Sustainability, Advertising and Greenwashing – the German view

"Recyclable", "carbon neutral" or "biodegradable" – these labels reveal how sustainability plays a major role in advertising. However, the lack of uniform standards and clear regulations makes it difficult for companies to ensure full legal compliance when advertising the environmental benefits of their products.

Whereas in the past, price and quality alone were often the most relevant factors for consumers when making a purchasing decision, the sustainability of products and the sustainability policies of companies have become increasingly important. Knowing this, many companies advertise their products with a wide variety of sustainability claims that are supposed to show environmental friendliness and corresponding corporate responsibility. Legally, however, such "sustainability claims" are often a challenge. What exactly do claims such as "biodegradable" or "environmentally friendly" mean? And what requirements must be met in order to advertise a product in this way?

Sustainable production: "carbon neutral" and "resource friendly"

The range of advertising claims referring to the environmentally friendly production of goods is broad, ranging from rather vague statements such as "resource friendly" to strong claims such as "CO2-neutral". From an advertising law perspective, the first question to consider is consumer perception of vague claims. Does "resource friendly" mean that fewer raw materials have been used or that the materials used are more environmentally friendly? Does the claim refer to the use of less energy or energy that has been sustainably obtained? If the advertiser is not specific in its statements, he runs the risk of creating multifaceted messages, which he must prove. Even supposedly clear statements such as "carbon neutral", however, require closer examination. Does this statement refer solely to production on the advertiser's premises? Does it include the extraction of raw materials, the logistics across all distribution chains and also eventual disposal? Is the compensation of carbon dioxide through the support of climate projects permissible or must there be no carbon dioxide emissions?

The advertiser must consider these questions and the expectations of consumers before launching a campaign. German case law shows that to prove the correctness of advertising it is not sufficient if expert opinion is only offered during the trial.

Sustainable disposal: "compostable" and "recyclable"

Yellow bin, brown bin, home compost – many consumers are happy to contribute to sustainability by separating waste in this way. Claims around "compostable", "biodegradable" and "recyclable" are therefore very popular. The first question here is how to prove that a product meets the technical requirements for recycling or composting. DIN standards are often used for this purpose. Sometimes, however, the standard that applies is unclear or a DIN standard does not yet exist for a particular process, such as home composting.

Another challenge is the reality of waste management. Even if a product meets the technical requirements to be industrially composted or recycled, this does not automatically mean that such composting or recycling actually takes place in practice. Many of the approximately 1,000 local waste management companies in Germany do not yet have the technical prerequisites to actually recycle or compost products disposed of via the yellow or brown bins. Some facilities are not set up for the long composting time or cannot recognise recyclable material. German courts are increasingly critical of blanket claims about the compostability and recyclability of products, unless it can be shown that such sustainable ways of waste disposal are not only technically possible but actually do take place. Depending on the individual case, clarifying information (i.e. disclaimers) should be used on the packaging to avoid the risk of misleading advertising.

EU Commission's "Green Deal"

Increasingly, sustainability advertising and claims are likely to be regulated. For the food industry in particular, stricter requirements at the EU level must be expected in the coming years.

As part of the "European Green Deal" presented in December 2019, the EU Commission has announced a series of measures to promote the development of a sustainable economy while setting uniform rules and standards. One of these measures is the "From farm to fork" strategy. Among other things, this strategy envisages that the Commission will develop a uniform legal framework for sustainability advertising and for the labelling of sustainable food. A legal framework for an animal welfare label is also to be created and the compulsory nature of such a label will be examined. However, details are still unclear. The Commission intends to submit initial regulatory proposals only in 2024.

Overall, numerous legal questions arise when product advertisements include "sustainability claims". Much is still in flux here. Court decisions and new legal regulations are likely to tighten the requirements in the coming years and hopefully bring more clarity.