In this day and age, when awareness of environmental and climate protection is becoming increasingly prominent, it is not surprising that more and more companies are advertising their products and services as “green” or “environmentally friendly”. But what happens when these claims are not true or are misleading? This blog post highlights the disclosure obligations when advertising with positive climate effects in Germany and shows what the legal consequences are if companies violate these obligations.

What is greenwashing?

Before we get into the legal aspects, it is important to understand the concept of greenwashing. As explained in a previous blog post, greenwashing refers to the practice of portraying products, services or the entire company as more environmentally friendly than they actually are. This can be done through misleading statements, unclear terms, or lack of evidence for the claimed environmental benefits.

Legal basis

Here is a possible extension of the paragraph:

In Germany, the Unfair Competition Act (UWG) regulates advertising and ensures that it is not misleading. According to Section 5 UWG, a commercial act is misleading if it contains untrue statements or other statements suitable for deception about essential characteristics of the goods or services. This also applies to environmental statements. In addition, the provisions of the Consumer Information Act (VIG) and the Environmental Code (UGB) may also be relevant.

With regard to greenwashing, Section 5a UWG is particularly relevant. Accordingly, a statement or sign about certain characteristics of a good or service is misleading if such statement or sign does not correspond to the actual environmental characteristics of the good or service. Under certain conditions, exaggerated or unclear environmental claims may also be unfair and anti-competitive under Section 5 UWG.

The EU Unfair Commercial Practices Directive (UCP Directive) also contains regulations on misleading environmental claims. These were transposed into national law by the UWG. Violations can be punished with fines and warnings.

Current judgments

Two recent rulings clarify the legal requirements for advertising with positive climate effects.

The Bremen Higher Regional Court just ruled (Case No. 2 U 103/2) in a case that a company’s advertising with the terms “sustainable” and “resource-friendly” was misleading, as the company was unable to prove that its products actually use fewer resources than comparable products. The court clarified that companies advertising environmental friendliness must provide concrete evidence to support their claims.

In another case, the Karlsruhe Regional Court ruled (judgment of July 26, 2023, Case No. 13 O 46/22 KfH) that the drugstore chain dm had advertised in a misleading manner by describing its own-brand products as “climate neutral” without providing sufficient information on the calculation of climate neutrality. The court emphasized that companies advertising climate neutrality must provide transparent information about the calculation methods and bases.

Other judgments

Further judgments on greenwashing and advertising with positive climate effects:

• Düsseldorf Regional Court, judgment of July 19, 2013, Ref. 38 O 123/12 U:

Advertising claim about “climate-neutral candles” classified as misleading. Offset certificates are not sufficient if it is suggested that the candles themselves burn in a climate-neutral manner.

• Frankfurt Regional Court, judgment dated May 31, 2016, Ref. 3-06 O 40/15:

Advertising with “100% climate neutral” for frozen food misleading, as climate neutrality was only achieved through offsetting.

• Frankfurt Regional Court, judgment dated March 17, 2022:

Claim “climate neutral” needs to be explained in more detail, as certification criteria are multi-layered.

• Mönchengladbach Regional Court, judgment dated February 25, 2022, Ref. 8 O 17/21:

Concept of climate neutrality through offsetting is well known, “climate neutral” does not promise emission-free production.

• Oldenburg Regional Court, judgment dated December 16, 2021, Ref. 15 O 1469/21:

With “climate-neutral” meat, consumers expect a balanced CO2 balance or emission-free production.

• Frankfurt Higher Regional Court, judgment dated November 10, 2022, Ref. 6 U 104/22:

When advertising with “climate neutral”, information must be provided on the essential circumstances of climate neutrality.

• Schleswig Higher Regional Court, judgment of June 30, 2022, Ref. 6 U 46/21:

“Carbon neutral” means balanced carbon footprint, but does not require an explanation of offsetting.

The rulings show that courts are increasingly interpreting the term “climate neutral” in concrete terms and imposing certain minimum requirements on advertising with climate neutrality. In particular, material circumstances such as compensation measures must be disclosed if climate neutrality is not achieved through emission-free production.

Conclusion

Advertising positive climate effects is a double-edged sword. On the one hand, it can help raise awareness of environmental and climate protection and encourage consumers to consume more sustainably. On the other hand, it carries the risk of greenwashing, which misleads consumers and undermines trust in environmentally friendly products and services.

Companies that advertise positive climate effects must therefore take their duty of disclosure seriously. They must ensure that their environmental claims are true, clear and verifiable, and that they provide sufficient information to support their claims. Otherwise, they risk not only legal consequences, but also a loss of trust among their customers.

It remains to be seen how case law will develop in this area. But one thing is clear: The duty to educate when advertising with positive climate effects is becoming increasingly important in an ever more environmentally aware society.

In the future, this is likely to apply not only to online retailing, but also to advertising claims such as “Our data center is climate-neutral,” etc.