. For years, consumers have been increasingly interested in being informed about the environmental compatibility of a product or a company. Many consumers also base their purchasing behavior on criteria like “environmental compatibility”. It is therefore not surprising that companies want to communicate their efforts regarding the enhanced sustainability of their products in advertisements to commercialize their efforts. However, they are faced with growing challenges in this regard. The ­understanding of the average consumer is constantly changing and case law has not always been consistent in the area of environmental advertising. Advertising companies could therefore easily find themselves confronted with the – justified or unjustified – accusation of unlawful “greenwashing” of their products.

A recent judgment by the Federal Court of Justice (BGH) has now addressed the use of the concept of “climate neutrality” in advertisements for the first time and set out some guidelines. To a certain extent the judgment also anticipates future changes which the European Commission’s European Green Deal will bring along. The ­European Green Deal aims to make the European Union ­climate-neutral by 2050. In order to achieve this goal consumers should be given adequate information about the sustainability of products before purchasing them and environmental claims made by companies should be verified more efficiently.

Two instruments to achieve this goal are the Directive on empowering consumers for the green transition through better protection against unfair practices and through ­better information (EmpCo Directive) and the Directive on substantiation and communication of explicit environmental claims (Green Claims Directive). While the EmpCo Directive came into force on 26 March 2024, and the member states now have until 27 September 2026 to transpose it into their national laws, it is not yet clear when the Green Claims Directive will come into force and if it will be further amended.

Starting with the “climate neutrality” judgement of the BGH this article provides a brief overview of some of the key changes that the EU Green Deal will bring for environmental advertising in the future.

The BGH judgement on “climate neutrality”

The subject of the judgement was the advertisement of a fruit gum manufacturer in which it stated that it had been producing all its products in a climate neutral manner since 2021 (see article in Deutscher AnwaltSpiegel 15/2024). The advertisement also featured a logo with the term ­“climate neutral”. However, the production of the candies themselves was not emission-free and CO2 emissions were only balanced through offsetting measures. The lower courts had nevertheless deemed the advertising of the products as “climate neutral” to be permissible since consumers knew that climate neutrality could also be achieved through offsetting measures. Furthermore, via a link and a QR code in the advertisement buyers could retrieve more information about the “climate neutrality” of the advertised products.

The BGH, however, disagreed and stated that the advertising of the products as “climate neutral” was inadmissible. The term “climate-neutral” was ambiguous, as it could be understood both in the sense of a CO2 reduction as well as a mere compensation. Therefore, a clear and unambi­guous explanation how the term was to be understood in the advertising itself would have been necessary. According to the court it was not sufficient to provide additional information elsewhere, in particular if it depended on the ­customer’s choice whether the information was displayed or not.

This judgement of the BGH represents in some way a turning point in environmental advertising and shows that from now on stricter standards are likely to be applied than in the past. In fact, the legal requirements for environmental advertising will become even stricter in the ­future as a result of the European Green Deal. Companies should therefore keep an eye on the most relevant aspects for environmental advertising in the future. These are summarized below.

The European Green Deal

As already mentioned, the Empowering Consumers for the Green Transition Directive (“EmpCo Directive”) and the proposal for a Directive on the substantiation and communication of environmental claims (“Green Claims Directive”) are two key instruments for achieving the ­objectives of the EU Green Deal.

The Empowering Consumers for the Climate Transition Directive (EmpCo Directive)

The most relevant provisions of the EmpCo Directive for advertisers concern the following aspects:

• Advertising with general environmental claims: In future, general environmental claims will be prohibited per se if the advertiser is not able to prove them. General ­environmental claims are primarily short, bold statements that describe the environmental impact of a product or company (e.g., “environmentally-friendly”, “eco-friendly”, “climate-friendly”, “biodegradable”, ­“energy efficient” or “green”). Such statements lack a particular and verifiable conceptual meaning. They are not self-explanatory and in isolation it is not clear which specific environmental aspect or part of the life cycle of a product is affected or how a described effect is achieved. Such general environmental claims are ­inadmissible if the advertiser cannot prove that the product or company complies with legally-defined ­environmental standards. As there are only a few areas in which such standardization exists, most general claims are likely to be inadmissible in future. However, an environmental claim which is clearly and comprehensibly substantiated is not a general environmental claim subject to the EmpCo Directive. In fact, such a claim is an explicit environmental claim, which is subject to the Green Claims Directive.
• Advertising with compensation of greenhouse gases: Product advertisements claiming a reduction in greenhouse gases are also inadmissible if this claim is merely based on offsetting measures. Consumers should be protected from the misconception that a product has no impact on the environment at all. This means, for example, that advertising a product as “climate neutral” will not be permitted in future. In this case, the advertised climate neutrality is only achieved through offsetting measures, but not through a real reduction of greenhouse gases in the supply chain.

• Advertising with future environmental services: Advertising future environmental performance is also prohibited if it is not based on a detailed and realistic implementation plan that is regularly reviewed by an independent third-party expert. The commitments set out in the implementation plan must also be clear, objective, publicly available and verifiable, and the results of the expert’s review must be published regularly. Consequently, if companies want to advertise their future environmental performance this will require a considerable amount of additional work (e.g., planning and monitoring).
• Advertising with sustainability labels: In future, the use of a voluntary sustainability label relating to environmental, social or ethical aspects will always be prohibited if it is not based on a certification scheme or has not been established by government bodies. This is intended to ensure the transparency and credibility of sustainability labels and put a stop to the uncontrolled use of self-created “eco-labels”. With regard to the certification scheme it is essential that certification is carried out by a person who is independent of both the user of the label and the owner of the sustainability label.
• Generalized product advertising with environmental claims: Advertising with environmental claims will also be deemed unlawful if the impression is given that the claim refers to the entire product, when in fact in only refers to a specific part or parts of the product. For example, the statement that a car seat is made of recyc­led material is likely to be unlawful if only the fabric cover is made of such material. The advertiser will therefore have to pay particular attention to clearly and unambiguously explaining which specific part of a product is made from recycled material.
• Environmental statements by law: Presenting environment related requirements that are imposed by law on all products within the relevant product category as a distinctive feature will also be prohibited in future. For example, it will no longer be permitted to advertise compliance with a statutory minimum standard. ­Rather, compliance with this standard is expected by the public and the law and therefore is not a special feature of the advertised product. However, features that exceed the statutory minimum standard may ­continue to be advertised.
• Obsolescence: Finally, business practices that lead to old products being replaced more quickly than necessary (obsolescence) are also prohibited. This is intended to avoid unnecessary waste and achieve savings in energy and raw materials.

The Directive on the substantiation and communication of explicit environmental claims (Green Claims Directive)

In addition to the EmpCo Directive the Green Claims ­Directive will in future set out further requirements for the substantiation and communication of explicit environ­mental claims and in relation to ecolabels. In relation to the EmpCo Directive, the Green Claims Directive will ­apply as lex specialis. Some of the most relevant provisions of the future Green Claims Directive are outlined below.

• Advertising with explicit environmental claims: While ­general environmental claims will be subject to the EmpCo Directive, explicit environmental claims should be subject to special requirements under the Green Claims Directive. However, it has not yet been conclusively clarified what exactly falls under the concept of an explicit environmental claim. Most likely only specified and substantiated environmental claims that are not subject to the ban on general environmental claims are likely to fall under the Green Claims ­Directive. If an environmental claim is qualified as an explicit environmental claim, it must in future be ­independently verified before it is used. The verifier must be a third-party conformity assessment body accredited in accordance with Regulation (EC) No 765/2008, which sets out the requirements for accreditation and market surveillance relating to the marketing of products. The underlying claim must be scientifically substantiated and transparent. Advertising companies must therefore evaluate the environmental claim on the basis of certain aspects (e.g., reference point, scientific basis, life cycle, etc.) and environmental claims may also only refer to significant aspects, so that minor environmental measures may no longer be advertised by using explicit environmental claims in future. In the case of comparative environmental advertising with competitors’ products the equivalent information and data on which the comparison is based must also be explained.
• Further communication in connection with explicit environmental statements: In connection with explicit environmental claims advertisers are also required to provide further information. If the use phase is one of the most important life cycle phases of the advertised product, information must be provided on how the consumer should use the product in order to achieve the expected environmental performance of this product. If the advertising claim ­relates to the future environmental performance of a product, the advertiser must also commit to improvements in its own activities and within the value chains.
• Advertising with environmental labels: Unlike sustainability labels within the meaning of the EmpCo Directive, ­environmental labels subject to the Green Claims ­Directive relate exclusively or predominantly to environmental aspects. The exact requirements for corres­ponding ecolabels do not yet appear to have been ­finalized. However, ecolabels must be based on an ecolabelling or certification scheme that fulfils specific ­requirements and whose conformity has been confirmed by an accredited verifier. However, it is still ­unclear how exactly the environmental labelling scheme will function.

Outlook and practical advice

Current case law and legislative efforts at EU level clearly show that the regulations for environmental advertising will become much stricter in the future than they have been to date. It is therefore important for companies to adapt accordingly and align their advertising measures with these stricter rules. Otherwise, they might run the risk that their environmental advertising is categorized as unlawful “greenwashing” and might be successfully ­attacked by competitors or qualified (trade) associations as a result.