Greenwashing Update: What you should know before advertising your products as "green", "eco-friendly" or "CO₂ neutral"

Under the slogan "trendy but tricky (and soon to become expensive)" we have been updating our readers on the increasingly stringent regulations governing environmental advertising over the past two editions of our roadmap. Although only a year has passed, there are already many legal developments to report on in this "trendy" yet serious topic. Reason enough to have a closer look at the ongoing efforts driven by the EU Green Deal to combat so-called "greenwashing" (misleading environmental advertising) at both the EU and CEE national level.

Misleading environmental claims remain subject to litigation in CEE and beyond.

The use of claims such as "green", "climate friendly" or "CO₂ neutral" in advertising has grown increasingly popular in recent years. However, as you may have noticed, accusations of greenwashing often quickly follow for those who misstep in highlighting their own or their product's environmental achievements or benefits. This heightened public scrutiny of environmental claims continues to be reflected in related litigation:

- In Austria, advertisers have recently been turning their attention to Germany, where the Federal Court of Justice (BGH) ruled that the claim "climate neutral" is ambiguous and often misleading unless the advertisement explicitly clarifies its specific meaning. Notably, the BGH's longstanding principles for assessing environmental claims under unfair competition law have been part of settled case law in Austria since the 1990s. Therefore, one can expect that Austrian courts would adopt the BGH's newest decision regarding the interpretation of the claim "climate neutral" if confronted with a similar case, particularly given the harmonisation of misleading advertising rules across the EU.

- Meanwhile, there have been reports of a lawsuit filed in the Czech Republic against a large supermarket chain. The claimant, a Czech nature protection association, contested that the supermarket chain had claimed that climate protection was important for all their activities while at the same time importing large amounts of plastic toys to give to customers for free as a reward for their purchases. Ultimately, according to media reports, the claims were dismissed for formal reasons (the claimant had requested an "apology" as opposed to cease and desist obligations). Thus, it remains open whether Czech courts would have considered the claim to be misleading. Nevertheless, this case shows the risks advertisers may face when making broad environmental claims without considering all (side) aspects that might be relevant from an environmental perspective.

- Finally, the Hungarian Competition Authority (HCA) continues to hold advertisers accountable for greenwashing. Both Hungary's largest reusable-cup distributor as well as producers of bottled water and soft drinks have become subject to investigations by the HCA. While the reusable-cup distributor who got challenged with regards to a waste-reduction claim was able to prevent further consequences by fully cooperating with the HCA, the proceedings against the drinks producers and their claims of "100 % recycled PET bottles" are still ongoing. This all comes as Hungary has further increased the maximum fine that the HCA can impose to 15 % of the group-wide worldwide revenues of the sanctioned company.

However, it is not only courts but also EU lawmakers who have been actively working to address greenwashing and help consumers make more sustainable purchasing decisions.

EmpCo Directive enters into force

On proposal by the EU Commission, two separate Directives to tighten the rules on environmental advertising have been addressed by EU lawmakers:

1. Directive (EU) 2024/825 as regards empowering consumers for the green transition through better protection against unfair practices and through better information ("EmpCo Directive"), which introduces several amendments to the Unfair Commercial Practices Directive specifically targeting sustainability claims; and

2. Directive on substantiation and communication of explicit environmental claims ("Green Claims Directive").

The first of these two, the EmpCo Directive, entered into force on 26 March 2024. While we briefly touched on some of the new, and at times highly casuistic, rules introduced by this Directive in our past two roadmap editions, it is now time to summarise the restrictions most relevant to advertisers in their day-to-day activities:

- Advertising using the terms "climate neutral" or "CO₂ neutral" should be categorically prohibited if these statements are based solely on compensation measures.

- Making generic environmental claims such as "green" or "climate friendly" will be prohibited under all circumstances where the company cannot demonstrate the environmental excellence to which the claim relates (see the new point (4a) of Annex I UCP Directive).

- Equally, environmental claims about a company's entire product or business operations (e.g. "We are CO₂-neutral") will be prohibited under all circumstances, where the environmental performance relates only to a specific aspect of the company's product or activities (see the new point (4b) of Annex I UCP Directive).

- Subject to a case-by-case assessment, environmental claims aimed at future environmental performances (e.g. "We will be climate neutral by 2035") will be considered misleading if the advertiser does not lay out clear, objective, publicly available and verifiable commitments and targets in a detailed and realistic implementation plan that shows how those commitments and targets will be achieved and that allocates resources to that end (see the new provision under Art 6 (1) (d) UCP Directive).

There is still time before this new set of rules will become legally binding for advertisers. Member States must now transpose the Directive by 27 March 2026 and apply the new provisions from 27 September 2026. So far, most CEE countries have yet to provide information on how exactly they will adapt their national law to implement the Directive. Looking at the transposition period, advertisers are well advised to already consider the new provisions (and prohibitions) before making environmental claims.

Green Claims Directive to be expected

Meanwhile, the proposal for a Green Claims Directive is taking shape. However, its strict stance on environmental advertising – especially the requirement for all green claims to be independently verified by third-party experts before publication – shows no signs of softening. On the contrary, on 17 June 2024, the EU Council adopted a general approach to the proposal, which will now serve as the basis for further negotiations. This approach introduces even tighter requirements for environmental advertising.

Perhaps most notably, the Council has limited the benefits for microenterprises, who under the initial proposal would have been able to opt out of the verification and certification requirements introduced by the Green Claims Directive. In practice, this means that all advertisers irrespective of their size and budget would be affected by the strict obligation to obtain (likely cost and time consuming) ex-ante certification before communicating any environmental benefits of their products.

Further, additional requirements of the general approach provide, f.ex., for substantiating climate-related claims, including those involving carbon credits. This underscores the EU lawmakers' particular focus on emissions-related claims, which – as we have seen – are not only subject to litigation but are also strictly regulated under the EmpCo Directive.

The Council's general approach also provides a simplified procedure to exempt certain types of explicit environmental claims from third-party verification. Whether this will be a significant facilitation for advertisers remains to be seen.

A map summarising recent legislative and case law developments in the CEE EU member states can be found here. For more detailed information, see the table below.

The map above also includes the answers to three questions from last year's greenwashing article. The detailed answers to the first three questions in the map can be found here.

Author: Antonia Hirsch

The complete CEE overview has been compiled by Antonia Hirsch, Daria Rutecka, Piotr Podsiedlik, Márk Kovács, Sorin Eduard Pavel, Libuše Dočekalová, Dina Vlahov Buhin, Lovro Saraf, Michal Lučivjanský, Elena Todorova, Ventsislav Tomov Andrea Radonjanin and Andrej Zoric.