Note on Greenwashing Guidelines
The Central Consumer Protection Authority, on the 20th of February 2024 released “Draft Guidelines on the Prevention and Regulation of Greenwashing” for public consultation. These guidelines, in a nutshell, are to prevent false or misleading environmental claims by service providers, product sellers, advertising agencies or “endorsers”. This is colloquially known as Greenwashing. Though they are not yet law, they are likely to become enforceable soon and hence, companies engaging in making environmental claims with respect to goods/services should take note.
Definition of Greenwashing
The draft guidelines define Greenwashing as “i.) any deceptive or misleading practice, which includes concealing, omitting, or hiding relevant information, by exaggerating, making vague, false, or unsubstantiated environmental claims and ii.) use of misleading words, symbols, or imagery, placing emphasis on positive environmental aspects while downplaying or concealing harmful attributes”.
Further, the definition of “environmental claims” is broad enough to include any sort of advertising with respect to a good or a service. There are certain broad exceptions, of course, and the same have been covered in the final section.
Greenwashing in the Healthcare Industry
Instances of greenwashing in the healthcare industry have been particularly noted in the pharmaceutical and medical devices sectors. For example, with respect to certain allopathic and ayurvedic products, companies often use terms like “clean”, “pure”, “natural”, “hypoallergenic”, “green formula”, “safety-tested”, or “organic”. Further, with respect to medical devices, claims such as “CO2 neutral,” “environmentally friendly,” or “recyclable” are often made.
In general, the guidelines apply to all advertisements and products/services that make environmental claims. It is not only the service provider or product seller but an advertising agency or “endorser” who will be subject to these guidelines.
To be specific, the applicability is as follows:
(a) all advertisements regardless of form, format or medium.
(b) a manufacturer, service provider or trader whose goods, product or service is the subject of an advertisement, or to an advertising agency or endorser whose service is availed for the advertisement of such goods, product, or service.
Ban on Greenwashing
There is a specific ban on greenwashing as per the guidelines and action will be taken under the Consumer Protection Act, 2019 for any violations. There are no additional penalties provided as of now in the Guidelines.
Environmental Claims, generally need to be substantiated by adequate scientific evidence. Where using technical terms such as “environmental impact assessment”, they need to be explained in a “consumer friendly” manner. Generic terms such as “clean”, “green”, “eco-friendly” need to be backed by verifiable evidence.
With respect to the level of clarity and unambiguity, the illustrations below provide some useful clarifications:
Illustration 1: “Go green with our product!” The claim is unclear and ambiguous, as it doesn’t specify what does the word ‘green’ convey or how the product is environmentally friendly. Hence case adequate qualifiers and substantiation should be provided.
Illustration 2: “Harnessing the power of sustainable technology!” In relation to such a claim, specific details about how the technology is sustainable should be disclosed.
Disclosures Required
Truthfulness: At the outset, it is important to note that any disclosures made should not contradict the claim made. They need to be truthful and specific. Material information with respect to a claim needs to be disclosed by inserting a QR Code or URL which will contain the relevant information. Such information cannot be “cherry-picked” and be one-sided.
Specificity: It should be specified if the claim is related to the good, manufacturing process, packaging, manner of use of the good or disposal or service. Futuristic environmental claims can be made only when such claims are explained as to how those objectives will be achieved.
Illustrations for truthful and specific claims as per the guidelines are provided below:
Illustration 1: “Our packaging is made from 100% recycled materials.” Without verifiable evidence or certification, this claim might be misleading.
Illustration 2: “Energy-efficient technology for a greener tomorrow!” Without providing specific data or comparisons, this claim may lack substance.
Comparisons: If products or services are being compared, they must disclose the exact aspects being compared and must be based on verifiable data. Illustrations from the guidance note regarding the same are produced below:
Illustration 1: “Our energy-efficient light bulbs outperform all others!” The claim lacks context and does not specify which bulbs are being compared. For fair and meaningful comparisons, the company should compare its bulbs to others with similar characteristics and intended uses.
Illustration 2: “Chemical-free cleaning for a safer environment!” This claim may mislead consumers by implying that other cleaning products are unsafe.
Absolute and relevant: If a claim is with respect to a specific feature, part or stage, the same should be disclosed.
Illustration 1: “A packaged product is labelled with an unqualified claim, “recyclable.” It is unclear from the type of product and other context whether the claim refers to the product or its package.”
Exclusions
There are two main exceptions.
Firstly, the guidelines will not apply to any advertisements or communication that is not specific to any product or service, unless the advertisement or communication directly or indirectly links to any product or service.
Illustration: A Company in its Mission Statement makes a statement that “its growth will be based on sustainability principles”. For the purpose of the guidelines this will not be treated as environmental claim as it does not relate specifically to a product or service. However, if the Company further makes a statement that “and all its products are manufactured in sustainable manner”, then such an environmental claim will be examined for greenwashing.
Secondly, there is an exception regarding the usage of “(i) obvious hyperboles, puffery, or (ii) the use of generic colour schemes or pictures; either not amounting to any deceptive or misleading practice”.
The standard of “obvious hyperboles/puffery has not been defined”. Courts have previously held that puffery requires “denigration of the rival product”. However, considering that there are specific laws with respect to comparison of rival products in these guidelines, i.e. that they must be based on verifiable data, the scope for puffery will be very limited.
Please note that the above is only an opinion of the draft Greenwashing law released by the CCPA. It should not be construed as legal advice. In order to seek specific legal advice, please contact us directly.