Green Washing and Unfair Commercial Practices

SÉRVULO PUBLICATIONS 13 May 2020

The European Green Deal, announced in December 2019, provides for a series of policies and measures to make European economy sustainable. These measures are addressed not only to European institutions and member states, but also to companies and citizens due to their great importance in the promotion of a clean and circular economy. 

Therefore, in this Communication, it is recommended to the companies to disclose reliable, comparable and verifiable information to enable consumers to make sustainable decisions and to reduce the risk of ‘green washing’. In turn, the Commission will step up its regulatory and non-regulatory efforts in order to tackle false green claims. 

Therefore, at this point, it is important to understand what qualifies as a false green claim and why should companies be alert to this issue.  A green claim or environmental claim is a practice of suggesting or otherwise creating the impression that a good or a service has a positive or no impact on the environment or is less damaging to the environment than competing goods or services[1]. 

A green claim is deemed misleading when (i) it deceives or is likely to deceive the average consumer, even if the information is factually correct (ii) if it is based on vague and general statements of environmental benefits and (iii) if it implies a breach of a conduct code which the company promised to comply with. 

The companies shall (i) present their green claims in a clear, specific, accurate and unambiguous manner, (ii) have the evidence to support their claims and be ready to provide it to competent enforcement authorities (iii) moreover, an environmental claim should relate to aspects that are significant in terms of the product’s environmental impact and (iv) codes of conduct may include commitments in relation to environmental protection or "green behaviour”. 

Comparing environmental claims - claims may suggest that a product has a more positive impact on the environment or is less damaging to the environment than competing goods or services- cannot be misdealing, should compare goods or services meeting the same needs or intended for the same purpose, and objectively compare one or more material, relevant, verifiable and representative features of those goods and services. 

False green claims can be deemed unfair practices under Decree-Law no 57/2008, of 26 March, which transposed Directive 2005/29/CE on unfair commercial practices. 

The bodies responsible for the supervision and the instruction in the administrative procedures are ASE or the competent entity of the sector in which the unfair practice is detected. In the financial sectors, the competent authorities are the Bank of Portugal, the Portuguese Securities Market Commission and the Supervisory Authority for Insurance and Pension Funds in Portugal. With respect to an unfair commercial practice regarding advertising, is up to the Consumer Directorate-General. The practice of such unfair practices could lead to the imposition of fines on companies between €3.000,00 and €44.891,8. 

As far as we are aware, until now, there is no Portuguese court decisions regarding “green washing”, but it is known at least two landmark foreign decisions, described below. 

In Italy, on 20^th December, 2019, the Market and Competition Authority  imposed a fine on ENI S.p.A between €5.000,00 and €5.000.000,00 for disclosing misleading advertising messages and informative material regarding “Eni Diesel+”, a new oil produced by such company. 

The decision refers the content of the messages, the product logotype, the graphic image and some terms. For example, the content of the messages induced on the consumer the confusion between HVO, one of the compounds of the EniDiesel+ and known as “Green Diesel” and the Eni Diesel+ itself, the term “green” in English, created in consumers mind the idea of an absolute benefit for the environment and absence of damages. In addition, some advertising messages were so generic that the consumer could associate the reduction of CO² emissions and the use of the advertised oil.  

On the other hand, in the United Kingdom, on 5th February 2020, the Advertising Standards Authorithy demanded the removal from TV, radio and press the following Ryanair´s message: “Europe’s Lowest Fares, Lowest Emissions Airline”. Everybody knows that when you fly Ryanair you enjoy the lowest fares. But do you know you are travelling on the airline with Europe’s lowest emissions as well?”. It was considered that this message could lead the consumers to the perception that traveling with Ryanair would contribute to reduce CO² emissions, more than other Airlines. However, as matter of fact, Ryanair´s available data was not reliable because its comparative method was not the most appropriate, as some Airlines were not included and other Airlines had low emissions as well.  

 

Cláudia Isabel Costa | cic@servulo.com