Hungary - Sustainability claims and greenwashing

• Regulator issues warning for consumers to treat sustainability claims with caution and provides guidance for businesses
• Specific requirements apply to the most common types of green claims and certification labels, and the regulator signals increased monitoring
• Private sector cooperation bodies launch green initiatives to promote and develop environmentally responsible practices

What are the top three developments in your territory concerning green claims and the associated risk of greenwashing? 

As in other parts of the world, Hungarian consumers are becoming increasingly eco-conscious. A recent survey by the Eurobarometer found that more than eight out of ten respondents in Hungary (81% compared with the EU average of 78%) think that climate change is a very serious problem, and at least six out of ten respondents in Hungary believe that business and industry (65% vs the EU average of 58%) and national governments (60% vs the EU average of 63%) are responsible for tackling climate change.  

We have identified three important trends to watch out for when making green claims aimed at Hungarian consumers. 

1. Regulator issues warning for consumers to treat sustainability claims with caution and provides guidance for businesses 

In a public communication the Hungarian Competition Authority (in Hungarian: Gazdasági Versenyhivatal, “GVH”) raised consumers attention about the need to always double-check the sustainability claims of advertisers. Even if a statement is factually true, it may still be a misleading or unfair commercial practice, if the wider context is kept hidden from the consumer. The GVH stressed that advertisers should provide clear, concise and unambiguous information to consumers to enable their informed decision. 

In late 2020, the GVH published Green Marketing Guidance for Undertakings (“Green Marketing Guidance”) to assist it in developing commercial communication practices that help advertisers to avoid infringing the law. Although not binding, the guidance aims to outline commercial best practices expected by the GVH in individual cases. 

In its Green Marketing Guidance, the GVH recommends using specific and unambiguous wording, and clear and understandable language. For example, the advertisement must make it clear how a green claim is related to a product or activity. Furthermore, advertisers should carefully consider the use of scientific terms or jargon which may confuse and mislead the average consumer. 

In late 2022, the GVH announced it would be undertaking a market analysis study (“Market Analysis”) to examine the use of green and environmental impact claims in product and services advertising.  

The Market Analysis focuses on green claims concerning food, clothing, household chemical products and cosmetics. As a first step of the Market Analysis, the GVH conducted a sweep of the market to identify green claims currently used by companies, and to determine which claims and businesses should be investigated further. In February 2023 the GVH issued a press release on the findings of the sweep, according to which it identified numerous potentially problematic claims (e.g. unclear/unsubstantiated green claims). This sweep was followed by an investigative phase (including an online consumer survey and requests for information addressed to major companies) to identify how green claims affect consumer perception of products and services, and the willingness of consumers to buy these products. As a third step, the GVH will issue a discussion paper summarising its findings and proposals to the legislator to establish a labelling and claim system, which aims to strengthen consumer confidence in environmental marketing in Hungary.  

2. Specific requirements apply to the most common types of green claims and certification labels, and the regulator signals increased monitoring 

The Green Marketing Guidance recommends specific requirements for substantiating common types of green claims, including “recyclable”, “recycled”, “refillable”, “free from”, “bio”, “organic”, “compostable” and “biodegradable”. For example, an advertisement claiming that a product is “free from” certain ingredients might be misleading if the ingredients in question are replaced by other materials, which are at least as harmful to the environment as the omitted ingredient. The green claim may also be misleading if other similar products do not contain the ingredient labelled as “free” either. For example, it is not advisable to refer to a product as being “free from” a certain chemical ingredient, if other comparable products do not generally contain such chemical ingredients either. 

Claims related to renewable (“green”) energy, the longevity and durability of products, and carbon-dioxide emissions are also under strict scrutiny by the GVH. According to the Green Marketing Guidance, all such claims need to be supported by factual evidence, and consumers must be provided with all relevant information to prove that the product has the promised environmental benefit. When using comparative claims and claims about market-leading status, advertisers should pay special attention to the context of the claim and its possible interpretation by consumers in order to avoid the claims being considered misleading. 

Green claims may also be made visually through the use of various trust marks, quality marks, other markings, logos, symbols and certificates. In this context it is important to ensure that the advertising message does not extend beyond the scope of what the certification label is intended to certify. 

To facilitate compliance, the Green Marketing Guidance offers advertisers a practical checklist to consider when planning and performing green advertising activities. Staying up-to-date with the latest guidance is essential, as the president of the GVH emphasised in his speech of late 2022 that the authority will continue its zealous enforcement work concerning green claims to ensure consumers receive adequate and specific information as to product characteristics. 

3. Private sector cooperation bodies launch green initiatives to promote and develop environmentally responsible practices 

The Hungarian Marketing Association (in Hungarian: Magyar Marketing Szövetség, “MMSZ”) established its Green Section in late 2021. The MMSZ is the leading marketing advocacy group comprising thousands of marketing professionals and hundreds of multinational organisations. The Green Section aims to bring together businesses working towards a more sustainable future. The platform provides for coordination opportunities and development of common policies among its associates. 

The Hungarian Advertising Association (in Hungarian: Magyar Reklámszövetség, “MRSZ”) is the self-regulatory body for the advertisement sector in Hungary. In its Hungarian Code of Advertising Ethics, the MRSZ lays down certain best practices regarding green claims. For example, advertisers must demonstrate that the advertised product has no negative environmental impact, taking into account its whole life cycle. In addition, the MRSZ recently launched its Green Planet Initiative, which aims to support its members in developing environmentally conscious attitudes and practices that minimise environmental impact. As part of the initiative, the MRSZ has also established the Green Planet Award to recognise member companies’ initiatives and projects that exemplify sustainable development. 

It is clear from the recent developments that consumers and regulators expect advertisers to deliver more sustainable products and services. This is further underpinned by the fact that more than 80% of respondents in Hungary agree that tackling climate change and environmental issues should be a priority as part of the wider effort to improve public health (85% compared with the EU average of 87%).  

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Greenwashing: reputations on the line

As global heating and other environmental issues have come to the forefront of public consciousness in recent years, with extreme weather events and increasingly urgent warnings about the damage humans are doing to the planet, consumers have taken a greater interest in the environmental impact of the products they buy and use. Dozens of surveys have revealed that consumers prefer en­vir­on­ment­ally-friendly products, and that they are willing to pay a premium to get them. Naturally, business have responded to this concern, with brand-owners increasingly highlighting the benign or even beneficial effects their products and services have on the natural world. However, environmental issues are highly technical, and therefore raise a significant risk of confusing and misleading consumers, who may be persuaded to part with their cash to obtain products whose environmental benefits may be less than they appear. A European Commission website screening project, which reported in January, found that green claims were exaggerated, false or deceptive in 42% of cases, and more than half the time the information provided was in­ad­equate. 2021 therefore saw an increased focus from regulators on misleading green claims. In the UK, the Competition and Markets Authority recently published a new Green Claims Code, setting out six key principles for traders to follow when making environmental claims, together with over 100 pages of examples and more detailed advice, and has implied that enforcement in this area may follow soon in 2022. The Advertising Standards Authority recently carried out a review of its regulation of green claims regulation, announcing its decisions following the first stage of its review in September. 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Avoid industry jargon, or explain it when used. 2. Be specific Identify the specific environmental benefit of your product or service and state it clearly. Avoid terms like “sus­tain­able”, “green”, “en­vir­on­ment­ally friendly”, “eco-friendly” or “kind to the planet”, which are largely meaningless. Comparative claims, such as “more sustainable” or “greener”, may be acceptable if you explain the specific environmental benefit clearly. A claim made for a product or service generally should be based on a “cradle-to-grave” assessment, taking into account the environmental effects of inputs such as raw materials, water and electricity, manufacturing, transport, use and end-of-life disposal. Even with more narrowly-framed claims, make sure you consider all aspects – a common pitfall is to claim that packaging is recyclable or plastic free, without considering whether inner packaging, glue or tape, all of which form part of the packaging, meet that description. 3. Limit your claims to what you can prove Start with the evidence you have, and work out what claims you can make based on that evidence. A common pitfall is to start with the claim and then cast about for evidence to support it, which often leads to a broader claim than can be substantiated. If you have taken waste out of the supply chain, limit your claim to the supply chain. If you have reduced CO2 emissions from transport, limit your claim to transport. 4. Sub­stan­ti­ation should be thorough and detailed Because they are often technical and detailed, environmental claims may require in-depth substantiation, and you may need to expend significant time and effort compiling it. For example, claims regarding carbon neutrality or reduced carbon require a thorough survey of a business’s operation and supply chain over a significant period, first to determine its baseline carbon emissions and then to track its progress towards reduced carbon or carbon neutrality. 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The features compared should be material and representative, and also “veri­fi­able”, which requires the detailed basis of the comparison to be disclosed proactively, either in the advertising itself or by way of a “signpost” in the ad directing readers to the source of information.  

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