The Use of Green Claims in Advertising

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In today’s world, awareness of environmental and sustainability issues in advertising is gaining legal significance. Consumers are increasingly seeking products and services that are environmentally friendly and sustainably produced. To meet this demand, companies and advertisers often use so-called Green Claims, such as “eco-friendly,” “CO2-neutral,” or “climate-neutral,” to highlight the environmental friendliness of their products or their business.

Current examples include advertising claims like “climate-neutral” for heating oil or “climate-positive” for baby food, which have generated interest not only among consumers but also within organizations like the Foundation for Consumer Protection and the Swiss Commission for Fair Competition (SLK). The media has extensively covered these recent cases.

These resent cases stress the importance of assessing Green Claims under the perspective of unfair competition law.

1. Green Claims

Green Claims refer to information that creates the impression among recipients that a particular product, service, or company is environmentally oriented and therefore less harmful to humans and the environment. The key to evaluating such statements is how the average consumers understand the provided information. Terms like “climate-neutral,” “eco-friendly,” “environmentally friendly,” “green,” “ecologically safe,” or “CO2 compensated” are considered Green Claims.

2. Legal Framework

Fair competition law aims to ensure fair business practices and protect consumers. It considers acts of competition unfair, especially when someone makes false or misleading statements about themselves, their company, their business name, their products, their works, or services, their prices, available quantities, the nature of the sales event, or their business relationships (Art. 3 para. 1 lit. b of the Unfair Competition Act, UCA). Therefore, statements must be accurate by law. However, the UCA does not contain specific provisions regarding the use of Green Claims and its potential for deception.

In addition to the UCA, the “Principles of Fairness in Commercial Communication” issued by the SLK are also relevant, although they do not provide specific details about the use of Green Claims. In their case-specific explanations, the SLK generally stipulates that Green Claims should only be used when it is proven that they are true under all reasonably foreseeable circumstances. Strict standards apply to proving the accuracy of environmental claims, with the burden of proof resting on the advertising companies.

The International Chamber of Commerce has also addressed the regulation of environmentally related advertising statements in the ICC Code on Advertising and Marketing Communications in Chapter D, “Advertising and Marketing with Environmental Claims”. It specifies that marketing communications should be designed to serve consumer interests in the environment and not take advantage of consumers’ potential lack of knowledge about the environment. It is crucial that the use of Green Claims regarding specific products or services of a company does not imply, without adequate justification, that these claims extend to the entire performance of a company, group, or industry. The use of Green Claims must be relevant to the advertised product and can only refer to aspects that actually exist or are likely to occur.

It is worth noting that the ICC Code is generally subsidiary to the principles of the SLK, which, as a self-regulatory tool of the advertising industry, does not have the character of general law. Since there are no specific regulations in Swiss law or in the SLK’s principles concerning advertising for environmental and sustainability issues, the SLK regularly relies entirely on the ICC Code in this area.

3. Swiss Case Law

Neither cantonal courts nor the Federal Supreme Court have yet addressed the permissibility of Green Claims and the potential resulting deception. In contrast, the SLK has already dealt with several complaints and has addressed the requirements for advertising with Green Claims in its decisions, particularly referring to Chapter D of the ICC Code. It is important to note that the purpose of the SLK’s self-regulation is to ensure ethical advertising, and consequently, its decisions and recommendations cannot be enforced through the courts. However, state courts regularly refer to the principles and decisions of the SLK.

a. Climate-Neutral Heating Oil and Climate-Positive Baby Food

In two recent decisions, the SLK expressed concerns about the use of Green Claims like “climate-neutral” and “climate-positive” and, in specific cases, deemed them as misleading. According to the SLK, the (translated from German) advertising claim “X heating oil is climate-neutral” is misleading because it is not clear to the average consumer that it refers to the climate neutrality of the company rather than the heating oil itself. Furthermore, for advertising climate neutrality, it is not sufficient to merely present a CO2 balance or a certificate proving CO2 neutrality. Instead, a plausible and traceable calculation of all climate-damaging effects, made according to generally accepted methods, and evidence of corresponding offset measures must be provided.

The statement (translated from German) “Our baby food jars are climate-positive” was also considered misleading by the SLK because the term “climate-positive” implies to average consumers that there is an excess of measures aimed at slowing down climate change. Additionally, a plausible and traceable calculation of all climate-damaging effects, made according to generally accepted methods and evidence of corresponding over-compensation measures must be provided.

In both cases, complaints of unfair climate advertising have also been lodged with the State Secretariat for Economic Affairs (SECO). These complaints are currently still pending and might result in additional sanctions.

b. Other SLK Decisions

In another decision, the SLK dealt with commercial communication that, due to absolute statements, created the false and misleading impression of the complete climate or CO2 neutrality of the World Cup in Qatar. The advertiser was recommended to refrain from such statements.

Regarding the use of the term “eco heating oil,” the SLK focused on the interpretation of the term “eco heating oil” and the question of what the average consumer understands under the term “eco” and whether this term suggests absolute environmental friendliness in all aspects. The SLK denied this view and determined that the advertised heating oil has relatively better environmental compatibility than others of its kind, which corresponds to the relative meaning of the word “ecological.”

4. Legal Situation in Germany

The permissibility of various Green Claims has been controversially discussed before German courts already. According to the standard defined by the Federal Court of Justice, it must be specifically clarified how the claimed environmental friendliness is achieved, considering different expectations and perceptions. However, an advertising claim without specific environmental reference is not always considered misleading due to the generality of the statement.
The use of Green Claims as headlines in commercial communication is also permissible, as long as additional text provides specific information about the basis for such environmental friendliness.

Particularly for the use of the terms “climate-neutral” or “climate neutrality” in advertising, several judgments from German courts have assessed them as misleading. Courts generally assume that the term “climate-neutral” without further information suggests that a product or its associated processes are completely free of CO2 emissions, which is hardly achievable in most industrial processes. Therefore, it is necessary to accurately clarify how the claimed climate neutrality is achieved in advertising and otherwise might be considered misleading. The form in which the obligation to provide information is fulfilled is contentious and depends on the advertised product, its production, and the climate protection measures taken.

The issue of achieving climate neutrality through CO2 offset is becoming increasingly important. According to German jurisprudence, advertising climate neutrality is generally considered misleading when it is achieved solely through accounting for offset measures. The Regional Court of Karlsruhe takes the position in a recent judgment that climate neutrality through compensation using forest protection projects alone cannot be achieved. The court was of the opinion that the statement of climate neutrality goes beyond what can be accomplished with CO2 certificates from forest protection. According to the court, climate neutrality pertains not only to CO2 emissions but to all climate-active gases that contribute significantly to global warming and cannot be neutralized by forest protection alone. This argument is also followed by the Regional Court Berlin in a recent judgment.

The strict practice of German courts is relevant for Swiss companies when their advertising also targets customers in Germany, which is often the case, especially in online publications. This frequently leads to unfair competition law cease-and-desist letters, which can also lead to cost recovery, and potentially escalate to preliminary injunction proceedings in court. The resulting costs can, if necessary, also be enforced in Switzerland through legal assistance proceedings.

5. EU Green Claims Directive

On March 22, 2023, the European Commission published a revised draft directive for regulating Green Claims. This directive aims to make Green Claims comparable and verifiable across the EU and protect consumers from “greenwashing.” These efforts are welcome from the perspective of legal certainty. When this directive will come into effect and how it will be adapted by Swiss law is currently uncertain. A vote in the European Parliament is expected at the earliest in spring 2024.

In the meantime, interpreting Green Claims remains the responsibility of the courts under the rules of fair competition and deception.

6. Conclusion

In a time when environmental and sustainability issues are increasingly in focus, it is crucial to consider the legal requirements of environmental advertising claims to ensure both consumer protection and fair competition practices.

In both, Switzerland and Germany, the legal framework and jurisprudence regarding Green Claims are inconsistent. While some courts consider the use of terms like “climate-neutral” without clear explanations as misleading, there are different opinions on how existing disclosure requirements should be met. The issue of achieving climate neutrality through CO2 offset is also controversial.

It is important to note that the permissibility of advertising claims is assessed in the overall context, and general statements about the risk of deception are rarely possible. Therefore, a specific assessment of the legal permissibility of advertising claims to avoid deception is essential and can prevent later disputes over such claims only on a case-by-case basis.

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