In recent years, civil court decisions have increasingly focused on the legality of advertising sustainable production processes. While a decision from the Federal Court of Justice (BGH) on this matter is still pending, a manageable standard can be discerned from the higher regional court decisions, which must be considered when advertising with terms like “climate neutrality” or similar. We would like to briefly outline these requirements.
The permissibility of advertising hinges primarily on the relevant understanding of terms. In the context of fair trading law, the understanding of an average consumer is crucial. “Climate neutrality,” according to consistent judicial decisions, means having a “balanced greenhouse gas footprint.” It is now widely accepted that an average consumer is aware that a company can achieve climate neutrality through compensation measures. However, contrary to the higher regional court rulings, the Regional Court (LG) Karlsruhe considers forest conservation projects inherently insufficient to completely offset the climate impact of a product. The claim of “climate neutrality” inherently exceeds what can be achieved through CO₂ certificates from forest conservation because trees only temporarily store CO₂, while complete decomposition takes hundreds of thousands of years. To permanently balance the CO₂ footprint of the product, continuous efforts in forest conservation would have to be undertaken, even in 100 or 1000 years.
Despite their similarity to “climate neutrality,” terms like “carbon neutral,” “environmental neutral,” “eco-friendly,” or “environmentally friendly” are rightly assessed individually by the courts. The LG Karlsruhe has noted that “environmental neutrality” extends beyond “climate neutrality.” To an average consumer, “environmental neutrality” would mean a “product with a balanced environmental impact,” encompassing environmental effects beyond greenhouse gases. “CO2 neutrality” is narrower than “climate neutrality” because it refers only to carbon dioxide, not all greenhouse gases.
There is now widespread agreement in in case law about the extent to which companies must inform consumers about how the advertised sustainable production process (climate neutral, carbon neutral, etc.) is ensured. The Higher Regional Court (OLG) Frankfurt ruled on 10 November 2022, that clarification is necessary on whether climate neutrality is achieved through savings or compensation measures, and whether certain emissions were excluded from the carbon accounting. Information must also be provided on the criteria used for evaluating any quality seals. The OLG Düsseldorf, in its judgment of 6 July 2023, also states that it there is an obligation to disclose whether the claimed climate neutrality is achieved through savings or compensation measures. Owing to controversies around certain offsetting measures, there is also an interest in information about the nature of these measures.
The LG Karlsruhe, in its judgment of 26 July 2023, sets similar requirements for the informational duties of companies using the term “climate neutral.” It requires that consumers be informed about the steps in a product’s lifecycle that the claim of climate neutrality refers to, whether climate neutrality for the specific product is to be achieved through reduction and/or compensation, and the criteria used for the certification partner’s label. Furthermore, the LG Karlsruhe believes that disclosure obligations are higher when product advertising refers to a complex network of effects, such as ecological relationships between greenhouse gas emissions and their reduction or compensation. Compared to “climate neutrality” the term “environmental neutrality” entails even more extensive disclosure obligations.
A particular case is that of established seals: when using these, as per consistent judicial decisions on test or quality seals, it is additionally required to specify the criteria for certification. This must include a reference to a website that provides detailed information about the testing process. However, a barely readable test number on the packaging is not sufficient.
Case law is also increasingly determining the form of disclosure.. The OLG Frankfurt emphasizes that it is sufficient if the relevant information is accessible by clicking on a link (so-called “media break”). The Regional Court Munich I has recently decided that a QR code on a beer bottle must clearly and distinctly refer to further information and be placed close enough to the environmental advertising so that the customer can immediately recognize that it provides necessary information.
It is expected that the standards set by the judiciary will continue to develop in the foreseeable future. An appealagainst the OLG Düsseldorf’s judgment of 6 July 2023, is currently pending at the BGH. Additionally, at the EU level, the enactment of a directive, the so-called “Green Claims Directive,” is planned, which aims to protect consumers from greenwashing by companies.
Given the increasing attempts at greenwashing, we are witnessing a strengthening of the judiciary regarding the requirements for environmental advertising claims, particularly concerning transparency and verifiability. It is therefore crucial for companies to take these requirements seriously. Failure to comply could lead to claims for injunction and removal, as well as claims for damages in principle. Competitors, consumers and – in connection with injunctions – consumer organisations are entitled to file claims.. Ultimately, in certain scenarios, companies may face penalties amounting to as much as 4% of their annual revenue.
(10 January 2024)