1.Current legal situation
Currently, there are no specific rules for advertisements with so-called green claims. Claims that pertain to the climate friendliness of products or companies are therefore only subject to the general provisions against misleading advertising in sec 5, 5a UWG (Act against Unfair Competition).
According to sec 5 UWG, advertising is prohibited if it misleads consumers and causes them to make a decision that they would not otherwise have made. According to sec 5(2)(1) UWG, this includes misleading information about essential characteristics of the advertised product, such as the manufacturing process. Sec 5a UWG prohibits so-called deception by omission in the form of withholding material information which the consumer needs to make an informed decision and the withholding of which is likely to induce the consumer to make a decision that he would not otherwise have made.
The judgements published to date on the issue of misleading green claims vary considerably in their approach and strictness but are gradually revealing certain basic principles. Recent decisions by the Higher Regional Court of Düsseldorf, the Higher Regional Court of Frankfurt a. M. and the Regional Court of Karlsruhe illustrate this.
a. OLG Düsseldorf, GRUR 2023, 1207 – „Klimaneutrale Marmelade“ (climate-neutral jam)
The Higher Regional Court of Düsseldorf had to decide on an advertising claim for strawberry jam that had been praised as a “climate-neutral product” (“Klimaneutrales Produkt”) by means of, among other things, a spoiler on the front label:
At first instance, the Regional Court had decided that the claim “climate neutral” was misleading within the meaning of sec 5(1) UWG. The judges held that consumers understand the claim to the effect that the jam was produced in a climate-neutral way and not (only) that the CO₂ produced during the manufacturing process was offset by subsequent measures and that climate neutrality was thus only achieved “on the balance sheet”.
The Higher Regional Court of Düsseldorf did not agree with the first instance court, at least not with its reasoning. According to the judges, the term “climate-neutral” is not necessarily understood in the sense of an emissions-free manufacturing process. Rather, the average consumer will understand the term as referring to the balance of the company’s CO₂ emissions and is aware that such neutrality can be achieved by prevention as well as through compensation measures (e.g. certificate trading) (cf. OLG Schleswig, GRUR 2022, 18341 – klimaneutrale Müllbeutel II). Thus, the judges did not find any (actively) misleading behaviour within the meaning of sec 5(1)(1) UWG.
However, the Higher Regional Court found a deception by omission within the meaning of sec 5a(1) and (2) UWG. The judges held that consumers, precisely because they know that a neutral carbon footprint may only be achieved through compensation payments, have a legitimate interest in further information about the circumstances of the climate neutrality claimed by the advertiser. Consumers would not assume that a company that describes itself or its product as “climate neutral” relies solely on third-party offset measures or the purchase of certificates, as they consider certificate trading and other offsetting measures to be “suspicious” in the sense of being merely “greenwashing” without any actual and significant benefits for the climate. Consumers therefore have a material interest in information as to whether climate neutrality is (at least partly) achieved through the company’s own prevention and saving measures or only through the purchase of CO₂ certificates or the support of third-party climate projects. That additional information was, however, missing in the current case. Neither the advert nor the product packaging contained any indication of how the claimed climate neutrality was achieved. Insofar as the defendant claimed that corresponding explanations could be found on its website, this was not held to be sufficient by the court, as there was no explicit indication in the advert or on the packaging (such as “More information at …”) that more detailed information on the claimed climate neutrality was available on the defendant’s website.
b. OLG Düsseldorf, GRUR-RS 2023, 16069 – “schmeckt auch unserem Klima“ (also savoured by our climate)
A defendant in parallel proceedings before the Higher Regional Court of Düsseldorf had also advertised with the term “climate neutral” and the logo of a certification body:
In these proceedings, the Higher Regional Court of Düsseldorf confirmed that further information as to whether the claimed climate neutrality was achieved through prevention or (only) through offsetting measures was required under sec 5a UWG. In this case, however, the judges considered the information in the advertisement to be sufficient. Although the required information was only provided when the reader of the advertisement visited the “ClimatePartner.com” website mentioned in the advert either via the QR code provided or by entering the address directly, the court considered this to be sufficient, as the assessment of whether essential information is withheld must take into account restrictions of the chosen means of communication (sec 5a(3) UWG). While the statement in the advert “Climate neutrality is also achieved through offsetting” was not sufficient in itself, as the consumer requires more detailed information on the type and scope of any offsetting measures, the judges agreed that there was not enough space in a newspaper advert to provide the necessary detailed information, so reference to a website was sufficient to provide that information. Thus, the court found no misleading omission.
c. OLG Frankfurt a.M., GRUR 2023, 177 – climate neutral
A case decided by the Higher Regional Court of Frankfurt a.M. involved (among other things) an advertisement with the same “climate neutral” logo of a private certification body, this time on a company website:
The logo was designed as a link that took users to a subpage containing more detailed explanations about the certification. From there, a further link led to the home page of the certification body, where further information was available.
Unlike the first-instance court, the Higher Regional Court did not consider this advertisement to be misleading within the meaning of Section 5a UWG. The term “climate neutral” is sufficiently clear for the average consumer and – unlike the term “environmentally friendly” – has a specific meaning. In the judges’ opinion, the average consumer understands the term in the sense of a neutral balance of the company’s CO₂ emissions, taking into account that consumers are aware of the fact that neutrality can be achieved both by preventing emissions and through compensation measures. There is, however, a legitimate interest on the part of consumers in receiving further information, in particular whether the claimed climate neutrality is (at least partly) achieved through the company’s own savings and prevention measures or (only) through the purchase of CO₂ certificates or the support of third-party climate projects.
According to the Higher Regional Court of Frankfurt a. M., claims such as “climate neutral” therefore require clarification as to
It is, however, not necessary to provide further details of the carbon footprint assessment, such as the scope of reduction measures in relation to the emissions or the subject of the climate project supported for compensation.
In the case at hand the Higher Regional Court found that the advertisement met these requirements. While the necessary information could not be found directly on the website bearing the “climate neutral” seal, this was not necessary. Rather, it was sufficient for the consumer to be able to access a subpage of the website via the link provided, on which the certification was explained in more detail.
d. Regional Court Karlsruhe, GRUR-RS 2023, 18341 – “Umweltneutrales Produkt” (environmentally neutral product)
The Regional Court of Karlsruhe had to decide on an advertisement for a liquid soap with a “climate-neutral” seal with the additions “ClimatePartner.com/14938-2008-1001” and “Product CO₂-compensated” as well as a sun milk with the same “climate-neutral” seal but with the addition of (only) “ClimatePartner /14938-2008-1001”:
The Regional Court first examined whether there was a misleading omission of material information within the meaning of sec 5a UWG. The court considers the following information to be material:
In the case of both products, it was already clear from the respective packaging that carbon offset (and not prevention) was chosen to achieve the claimed climate neutrality. In the case of the liquid soap (left product), this information was given directly next to the logo of the certification body on the front of the pack, and in the case of the sun milk (product on the right) in an explanatory box on the back. However, the other information recognised as essential was not included on the packaging. While it is sufficient if consumers can find this information on the certification body’s website, it must be clear from the product packaging itself that and where they can access the additional information. That was only the case with the liquid soap, on which a specific website (ClimatePartner.com/14938-2008-1001) was stated. On the sun milk there was only a reference to “ClimatePartner /14938-2008-1001”, not to a specific website. Therefore, the court found an infringement of sec 5a UWG with respect to the sun milk.
However, irrespective of the information provided to consumers about how climate neutrality was achieved, the Regional Court has considered the claims on both products to be (actively) misleading within the meaning of sec 5(1) and (2)(1) UWG, because the compensation measure chosen by the defendant and the certification body were, from the outset, unsuitable to achieve the climate neutrality claimed.
According to the court, climate neutrality goes beyond what can be achieved by means of the specific CO₂ certificates for forest protection measures. The product-related, anthropogenic, additional CO₂ emissions can be traced for hundreds or thousands of years. The forest conservation project chosen, however, binds and stores the corresponding amount of CO₂ only for decades. After that, the temporarily neutral CO₂ balance of the product will be unbalanced again. To balance it out permanently, further forest protection efforts would have to be undertaken continuously – even in 100 or 1000 years. However, as the specific protection project chosen only runs until 2040, the defendant cannot deliver on his promise of a climate-neutral product and is thus (actively) misleading consumers within the meaning of sec 5(1) and (2)(1) UWG.
e. Conclusion
The current case law on green claims can be summarised as follows:
The Higher Regional Court of Düsseldorf has allowed further appeals on points of law in both decisions discussed above. In at least one of these proceedings, the claimant has lodged such an appeal, so that the Federal Supreme Court (Bundesgerichtshof) will get the opportunity to clarify the requirements for climate neutrality claims. It remains to be seen whether the Supreme Court will follow the line of the Higher Regional Courts of Düsseldorf and Frankfurt a.M. or endorse the stricter line of the Regional Court of Karlsruhe.
2. New EU regulatory proposals
On 22 March 2023, the EU Commission has published new regulatory proposals which – If implemented as proposed – will significantly tighten the requirements for advertising with terms such as “climate neutral” and “carbon neutral” and put a stop to so-called “greenwashing”. The Commission’s proposals include a new Green Claims Directive as well as additions to the Unfair Commercial Practices (UPC) Directive and the Consumer Rights Directive.
According to the proposal for a so-called Green Claims Directive (“Proposal for a Directive on the substantiation and communication of explicit environmental claims (Green Claims Directive)”, available at https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=COM%3A2023%3A0166%3AFIN), companies that make non-mandatory environmental claims about their products or services have to comply with minimum standards that relate both to how these claims are substantiated and how they are communicated. Environmental claims will only be permitted if they are independently verified and substantiated by scientific evidence. Member States are called upon to set up appropriate verification systems. Environmental claims that fall under existing EU regulations, in particular the Ecolabel and the organic farming label, will be exempt from the regulation.
In addition to the Green Claims Directive, the UCP Directive, which is implemented in Germany in the UWG, is to be updated with additional prohibited practices (“Proposal for a Directive amending Directives 2005/29/EC and 2011/83/EU as regards empowering consumers for the green transition through better protection against unfair practices and better information”, available at https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:52022PC0143). According to the proposal
The proposed directive also provides for the Consumer Rights Directive to be supplemented by prohibitions relating to the use of third-party consumables and spare parts as well as the so-called planned obsolescence. Among other things, the proposal aims to prohibit
3. Outlook
It remains to be seen whether the Commission’s proposals will be implemented as proposed or whether there will be amendments in the legislative process. In any case, it can safely be assumed that the standards for environmental claims will be tightened considerably. As the proposal must still pass through the entire legislative process and the proposed directives (currently) provide for implementation periods of 18 months, it will be some time before the new regulations actually take effect. Nevertheless, it is advisable for companies that want to use green claims in their advertisements to familiarise themselves with the future requirements and prohibitions and to prepare for the new, stricter rules on green claims.
Until the new law is in effect, advertisers should closely follow the development of case law and try to base their claims on the requirements of latest jurisprudence as far as possible. In view of the still diverging opinions of the courts, particular care should be exercised when applying claims directly to a product.
