ACM targets "greenwashing": practical guidance on sales practices involving sustainability claims

The Netherlands Consumer and Markets Authority (ACM) continues with its trailblazing sustainability initiatives. Following its publication of draft Guidelines on antitrust aspects of sustainability agreements (click here for further information), it has now published draft Guidelines on Sustainability Claims from a consumer protection perspective (the Guidelines – available here in Dutch).

Sustainability claims are claims that suggest that a certain product (or service) has been produced in a way that minimises the impact on the environment and/or reflects social or ethical concerns. The purpose of the Guidelines is to offer companies (and consumers) practical guidance on what types of claims could be misleading or incorrect, and how to avoid “greenwashing”. The ACM defines greenwashing as “misleading consumers by claiming that a product is more sustainable than it is in reality”.

The ACM believes that both companies and consumers are increasingly interested in making “sustainable choices” and contributing to a more sustainable society. In particular when purchasing services or goods, consumers are increasingly opting for more “sustainable” or “environmentally friendly” products. However, sustainability claims are often still too vague, incorrect or misleading, the ACM found. Therefore, it has now published draft guidance setting out five “rules of thumb” for making sustainability claims:

Five rules of thumb

The draft Guidelines set out five rules on making sustainability claims:

1.  Clearly describe the sustainability benefits/advantages of the product: use clear-cut language and avoid any vague or misleading terms or phrases. This includes clearly describing the sustainability benefits rather than making general statements. One of the examples given is a claim that a washing machine uses 30% less energy compared to standard washing machines, if that is only true when using the special “eco” functionality on the machine. In that scenario, a claim would have to state that the washing machine, when used in the special eco functionality, results in approximately 30% less energy use.
   
   Further, avoid general claims or advantages - make it specific in every instance. General statements and claims are unlikely to be correct or substantiated and therefore companies should avoid using terms and phrases such as: “eco”, “environmentally friendly”, “clean”, “green”, “ethical”, “fair”, “natural(ly)”, “responsible” etc. The notion of “general” claims and statements appears very broad.
   
   
2. Substantiate sustainability claims with facts and keep them updated: the ACM emphasises that from the moment a company makes a sustainability claim, it must “possess evidence underpinning that claim”. The more general the claim, the stricter and higher the burden of proof on the company. Companies may assess their claims according to the “footprint” or “lifecycle” approach, by determining what the environmental benefits are, from sourcing to raw materials to disposing of the product.
   
   
3. Comparisons with other products, services or companies must be accurate and true: this is perhaps the least controversial rule, and essentially comes down to comparisons having to be accurate and true. If a company claims its chickens are more free-range compared to its competitors, that must in fact be true. Products and services may only be compared with other comparable products and services; i.e. comparing sneakers to jeans is not permissible (but only comparing sneakers with other sneakers).
   
   
4. Sustainability claims about one’s company should be accurate and true: claims or statements made about a company’s footprint or sustainability efforts must be true and accurate, and not refer to general ambitions but instead to actual results. An example given is an oil company developing a new biofuel which will result in a reduction of 50% of carbon dioxide emissions. If that company were to claim that it is “on the road to becoming climate neutral”, that would be misleading. It would need to clearly describe that it is in the process of developing biofuel which will result in reduced CO2 emissions.
   
   
5. Ensure that visual claims and quality marks/claims are not confusing to consumers: sustainability claims do not only refer to phrases or statements, but include stand-alone images, colours or other visual aspects (although often there will be a combination of text and visual elements). The use of the colour green or images of leaves or trees often leads consumers to believe the product has benefits to the environment or is eco-friendly. Therefore, companies are only allowed to use the colour green and/or images of nature (e.g. leaves and trees) if there is a direct and verifiable link to the image and the claim.

Although the Guidelines provide useful insight into the ACM’s reasoning in relation to misleading sustainability claims and greenwashing, it remains to be seen how it will actively enforce these rules against companies making such claims and how the courts will deal with these issues. It may also serve as useful context in other jurisdictions where consumer protection and sustainability issues are also high on the authorities’ agendas (see for instance the Commission’s action plan on EU Taxonomy published earlier this year).

The draft Guidelines are now subject to public consultation until 20 October 2020.