Recent legal developments relating to misleading advertising and green claims

Introduction
This article is intended to provide a brief summary of the Dutch legal regime regarding misleading advertising and the contents of the EU’s recent Greenwashing Directive and Green Claims Directive (as defined hereafter), which are expected to enter into force later this year.

General Dutch rules related to misleading advertising
Pursuant to Dutch law, any advertising statement should be factually accurate and should not be capable of misleading the average consumer. This follows from Article 6:193c Dutch Civil Code (DCC) which contains a list of characteristics which, if presented inaccurately or misleadingly, can lead to a tort claim by a consumer based on unfair market practices. An omission of essential characteristics of a product can also lead to a tort claim by a consumer based on unfair market practices (Article 6:193d DCC). These statutory provisions are implemented into Dutch law from Directive 2005/29/EC (as amended through subsequent directives).

The abovementioned rules apply in a B2C-context. In a B2B-context, business purchasers may base similar claims on general tort rules (Article 6:162 DCC). Competitors can also base misleading advertising claims on Article 6:194 DCC or Article 6:194a DCC (which latter provision contains rules pertaining to comparative advertising), which are both implemented from Directive 2006/114/EC.

Green claims: Greenwashing Directive and Green Claims Directive 
One of the ways in which product and business claims can be misleading is through the presentation of incorrect or confusing information which – in essence – creates the impression that a product or enterprise is more environmentally sound than it is. This phenomenon is commonly referred to as ‘greenwashing’. Environmental claims will hereafter be referred to as green claims.

The EU intends to eliminate greenwashing and to empower consumers to make better informed choices and play an active role in the green transition. This should also reward traders for better environmental performance. To this effect, two new Directives are expected to enter into force shortly.  

Greenwashing Directive
The Directive Empowering Consumers for the Green Transition through Better Protection against Unfair Practices and Better Information (Greenwashing Directive) is an amendment of Directive 2005/29. The Greenwashing Directive covers all sustainability claims relating to a product, a brand, a company, or a service made in relation to consumers (B2C). The Greenwashing Directive introduces the following prohibitions (claims which are always unfair):

• The use of generic green claims, i.e. explicit green claims such as for example ‘environmentally friendly’, ‘eco-friendly’, ‘eco’, ‘green’, ‘carbon neutral’, ‘biobased’, etc., whenever there is no sufficient (excellent) environmental performance demonstrated or whenever the specification of the claim is not provided in clear and prominent terms on the same medium, such as the same advertising spot, product’s packaging, or online selling interface.
• Display of sustainability labels that are not based on an independent, third-party verification scheme.
• Environmental claims relating to an entire product or business which in fact only pertain to a specific aspect of the product or specific business activity. 

In addition, the Greenwashing Directive characterizes any explicit green claim as misleading if:

• It advertises benefits for consumers that are considered a common practice in the relevant market.
• Where it pertains to future environmental performance, it is provided without clear, objective, and verifiable commitments and targets and without an independent monitoring system.
• When products are compared as a service, including a sustainability information tool, if it is offered without information about the method of comparison, the products which are the object of comparison and the suppliers of those products.

The European Parliament approved the Greenwashing Directive on 17 January 2024. The Council is expected to endorse the provisional agreement shortly, after which the Directive will be published and shall enter into force. Member States will have 24 months to adopt the Greenwashing Directive into local law.

Green Claims Directive
The Directive on substantiation and communication of explicit environmental claims (Green Claims Directive) supplements the Greenwashing Directive by setting in place requirements for traders in relation to the substantiation and communication of explicit green claims.

Pursuant to the Green Claims Directive, traders are required to carry out an assessment which satisfies the requirements laid down in the Green Claims Directive to properly verify and substantiate explicit green claims.

In the context of this assessment, traders should – amongst other detailed requirements – rely upon widely available scientific evidence and demonstrate that environmental impacts, environmental aspects, or environmental performance that are subject to the claim are significant from a life-cycle perspective.

The Green Claims Directive also provides for detailed standards for the substantiation of comparative green claims.  

In addition, the Green Claims Directive introduces new requirements for environmental labelling schemes and a requirement for Member States to set up a procedure for the approval of new environmental labelling schemes based on a certificate of conformity drawn up by an independent verifier.

The Green Claims Directive has been approved in joint committee in January 2024 and will be put to a vote at an upcoming plenary session which will constitute the European Parliament’s position upon first reading and will then be followed up on by the new Parliament after the European elections on 6-9 June 2024.

Green claims: guidelines Dutch Authority for Consumers and Markets and Advertising Code Commission
Relevant for the situation in The Netherlands is also that the Dutch Authority for Consumers and Markets (ACM), on 16 June 2023, updated its guidelines regarding sustainability claims. In this respect, the ACM has formulated five ‘rules of thumb’ which can be considered when phrasing and using green claims.

The ACM is already taking enforcement measures against greenwashing based on existing unfair market practices rules (as described above) and has the authority to levy substantial administrative fines.  

In addition, the Advertising Code Commission (Reclame Code Commissie) provides for non-binding self-regulation of the advertising sector, amongst which a Code for Sustainability Advertising, which was published in 2023. The Advertising Code Commission handles complaints in relation to misleading advertising. Its decisions are of a non-binding nature.

Practical implications
The legal landscape in relation to green claims is developing rapidly and it is likely that this will lead to increased regulatory scrutiny and litigation risk in the years to come. To mitigate these risks, companies should be mindful of phrasing and using green claims in a compliant manner. 

Please feel free to reach out to the expert team at BUREN should you have any questions.