Greenwashing: How to communicate without misleading?
By Weronika Nalbert, adwokat, co-coordinator of the ESG & sustainable development team and member of Competition & Consumer Protection practice, Wardyński & Partners
In the face of the climate crisis, interest in sustainability issues is growing. This increasingly brings the issue of ‘greenwashing’ to the fore. The term refers to the creation of a false impression among the public regarding the supposedly green practices applied by a business, or the supposed environmental benefits of its goods and services. Typically, greenwashing is used to raise the attractiveness of goods or services in the eyes of prospective buyers, and thus to increase sales and attract customers. But sometimes the spread of misleading ecological messages is simply due to ignorance.
Increased global consumption is negatively affecting the environment. In turn, consumers frequently want to make informed, environment-friendly choices, guided by information presented by manufacturers or retailers. In this process, consumers have the right to reliable information about the environmental impact of the products they intend to buy, and for which – not infrequently – they pay more due to their alleged higher degree of environmental friendliness.
The EU perspective – new regulations counteracting greenwashing
On 30 March 2022, to strengthen the position of consumers in this respect, the European Commission published a draft directive amending the Unfair Commercial Practices Directive and the Consumer Rights Directive. The proposal is intended to enable consumers to make informed and environment-friendly choices when purchasing products and strengthen consumers’ protection against unreliable or misleading environmental claims by outright banning practices bearing the hallmarks of greenwashing.
Under the Unfair Commercial Practices Directive, the list of the main product-features in relation to which a business should not mislead consumers, is to be amended. The list is to be expanded to include “environmental and social characteristics and circularity aspects, such as durability, repairability and recyclability.”
The proposal also extends the list of commercial practices which shall in all circumstances be regarded as unfair, by adding practices such as:
- Making a generic environmental claim for which a trader cannot demonstrate recognised excellent environmental performance relevant to the claim
- Making an environmental claim about the entire product or the entire trader’s business when it actually concerns only a certain aspect of the product or a specific activity of the trader’s business or
- Presenting requirements imposed by law on all products within the relevant product category on the EU market as a distinctive feature of the trader’s offer.
A year later, in March 2023, the Commission adopted another proposal, for a Green Claims Directive, which aims to counter false environmental claims made to consumers and stop the proliferation of public and private environmental labels. It targets ‘green claims’ made by entrepreneurs that state or imply a positive environmental impact, lesser negative impact, no impact, or improvement over time for their products, services, or organisation. The proposal requires that these green claims must be substantiated; this substantiation must be verified based on prior assumptions. This means that the proposed directive introduces verification requirements before claims can be made and put on the market, in accordance with minimum requirements for substantiation and communication to be set by EU member states.
Together, both proposals establish a clear regime for environmental claims and labels. They aim to ensure that consumers receive trustworthy information about the environmental credentials of the products they buy. This will also boost the competitiveness of entrepreneurs who are doing their best to increase the environmental sustainability of their products, services and overall business activities.
Activity of the Polish regulator
In Poland, the president of UOKiK, the office of competition and consumer protection has noted that issues related to ecology, including the environmental impact of a product or its packaging, may constitute important information for consumers and thus influence their decision to purchase a particular product (e.g. in decision no. DOZIK-5/2022 of 6 March 2022, which concerned irregularities in the declared composition of raw materials used in clothing).
Currently, the president of UOKiK is conducting oversight activities to verify practices that may bear the hallmarks of greenwashing in connection with businesses offering products for sale and conducting marketing activities. Over the past three years, the regulator has sent ‘soft’ requests (without initiating proceedings) to over a dozen companies requesting voluntary clarification of doubts surrounding compliance with competition and consumer-protection regulations of their use of slogans alluding to ecology, sustainability, and environmental protection. Recently, the authority’s activities in this regard have clearly intensified, as it has also initiated explanatory proceedings regarding businesses, mainly in the clothing and cosmetics markets, to determine whether the businesses have committed a violation justifying the initiation of proceedings for practices violating the collective interests of consumers.
Among other things, the authority is examining whether, in their marketing practices, the businesses have used commercial information, labelling or claims referring to ecological, sustainability or environmental issues and whether they have verified the veracity of these statements. So far, administrative decisions directly addressing greenwashing have not yet been issued in Poland.
Potential sanctions that may be imposed by Polish authority
Greenwashing may constitute a practice violating the collective interests of consumers. For businesses whose ‘green’ claims and labels are untrue or present information in an incomplete or unreliable manner, or otherwise create a risk of misleading consumers, the president of UOKiK may initiate proceedings for violation of the collective interests of consumers. This can carry a potential fine of up to 10% of turnover generated in the financial year preceding the year when the fine is imposed.
To minimise the risk of greenwashing allegations, communications regarding a business’s activities or products should enable consumers to make an informed and reliable choice, and thus should be clear, precise, justified, and grounded in reality.
Claims should not be made regarding the environmental performance of an entire product if, in fact, they apply only to a certain aspect of the product. It must be clear to the consumer that the claim applies to a specific aspect and not to the product as a whole (for example, to say a product is ‘biodegradable’ is a general claim, while indicating that ‘the packaging is biodegradable through home-composting within one month’ is a sufficiently specific claim).
Also, information about the socially sustainable nature of products, including the working conditions under which they are manufactured, the manufacturer’s charitable activities or attention given to animal welfare, should not mislead consumers.
Environmental claims, in particular climate-related claims concerning future effectiveness in the form of transition to carbon neutrality, climate neutrality or a similar target by a certain date, should be supported by clear, objective and verifiable actions, commitments and targets undertaken by the business. Such claims should also be supported by an independent monitoring system to track the business’s progress in meeting these commitments and targets.
Businesses should employ environmental messages in their marketing with caution, ensuring that they are precise and well-founded in actual environmental best practices or features of the product or packaging. However, fear of being accused of greenwashing should not deter businesses from seeking to pursue sustainability or promoting such activities so as to set a good example.