The EU Parliament and Council have reached a provisional agreement on new rules to ban misleading advertisements and provide consumers with better product information. The deal requires final approval from both the EU Parliament and the Council. The vote by MEPs is expected to take place in November. When the directive comes into force, member states will have 24 months to incorporate the new rules into their law.
The EU’s rules will be updated to ban generic environmental claims such as “environmentally friendly” or “climate neutral,” unless proof of “recognised excellent environmental performance” is provided, along with claims that a product has a positive or reduced impact on the environment based on emissions offsetting. The new rules also prohibit the use of sustainability labels that are not based on approved certification schemes, and also includes rules addressing early obsolescence.
What will be banned?
It has been agreed to ban the following:
- generic environmental claims, e.g. “environmentally friendly”, “natural”, “biodegradable”, “climate neutral” or “eco”, without proof of recognised excellent environmental performance relevant to the claim;
- commercial communications about a good with a feature that limits its durability if information is available on the feature and its effects on the durability;
- claims based on emissions offsetting schemes that a product has neutral, reduced or positive impact on the environment;
- sustainability labels not based on approved certification schemes or established by public authorities;
- durability claims in terms of usage time or intensity under normal conditions, if not proven;
- prompting the consumer to replace consumables, such as printer ink cartridges, earlier than strictly necessary;
- presenting software updates as necessary even if they only enhance functionality features; and
- presenting goods as repairable when they are not.
UK action against Greenwashing – Advertising Standards Agency
In the UK the Advertising Standards Authority (“ASA”) has been at the forefront of the fight against greenwashing and has made a number of recent rulings finding that a wide range of companies have mis-stated or misrepresented environmental claims. These include the obvious targets of the oil, gas, water and motor industries as well as less obvious, some might say obscure, targets such as coffin manufacturers.
In June 2023 the ASA upheld a complaint against Hyundai Motor UK Limited in respect of a digital billboard, YouTube video and marketing brochure advertising Hyundai’s IONIQ 5 model, misleadingly claimed that the vehicle could charge from 10% to 80% in 18 minutes using a 350 kW charger. The ASA took into account “real-world” factors such as the very limited availability of 350kW chargers and battery temperatures finding that the advertisements:
“did not provide consumers with any contextual information regarding how the charging speed of a 350 kW charger differed from other charging options. In the absence of any specific limitations in those ads stating otherwise, we considered that the average consumer was likely to form the impression that it was relatively straightforward to access 350 kW chargers throughout the UK in public places.”
A similar complaint was upheld in respect of claims an a website for Toyota which misleadingly claimed its bZ4X model could reach 80% charge in around 30 minutes with a 150 kW fast-charging system when using rapid public charging.
Omission of Information
In June 2023 the ASA upheld a complaint in respect of an advertisement by Anglian Water. The TV ad, seen in September and October 2022, featured a girl who said “Right now Anglian Water is creating wetlands to clean water using nature and make homes for wildlife. By building a really long pipe to bring water to places that need it most, while protecting nature too. And huge tanks to collect rain so there’s less chance of floods in the future. In fact, everything they do today is for tomorrow …” A male voice-over said, “Never still, never stop. Anglian Water. Love every drop.” The ad included various scenes of a wetland and the wildlife living there, fields and wildlife, tanks collecting rainwater, a wind turbine, and an Anglian Water van with text on the side that stated “100% Electric 0% Emissions”.
The complainants were concerned because they understood that Anglian Water had a history of dumping sewage into rivers and the sea, had killed fish and wildlife as a result, and had been fined because of those actions. The ASA considered an EPA report which stated that they performed below target (amber status) for the number of sewerage pollution incidents and for their compliance with their discharge permit. Their performance was significantly below target (red status) for the number of serious pollution incidents. Furthermore, the ASA considered evidence that Anglian Water had had enforcement action against them on multiple occasions in recent years for Environmental Permitting Regulations (EPR) offences.
The ASA found that Anglian Water had breached various advertising rules misleadingly omitting material information about its history of releasing sewage into the environment.
The ASA adopted a similar approach to the omission of information in respect of a TV ad for Petronas which the ASA found misleadingly omitted material information about the balance of its current activities, its emissions, and the pathway to reducing them. Similarly, the ASA found that a paid-for online display ad for Repsol, misleadingly omitted material information including how and when Repsol would achieve net zero emissions, and the role that the development of biofuels would play in that plan.
It is clear that careful consideration must be given to environmental claims associated with products and services and that businesses must ensure that they can clearly and robustly substantiate claims. For those operating in traditionally less sustainable or green sectors, any environmental claims are likely to face increased scrutiny from environmental activists who are likely to add the ASA to their arsenal of tools to challenge such businesses.
The reputational risk of an accusation of greenwashing will be substantial and therefore attention needs to be focused on ensuring that environmental claims stand up to scrutiny.
While great care has been taken in the preparation of the content of this article, it does not purport to be a comprehensive statement of the relevant law and full professional advice should be taken before any action is taken in reliance on any item covered.