Fashion Law Journal
Green Goals
To achieve the UN’s Sustainable Development Goals, countries across the globe have adopted strategies aiming to control climate change amongst other goals. The European Union’s Green Deal to make EU a carbon-neutral continent by 2050, aims to also tackle misleading environmental claims to ensure that consumers are provided reliable information on product offerings, allowing them to make sustainable purchasing decisions and contribute to a green transition. As a result, several initiatives have been undertaken including the New Circular Economy Action Plan, the New Consumer Agenda and the Green Deal Industrial Plan. On March 22, 2023, the European Commission presented its proposal for Green Claims Directive – a EU Directive which, after the adoption under the ordinary EU legislative procedure, would concern substantiation and communication of explicit environmental claims. Once adopted, it would impact businesses in as much as what stood unverified thus far, will now be under greater scrutiny, wherein ‘Green claims’ by brands would require evidence, verification and certification.
As per the studies indicated in the proposed Green Claims Directive, 53.5% of environmental claims checked by the Commission in 2020 provided vague, misleading, or unfounded information about a product’s environmental characteristics. About 40% of claims were unsubstantiated and these figures were in line with results from claims assessed by the Consumer Protection Cooperation authorities (also in 2020) who found that 57.5% of the 344 sustainability claims assessed, did not have enough information to ascertain their accuracy. The need felt by business to drive their product offerings basis environmentally friendly claims rests on conscious millennials and GenZ redefining purchasing choices wherein social, ethical, and environmental values of a product are more important than ever. Comprising 32% of the world’s population, majority of GenZ is likely to choose brands based on their ethical values, as reported by the BBC, even if they are priced higher.
Greenwashing
Such conscious demand for products complying with social and environmental ethics has had companies revisit their branding and marketing strategies. Brand communication through much used words such as ‘Ethical, ‘eco-friendly’, ‘sustainable’, ‘zero-impact’ is under higher than ever scrutiny to ensure ongoing consumer engagement. However, while some companies are choosing the more difficult path of embracing sustainable and ethical practices, others are engaging in easy practice or ‘Greenwashing’ – a marketing tactic misleading consumers by using environmental imageries, green packaging, misleading labels and hidden trade-offs (claims emphasising greenness of a product basis some attributes without focusing on the other important environmental aspects), irrelevant claims to make the products appear environmentally sustainable.
Only a few EU Member States had previously introduced specific laws to deal with greenwashing. For instance, France became the first country to ban advertisement of fossil fuel in 2022. Further, new advertisement rules in France make claims of ‘carbon neutrality’ difficult with additional compliances such as disclosure of annual details of all carbon pollution associated with a product’s lifecycle.
To address greenwashing, the EU Commission, through the submitted Green Claims Directive, proposes regulatory compliances prior to adoption and communication of ‘green claims’ by companies that seek to imply positive environmental impact or lesser negative impact or no impact or improvement over time for their products, services, or organisation. Minimum requirements for substantiation and communication of green claims have been proposed and claims would have to be backed with scientific evidence identifying the relevant environmental impact. This would have to be accompanied by information on such substantiation either in physical form, or by way of a weblink, QR code, or equivalent, detailing the information. Further, green claims would have to be verified and certified by an officially accredited body that would be required to designate competent authorities which shall be responsible for enforcement against offenders. The proposed directive also mandates fair comparison supported with equivalent information and data when comparative claims are made by products/ businesses. Notably, the proposed directive shall also be applicable to businesses operating outside of the European Union, but whose environmental claims target EU consumers.
The proposed directive appears to be a promising proposition in view of preventing brands and companies from deploying misleading marketing strategies, which shall now not only impact the repute and goodwill of a company, but also attract strong legal scrutiny. The proposed directive shall assist in fulfilling goals of sustainable development allowing individuals to make thoughtful choices on brand engagement, apart from contributing their share to the global objective of sustainability. While the directive largely seems to be a welcoming step, it remains to be seen whether brand owners will be willing to go the extra mile vis-à-vis voluntary environmental claims to increase brands value and engagement. A positive step towards goal fulfilment indeed by the EU, which shall also likely set trends for other countries across the globe.
Where India stands on Greenwashing
While India does not have specific laws to address greenwashing, false and misleading claims are prohibited and consumer protection laws form the basic legislation in respect of the same. Further, the Advertising Standards Council of India (ASCI) also plays a significant role – it has prescribed an Advertising Code mandating that all claims and representations be substantiated and not mislead the consumer in any way. This advertisement code has been adopted by statutes that regulate content including advertisement broadcasts on television etc. amongst others, giving statutory backing to an otherwise self-governing code. In June 2022, ‘Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements 2022’ were introduced and added to the Consumer Protection Act 2019, to protect consumers from advertisements or endorsements that circulate incorrect information or misleading, false, exaggerated or unsubstantiated claims. Compliance measures are also in place for companies listed on India’s stock exchange wherein the top 1000 listed companies by market capitalisation are mandated to comply with new reporting requirements on steps undertaken by a company towards sustainability. These include disclosures on management and processes, efforts undertaken to protect and restore the environment, measures towards employee well-being, inclusivity and equitable development in order to ensure ethical, transparent and accountable business conduct. From a simple reading, the legal framework in India appears conducive to address concerns of greenwashing through misleading claims/ advertisement. However, codified standards and the mechanisms, such as the ones proposed by the EU, to verify sustainable and green claims remain lacking. It is hoped that regulations such as the EU’s proposed Green Claim directive set the tone for a similar guideline/regulation in India specific to greenwashing. This will assist with meeting sustainable development goals In India in a far more effective manner.
Authored by:
Radha Khera, Managing Associate at Remfry & Sagar (IP & Fashion Lawyer)
Mario di Giulio, Partner at Pavia e Ansaldo Law Firm & Co-founder and Vice President of The Thinking Watermill Society
Disclaimer: Views expressed are of the authors.
