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Sustainability, Advertising and Greenwashing – the Dutch view

Consumers increasingly consider sustainability when making purchases. As a result, more and more companies are using sustainability claims on the packaging of their products and in advertisements. This practice, however, creates the risk of "greenwashing": the dissemination of disinformation to present an environmentally responsible public image by using misleading wording or vague claims. According to the Dutch Authority for Consumer & Markets ("ACM"), greenwashing can reduce consumer trust and lead to unfair competition. To address this, the ACM has recently published guidelines on sustainability claims. Consumers and organisations also seem to be alert to the issue of greenwashing. Several complaints about sustainability claims have been submitted to the Advertising Code Committee ("ACC") in the recent years. This article discusses the guidelines on sustainability claims of the ACM and the ACC's approach to sustainability claims.

ACM Guidelines on Sustainability Claims

Sustainability is one of ACM's key priorities in 2021. The ACM, which not only supervises competition law but also unfair commercial practices in the Netherlands, published the final version of their Guidelines on Sustainability Claims on 28 January 2021. Two days earlier it had already published its final draft Guidelines on Sustainability Agreements on the application of competition law to sustainability agreements between undertakings.

The Guidelines on Sustainability Claims contain five rules of thumb that are explained using various examples. First, companies should make clear the sustainability benefits that a given product offers. Second, the sustainability claims used must be substantiated with facts and kept up-to-date. Third, comparisons with other products, services or companies must be fair. Fourth, companies must be honest and specific about their sustainability efforts. Lastly, visual claims and labels should be helpful to consumers and not confusing.

Upon its publication, the ACM communicated that its Guidelines on Sustainability Claims would serve as basis for enforcement by its consumer protection department. Three months later, on 3 May 2021, the ACM communicated that it had indeed launched investigations in three sectors in which it previously had found many potentially misleading claims: energy, diary and clothes. Over 170 companies active in these sectors received letters from the ACM in which they were asked to check the accuracy of their sustainability claims. In the letters, the ACM announced that as from 14 June 2021 it would assess the effects of its action and start fining companies that still communicate claims they cannot fulfil.

The ACM can sanction a violation by imposing an administrative fine of up to EUR 900,000 or 1% of the gross turnover.

Dutch Advertising Code

The Netherlands also has a self-regulating system regarding advertising, which includes labelling. The ACC is the body dealing with this system and the rules on advertising are contained in the Dutch Advertising Code (“DAC”). Anyone who believes that an advertisement violates the DAC can submit a complaint to the ACC. In case of a DAC violation, the ACC will uphold the complaint and recommend that the advertisers involved discontinue this advertising. The ACC cannot grant damages or impose any fines. However, over 95% of all ACC recommendations are respected due to the ACC's policy of "naming and shaming" – publishing the names of advertisers unwilling to comply and cooperate on the ACC website.

Special Advertising Code for Environmental Advertising

Sustainability claims can be seen as environmental claims. This means that the Special Advertising Code for Environmental Advertising ("CEA") is applicable. The CEA applies to the entire life cycle of all goods and services – from production to waste processing. Based on Article 3 CEA, environmental claims must be demonstrably correct and since environmental claims are often formulated in absolute terms, stricter requirements are imposed on the evidence the advertiser must provide.

Advertising Code Committee

The importance of fact-based proof in sustainability claims was highlighted in several ACC judgments. For example, the ACC ruled that the claim "100% compostable" on Bioodi coffee cups was misleading because Bioodi could only demonstrate through test results that the coffee cups were 90% compostable (ACC 9 March 2020, 2020/00059). According to the ACC, the assumption that a 90% degradation during the test period ultimately means that the coffee cups are 100% compostable is inconsistent with the requirement of Article 3 CEA that an environmental claim must be demonstrably correct.

Furthermore, the ACC considered the claim "This plastic bag is environmentally friendly" misleading since environmentally harmful fossil energy was needed for both the manufacture and recycling of the bag (ACC 24 July 2014, 2014/00325).

The claim “our packaging is 100% recyclable” on plastic bottles of Coca-Cola was not considered to be in violation of Article 3 CEA of the ACC because Coca-Cola had sufficiently substantiated that its bottles are made of fully recyclable materials. It did so by citing the guidelines of the European PET Bottle Platform and demonstrating that its bottles are made from transparent PET, which is considered a recyclable material based on these guidelines (ACC 20 December 2017, ACC 2017/00812). The ACC noted that the claim "100% recyclable" does not mean that the materials actually have to be 100% recycled.

Greenpeace, the party that filed the claim, also charged that the company was in violation of Article 10 CEA since the recycling of half-litre bottles into new Coca-Cola bottles did not take place in practice. Article 10 CEA states that environmental claims related to the recycling of products or parts of products are permissible only if a sufficient proportion of the recommended products or parts are actually recycled. Coca-Cola provided a report from Stichting Nedvang, which registers the collection and recycling of all packaging waste in the Netherlands, showing that 70% of small bottles in the Netherlands are recycled and a part of those bottles are used in new bottles. The ACC considered this sufficient evidence to meet the criteria of Article 10 CEA.

Conclusion

The above examples show that sustainability claims require careful consideration since Dutch regulators, consumers and organisations pay close attention to these claims. Organisations that are active in the Netherlands are advised to reconsider the use of certain sustainability claims and assess whether they can demonstrate the accuracy of these claims when requested.

Authors

Marcoline Dussen
Marcoline van der Dussen
Advocaat
Amsterdam
Roderick Nieuwmeyer
Roderick Nieuwmeyer
Advocaat
Brussels - EU Law Office