To start, it is important to note that Bosnia and Herzegovina is not yet a member state to the European Union. Therefore, although the rules and regulations stemming from the EU have an indirect impact in Bosnia and Herzegovina as a non-EU jurisdiction, there is no direct transposition or a requirement to implement EU regulations in local law. It is worth noting, however, that Bosnia and Herzegovina obtained “candidate” status to the EU membership in 2023 and opened its negotiations in 2024, therefore itis under a duty to harmonise its laws with those of the EU.
With the above in mind, although specific sustainability related ESG rules and regulations are still scarce in Bosnia and Herzegovina, it is expected that there will be significant legislative activity in this area in the upcoming period.
Overall, in terms of public discourse and interest of the business markets for sustainability and ESG, the topics are gaining traction and many market participants are self-regulating and working towards establishing their own systems and assessments. Having the afore said in mind, green claims and “greenwashing” are not yet a part of the main conversations on sustainability.
Therefore, for the time being, the following trends and noticeable happenings can be set out:
1. The progress of the financial services industry
In terms of industry standards and legislative efforts, most progress has been made in the financial services / banking sector with the adoption of Guidelines for management of risk regarding climate change and the environment by the local banking regulators setting up the expectations and the requirements for banks as well as embedding the “E” factor throughout the banking institutions’ risk management processes.
It can be said that the progress this sector is making in Bosnia and Herzegovina is expected, considering this industry is highly-liquid and progressive in the business environment of the country, but also taking note that most of the banking institutions are owned by EU – originating groups (that fall under the remit of significant EU regulations in the field and therefore bring down such regulations to their subsidiaries). “Greenwashing” has been, therefore, recognised under such Guidelines under which banks are expected to ensure comprehensive and reasonable information of its impact are disclosed to reduce the risk of greenwashing.
2. Activities of green and social activist organisations
Activism and in particular “green” activism have always been present in Bosnia and Herzegovina, however, with the rise of corporate social responsibility over the past decade, and lately, sustainability and ESG, such organisations are becoming more prominent in “calling out” and pinpointing to activities that have a negative impact on the environment or a certain circle or a group within the local society.
Currently open and public commenting and critique of various business organisations and their activities in Bosnia and Herzegovina is prominent, with several foreign capital and large corporations facing quite a significant reputational attack on their activities in the country. Albeit legal procedures have been initiated for environmental crimes or misdemeanours (including omission to protect biodiversity of plant and animal life), legal actions taken on the grounds of green claims or “greenwashing” are still not frequently encountered and are yet to become legal practice in Bosnia and Herzegovina.
Nevertheless, with the consumers, partners and the general public constant education and progress on the importance of the sustainability footprint of various businesses, it can be argued that green claims that are unsubstantiated or unfounded will leave organisations at a loss in respect of their reputation and status in the local business markets.
3. Already existing legal framework
Unsubstantiated green claims or “greenwashing” may fall under the consumer protection regulations applicable in Bosnia and Herzegovina, namely provisions governing “fraudulent advertising” or “unfair business practices”. Under these laws, advertising of goods and services must not contain any statement or image that may directly or indirectly, whether by omitting, incompleteness, or exaggeration mislead the consumers, especially regarding the properties of such services or the product, which may include, inter alia, its impact on the environment, the social (charitable) impact and alike.
Such advertising which uses or which has a potential to use the inexperience or lack of knowledge of the consumer distract the consumer from the important parts of the offer, for the purpose of making a profit by including ambiguities, unauthentic information, exaggerations or understatements, or other components that mislead or may mislead the consumer. Such practices are used unfairly to lead the consumer to a decision which her/she would not otherwise make or mislead the consumer by manipulating or omitting information, making it ambiguous, unclear, and alike.
Therefore, as it can be seen from the above, it can be argued that “cherry-picking” information provided to the public regarding certain “green” elements of a product or a service, providing misleading information, exaggerating or overall providing incomplete and ambiguous information regarding a certain sustainable impact or result may fall under the above legislative framework. Generally speaking, consequences for non-compliance under the mentioned rules may involve issuance of monetary fines for the relevant business entity and the responsible person and, provided the statutory conditions are met, a prohibition to sell or provide the relevant goods or services on an interim or more permanent basis. Whether such framework of proscribed repercussions would be used by the competent authorities in the context of green claims or “greenwashing” is not yet clear.
It remains yet to be seen in practice if and to what extent such a legislative framework will be used in the context of challenging green claims or “greenwashing” and to what extent will the (court and/or regulatory) practice develop to shape how business subjects are behaving and “correcting” their behaviour.
Read latest news on sustainability claims and greenwashing in Bosnia and Herzegovina here.
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