01 February 2024
roadmap
austria
Climate change knows no borders. But what about greenwashing?
As we wrote in last year's edition, sustainability claims are "trendy but tricky", at least from the perspective of advertisers: On the one hand, there is social and economic pressure to offer green, sustainable, climate-friendly or even CO2-neutral products and services. On the other hand, one should avoid not only the accusation but also the legal consequences of engaging in greenwashing, i.e. misleading environmental advertising. This year, our slogan needs the following update: "Sustainability claims: trendy, tricky and soon to be expensive", as the EU Commission's latest proposal for a Directive on Green Claims foresees a strict regulation of environmental claims and labels.
But before we report on these latest EU-wide developments in environmental advertising, let's look at how the topic of greenwashing has been handled throughout the CEE region so far. After all, how else are we to understand the impact of the changes that await us?
Greenwashing policies currently in place across CEE
From a legal perspective, the CEE region is hardly a safe harbour for misleading sustainability claims. Like all other commercial practices, claims relating to environmental benefits must comply with unfair competition and consumer protection laws. Already today, CEE jurisdictions provide for general prohibitions of misleading commercial practices in accordance with the standard set by the Unfair Commercial Practices Directive (UCPD).
But greenwashing is not only prevented and sanctioned under national laws across CEE. The awareness of misleading advertising in the form of unsubstantiated, vague or simply inaccurate sustainability claims is also on the rise. Besides the EU Commission's Greenwashing Guidance, national authorities and councils in several CEE countries such as Bulgaria, the Czech Republic, Hungary and Poland have issued their own guidelines on environmental advertising.
Moreover, it is already known that competent authorities in some CEE countries have launched investigations in relation to potential cases of greenwashing (Poland) or the discrepancy between the actual content of different sustainability (green) advertising messages and how they are perceived by consumers (Hungary). Similarly, the Austrian Consumer Protection Association has created its own "Greenwashing report form".
Greenwashing prosecution and litigation across CEE
Notably, there are differences as to who may ultimately bring actions against companies who make misleading environmental claims. In some countries such as Austria, Bulgaria or the Czech Republic, advertisers may be held liable for their misleading sustainability ads by competitors, legal entities like consumer protection organisations or even directly by consumers. Other countries foresee prosecution through state authorities. In Hungary for example, the Hungarian Competition Authority ("HCA") recently fined a tanning salon for making unsubstantiated claims such as "green organic", "bio" and "the power of nature" combined with health benefits like "helps calcium absorption" and "better joint movement". Also, the HCA fined a dental clinic for claiming without proof to be an "environmentally conscious clinic".
But the differences with regards to greenwashing prosecution and litigation across the CEE region go beyond the question of who has the right to bring in actions or impose fines. While some countries appear to have no case law in relation to misleading sustainability claims, other countries such as Poland have court decisions on more traditional claims such as "eco" or "bio". In Austria, the Supreme Court has decided on a number of greenwashing cases over the past decades, though decisions on more recent trends in environmental advertising (e.g. statements about CO2 or climate neutrality) are still either missing or wanting. Thus, it appears that the competent legal authorities and entities across the CEE have also shown a different level of activeness in terms of court cases brought related to greenwashing.
What to expect from the proposal for a Directive on Green Claims
The EU Commission has not been shy about its aim to "eliminate" greenwashing once and for all. Already last year, we reported on the proposal for a Directive on empowering consumers in the green transition, which introduces several amendments to the UCPD specifically targeting sustainability claims. However, by issuing its latest proposal for a Directive on Green Claims, the EU Commission has now shared its plans for a much stricter regulation of environmental advertising, comparable only with its standards for health claims.
First, the Green Claims Directive foresees numerous minimum requirements for the substantiation of explicit environmental claims as well as a general obligation for claims to concern a significant environmental impact, aspect or performance.
Second, the EU Commission plans to set strict requirements for environmental labelling schemes, which include banning all new national or regional environmental labelling schemes established by the public authorities of the Member States.
The minimum requirements of the Green Claims Directive will receive weight, particularly through an ex-ante verification issued by so-called "verifiers", which are yet to be established. If such certification is successful, advertisers will be issued with a certificate of conformity, which will then be recognised throughout the EU.
Moreover, the proposal sets standards as to how environmental claims may be communicated. These include minimum information requirements that must be provided together with the claim in a physical form or in the form of a weblink, QR code or equivalent.
The Green Claims Directive will be applied and enforced by national authorities, which the EC wants to equip with a series of investigative measures as well as the right to issue injunctions and impose fines for violations of its provisions. At the same time, the proposal's communication requirements (especially the minimum information requirements, which will probably be considered essential information from a misleading advertising standpoint) must be considered in the context of unfair competition law, for example by competitors or consumer protection associations, but also by authorities or other legal entities with the power to follow up on accusations of greenwashing.
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Country |
Which laws currently in place may prevent companies from making misleading claims about the environmental merits of their products and services? |
Who is allowed to bring actions against companies who make misleading environmental claims? |
Is there any case law concerning misleading environmental claims? |
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Austria |
General prohibition of misleading commercial practices (Section 2 UWG) |
Competitors or certain institutions, such as consumer protection organisations. |
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Bulgaria |
General prohibition of misleading commercial practices. The National Council for Self-regulation has issued non-binding guidelines called the Bulgarian National Ethical Standards for Advertising and Commercial Communication which contain several provisions on environmental advertising (e.g. referral to national and international guidelines such as the International Standard ISO 14021 on "Self-declared environmental claims"; vague or non-specific claims of environmental benefits must be valid and without qualification in all reasonably foreseeable circumstances; reliance on evidence; claims must be based on definitive, generally accepted methods). |
Actions against companies who make misleading claims (of any kind) can be brought by: - consumers (according to the Bulgarian Consumer Protection Act); and - competitors (according to the Competition Protection Act) in case of a hypothetical possibility (as per the case law) that an advertisement may mislead the persons to whom it is addressed or reach, and therefore may influence their economic behaviour or for these reasons has caused or may cause damage to a competitor. |
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Czech Republic |
General prohibition of misleading commercial practices under the Civil Code (e.g. misleading advertising or misleading designation of goods or services). Prohibition of unfair or misleading commercial practices under the Consumer Protection Act. The Czech Environmental Information Agency ("CENIA") issued non-guidelines according to which environmental claims themselves will be considered misleading practices under certain conditions (e.g. if an undertaking makes unauthorised use of a quality mark or other similar indication such as eco-labels). |
Actions based on violations of provisions under the Civil Code: - the person who was threatened or infringed by unfair competition (cease and desist; remedy of the defective state; reasonable compensation); - the legal entity entitled to defend the interests of competitors or customers may also exercise the right to require the infringer to refrain from unfair competition or to remedy the defective condition. Under the Consumer Protection Act, a consumer whose right has been affected by an unfair commercial practice may, in addition to the claims arising from the Civil Code, withdraw from the contract within 90 days from the date of its conclusion or demand a reasonable reduction in price to the extent appropriate to the nature and seriousness of the unfair commercial practice. |
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Hungary |
General prohibition of misleading commercial practices. The Hungarian Competition Authority ("HCA") issued its own guidelines on greenwashing (a marketing or PR strategy with the intention of giving the impression that the undertaking in question is environmentally friendly and responsible for environmental protection while in its actual operation no substantive steps can be identified to achieve these goals). |
In Hungary, two authorities have the competence to step up against misleading commercial practices and impose fines: - capital and county government office acting in the field of consumer protection for smaller infringements (fines from HUF 15,000 (approx. EUR 40) to 5 % of the annual net turnover of the undertaking; maximum fine HUF 2bln (approx. EUR 5.2m); - the HCA for infringements that can affect fair competition (fines of up to 13 % of the group-wide worldwide revenues of the sanctioned company). |
The HCA is currently conducting a market study to investigate the discrepancies between the actual content of different sustainability (green) advertising messages and the way they are perceived by consumers. Recent cases in which the HCA imposed fines: - unsubstantiated claims such as "green organic", "bio", "the power of nature", which were combined with health benefits (e.g. "helps calcium absorption", "better joint movement") in relation to the services of a tanning salon; - general claims of a dental clinic being an "environmentally conscious clinic", which would have required proving that the clinic operates in an environmentally responsible way in all details of their services. |
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Poland |
Provisions regarding (i) misleading the customer, product labelling; (ii) spreading misleading information about a company in order to gain an advantage; (iii) unauthorised advertising under the Act on Combating Unfair Competition or (similarly) the Act on Counteracting Unfair Market Practices. Breaching consumers' collective interests under the Act on Protection of Competition and Consumers. Possible violation of Environmental Protection Law, which allows environmental organisations, among other things, to take entities to court if their advertising contains content that promotes a consumption model contrary to environmental principles. Misleading consumers by means of using labels such as "bio" or "eco" incorrectly may also violate the Organic Agriculture and Production Act. |
Both the Office of Competition and Consumer Protection ("UOKiK") and the Regional Inspector of Commercial Quality of Agricultural and Food Articles conduct investigations in relation to greenwashing. Businesses may be fined up to 10 % of their annual turnover.
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- Currently, the UOKiK is conducting eight investigations against entities from the clothing and cosmetics market and the trade platform to determine whether businesses, in connection with their marketing activities referring to ecology, sustainable development or environmental protection, have committed a breach justifying the initiation of proceedings on practices infringing collective consumer interests. - The judgment of the Supreme Administrative Court dated 4 October 2018 indicates that the labelling of goods by an agricultural producer with the slogan "eco" is not allowed if it does not meet the requirements set out in the regulation (EU 834/2007). In the case in question, the inspection authority imposed a fine of PLN 1,500 (approx. EUR 345) on the company for marketing nine batches of dairy products labelled as organic agricultural products in breach of Article 23(1) and (2) of Regulation No. 834/2007. The Court upheld the position of the inspection authority. - The judgment of the Regional Administrative Court in Warsaw dated 19 December 2012, in which the infringing company tried to defend itself by arguing that the prefix "bio-" is a reference to the Greek word bios, meaning "life", and therefore does not suggest organic production. In the case in question, the inspection authority imposed a fine of PLN 3,000 (approx. EUR 690) on the company for marketing fertilisers labelled in such a way as to suggest that they were intended for organic production. The court upheld the position of the inspection authority. |
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Romania |
General legislation inter alia related to unfair commercial practices, consumer protection, labelling, unfair competition and misleading advertising.
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Romanian authorities with power to act against misleading acts: - National Authority for Consumer Protection (power to impose measures against the misleading commercial practice under a motivated decision which can be contested by the concerned party before the court); - Competition Council (power to act against practices relating to unfair competition); - Ministry of Finance (power to act against acts of misleading advertising). |
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Serbia |
General prohibition of misleading commercial practices under the Serbian Consumer Protection Act (Art. 18).
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Under the Serbian Consumer Protection Act any consumer is entitled to (i) file a consumer objection, (ii) initiate a consumer dispute (which may also be settled out-of-court) or (iii) report irregularities to the competent inspection. In case of a breach of general prohibition of misleading commercial practices, the competent authority may charge a commercial entity with a fine ranging from RSD 300,000 (approx. EUR 2,500) up to RSD 2m (approx. EUR 17,000). |
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Slovakia |
Regulations on unfair competition, consumer protection or advertisement regulation.
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Claims can be brought by competitors, state authorities or consumers. |
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Summing it up
Already today, the UCPD provides for a general prohibition of misleading commercial practices that also applies to sustainability claims like "CO2-neutral", subject to case-by-case assessment. But although laws prohibiting greenwashing already exist in all CEE countries the extent to which advertisers have been targeted in relation to potentially misleading sustainability claims diverges across the region, with some national authorities being more active than others. Looking at the latest developments on an EU level, these differences could soon become a thing of the past as advertisers face severe limitations on sustainability claims and eco labels.
author: Antonia Hirsch
The complete CEE overview has been compiled by Antonia Hirsch, Daria Rutecka, Márk Kovács, Bálint Szabó, Sorin Eduard Pavel, Andrej Zoric, Libuše Dočekalová, Matej Črnilec, Michal Lučivjanský, Stanislav Bednář, Piotr Podsiedlik, Elena Todorova, Ventsislav Tomov and Andrea Radonjanin.
Antonia
Hirsch
Associate
austria vienna