The Federal Court of Justice has ruled that advertising with an ambiguous environmental term (here: “climate neutral”) is only permissible if the advertising itself explains the specific meaning of this term.
Background of the Case
The plaintiff is the Central Office for Combating Unfair Competition. The defendant is a company that manufactures fruit gum and licorice products, available in food retailers, kiosks, and petrol stations.
The defendant advertised in a food industry trade magazine with the statement: “Since 2021, [company name, implied] has been producing all products in a climate-neutral way.” The advertisement also featured a logo displaying the term “climate-neutral” and referred to the website of a “ClimatePartner.”
It is important to note that the manufacturing process of the defendant’s products is not CO2-neutral. However, the defendant supports climate protection projects through “ClimatePartner.”
The plaintiff considered the advertising statement misleading. They argued that the target public would understand it to mean that the manufacturing process itself was climate-neutral.
At a minimum, the plaintiff contended that the advertising statement required supplementation to clarify that climate neutrality was achieved solely through compensatory measures. The plaintiff sought injunctive relief and compensation for pre-trial warning costs from the defendant.
Procedural History
The Regional Court (Landgericht) initially dismissed the action, and the plaintiff’s appeal was unsuccessful. The Court of Appeal was of the opinion that the plaintiff was not entitled to injunctive relief for misleading advertising, pursuant to Section 8 (1), Section 3 (1), and Section 5 (1) of the German Act against Unfair Competition (UWG).
The Court of Appeal found that readers of the trade journal understood the term “climate-neutral” as a balanced CO2 emissions balance. This understanding, they reasoned, stems from the awareness that neutrality can be achieved through both avoidance and compensation measures.
Furthermore, the Court of Appeal ruled that no claim for injunctive relief existed due to a violation of Section 5a (1) and (3) UWG for withholding information on how the “climate neutrality” of the advertised product was achieved. It considered this information essential.
However, the court argued that the necessary information about the type and scope of any compensation could be obtained via the cooperation partner’s website. This website was stated in the advertisement and accessible via a QR code. The court deemed this reasonable for readers of the newspaper.
Despite these rulings, the plaintiff continued to pursue its claims, and its subsequent appeal was allowed by the Court of Appeal.
The Federal Court of Justice (BGH) Ruling on Climate-Neutral Advertising
The appeal was successful. The Federal Court of Justice (BGH) ordered the defendant to cease and desist from the advertising and to reimburse pre-trial warning costs.
Contrary to the opinion of the Court of Appeal, the BGH found the advertising complained of to be misleading within the meaning of Section 5 (1) UWG. The court highlighted the ambiguity of the term “climate-neutral.”
According to the findings, readers of the trade journal – no differently than consumers – could understand this term in two ways: either as a reduction of CO2 in the production process or as a mere compensation of CO2.
The BGH criticized the Court of Appeal for failing to consider the particularly high risk of misleading in environment-related advertising, similar to health-related advertising. In such cases, there is an increased need to inform the target public about the meaning and content of the terms and signs used.
Consequently, advertising that uses an ambiguous environmental term such as “climate neutral” must explain its specific meaning directly within the advertisement itself to prevent consumer deception. Informative details provided outside the environmental advertisement are insufficient in this regard.
An explanation of the term “climate-neutral” was especially critical here. This is because the reduction and offsetting of CO2 emissions are not equivalent measures for achieving climate neutrality; reduction takes priority over offsetting from a climate protection perspective.
The deception was also competitively relevant. The advertising of a product with supposed climate neutrality significantly influences consumer purchasing decisions.
Conclusion
This ruling from the Federal Court of Justice underscores the importance of clarity and transparency in environmental claims made in advertising, especially concerning terms like “climate neutral.” Companies must ensure that the specific meaning of such ambiguous terms is explicitly explained within the advertisement itself, rather than relying on external information.
This decision serves as a crucial precedent for businesses, emphasizing the need for precision to avoid misleading consumers and incurring legal consequences under competition law.