How to Avoid Greenwashing on the Path to Sustainability?
Introduction
Sustainability is an important term that we have recently focused on to meet the needs of both present and future generations. This concept, which addresses economic, environmental, and social dimensions, requires extensive responsibilities and gains meaning through comprehensive cooperation. The significance of the efforts made to achieve sustainability goals is matched by the critical importance of the consistency of the steps taken and their strong connection to reality. Misuse of environmental sensitivity and misleading environmental practices pose a risk of misinforming the public and are referred to as greenwashing. According to European Commission data, 53% of green claims contain vague, misleading, or unsubstantiated information, 40% lack supporting evidence, and half of green labels offer weak or no verification . Misleading claims about the environmental values of products and services are prevented by various legal rules. This article briefly addresses the legal barriers to greenwashing.
What Does Greenwashing Mean?
Greenwashing, green painting, green marketing, and misleading environmentalism all refer to the same phenomenon. Greenwashing involves spreading misleading information to create an image of environmental responsibility for an undertaking. It is an action taken to create a perception that a product or service is environmentally friendly. The effects of this action are most often seen in marketing activities. When products are marketed as "green" or services are presented as "environmentally friendly" or "sustainable," and consumer choices are deliberately and knowingly shaped by this perception, it is referred to as greenwashing.
Green and eco-friendly products and services are those that cause minimal harm to the environment during their production, use, and disposal processes. They are made using environmentally-conscious or recycled materials. Examples of green and eco-friendly products and services include eco-friendly hygiene products, biodegradable packaging, and electric vehicles. Additionally, energy-efficient home appliances, sustainable construction practices, and food products produced with sustainable agricultural practices are also considered sustainable products.
Products described as green, eco-friendly, nature-friendly, or sustainable should aim to protect or enhance the natural environment compared to traditional products by saving energy, and reducing or eliminating the use of toxic and harmful substances, pollutants, and waste. However, if businesses make misleading claims to present their environmental responsibilities more favourably than they are, or if their claims and statements do not align with the true nature of the products and services offered, such actions can mislead consumers and violate legal regulations.
Legal Barriers to Greenwashing: Regulations and Violations
Making misleading claims about products or services being environmentally friendly or sustainable when they do not have environmental responsibility constitutes both unfair competition and a breach of the principle of honesty, as well as violating regulations concerning consumer protection.
Unfair Competition and Breach of the Principle of Honesty:
The Turkish Commercial Code No. 6102 ("TCC") aims to prevent unfair competition and ensure integrity and transparency in commercial activities. According to Article 54 of the TCC, deceptive or dishonest practices that affect relationships between competitors or between suppliers and customers are considered unfair competition and are unlawful. Examples of such behaviours and practices that constitute unfair competition are comprehensively listed in Article 55 of the TCC. Making false or misleading statements about products and services, which mislead customers, is among the practices deemed to constitute unfair competition.
Violation of Consumer Protection Regulations:
Law No. 6502 on Consumer Protection ("Consumer Protection Law") aims to protect consumers' health and safety, economic interests, and provide remedies for damages, protection from environmental hazards, and inform and educate consumers. It also encourages consumer self-protection initiatives. The Consumer Protection Law regulates commercial advertising and unfair commercial practices under a separate section. According to Article 61 of the Consumer Protection Law, deceptive advertising or advertising that exploits a consumer’s lack of experience or knowledge is prohibited.
Furthermore, the Regulation on Commercial Advertising and Unfair Commercial Practices (“Commercial Advertising Regulation”) contains a specific provision regarding environmental claims in advertisements. According to this provision, advertisements that include environmental claims should not use expressions that exploit consumers' sensitivity to environmental issues or their lack of knowledge. Additionally, environmental signs and symbols cannot be used misleadingly, and only scientific findings and technical representations accepted by academic institutions can be used regarding environmental impact. For products that require energy labeling, the energy efficiency class must be specified in advertisements. Moreover, using quality marks, safety marks, or environmental marks without obtaining the necessary approvals from the relevant authorities is considered an unfair commercial practice.
The Guideline on Advertisements Containing Environmental Claims, issued to ensure compliance with relevant regulations in commercial advertising and practices, also provides guidance for preventing misleading environmental claims. This Guideline primarily aims to prevent the exploitation of consumers' environmental sensitivity and the misleading use of environmental signs through advertisements. To achieve this, terms like “green” and “sustainable” should not be used without explanation, and the scope and application of environmental claims should be clearly stated. Future environmental impacts should be included in publicly available and verifiable strategy documents. Claims such as “biodegradable” must specify which part of the product they apply to and under what conditions. Additionally, in comparative claims, the content of the comparison must be clearly stated.
Examples of Greenwashing Practices
Undertakings may engage in greenwashing through misleading environmental claims and visual promotions to gain a market advantage and create an environmentally friendly image. While these deceptive practices may help businesses achieve their short-term goals, they can lead to long-term reputational damage and legal penalties. With increasing environmental awareness, there has been a rise in misleading advertisements containing environmental claims by undertakings. The Turkish Ministry of Trade has stated that it is diligently working to prevent consumers from being misled by such greenwashing methods . In this context, the Advertising Board has imposed administrative sanctions on companies in the food, clothing, and durable goods sectors for using vague and unprovable claims like “eco-friendly” and “climate-friendly” in their advertisements. Similarly, foreign courts have also ruled that advertisements containing greenwashing constitute unfair competition.
The Advertising Board’s Decisions
According to the press release from the Advertising Board meeting No. 346 dated 11.06.2024 ("Advertising Board Press Release") , it was determined that the general terms such as “Eco-Friendly, Sustainability Detail: Eco-Friendly and Eco-Friendly Production Techniques” used in the advertisements on the website of a ready-to-wear brand caused ambiguity and exploited the lack of information among consumers without providing an explanation or details on the environmental impacts of the product's production processes. Additionally, the claims and technical demonstrations in the advertisements stating “We used 30% fewer chemicals and saved 40% water with eco-friendly production techniques” could not be substantiated with information and documents obtained from the relevant departments of universities or accredited independent research, testing, and evaluation organizations, as required by the Commercial Advertising Regulation. Consequently, it was decided to halt these advertisements.
Likewise, according to the Advertising Board Press Release, it was determined that the general terms such as "Climate-Friendly Movement, Climate-Friendly Product" used in the promotions of an AquaTouch technology washing machine and an eco-program dishwasher on the website of a company operating in the durable consumer goods and consumer electronics market caused ambiguity and exploited the lack of information among consumers without providing an explanation or details on the environmental impacts of the product's production processes. Additionally, the claims of “Saving 22 Tons of Water Annually” and “32% Less Carbon Emissions” could not be scientifically substantiated as required by the Commercial Advertising Regulation. Consequently, the company was penalized with a cessation order for these advertisements.
Greenwashing Decision of The German Federal Court of Justice
The German Federal Court of Justice, in its ruling dated June 27, 2024, and numbered I ZR 98/23 , determined that the claim made by a company operating in the food sector that all its products have been produced as climate-neutral since 2021 was misleading and ordered the cessation of this advertisement. This decision, made under the German Unfair Competition Act (Gesetz gegen den unlauteren Wettbewerb), emphasized that unsupported and vague “climate-neutral” claims can be misleading and require companies to define the term “climate-neutral” in their advertisements. The court stated that this term could be understood to mean both reduction and compensation of CO2 emissions are not equivalent measures for achieving climate neutrality, but reduction takes priority over compensation from the point of view of climate protection and thus should be clarified in advertisements.
Greenwashing Decision of The Australian Federal Court of Justice
The Australian Federal Court, in its ruling dated March 27, 2024, and numbered VID 563 of 2023 , decided that Vanguard Investments Australia Ltd. (Vanguard) breached the law by making misleading claims about the environmental, social, and governance (ESG) exclusionary screens used for the Vanguard Ethically Conscious Global Aggregate Bond Index Fund (Hedged), a managed investment scheme launched in August 2018. The Australian Securities and Investments Commission (ASIC) alleged that from August 2018 to February 2021, Vanguard misrepresented the fund's adherence to ESG criteria and standards, thereby misleading investors regarding the fund's ethical investment claims. Despite Vanguard’s assertions that the fund excluded companies with significant operations in industries such as fossil fuels, it was found that many securities were not adequately screened, including those that did not meet the ESG criteria. This case highlights issues of misleading marketing and greenwashing within the financial services industry.
Conclusion
Undertakings must avoid greenwashing while striving to achieve sustainability goals in their market activities. Ensuring that environmental labels and green claims are reliable and credible helps consumers make better-informed purchasing decisions. Additionally, undertakings that enhance the environmental sustainability of their products and activities can improve their competitive edge. The provisions of the TCC addressing unfair competition and breaches of the principle of honesty, along with the Consumer Protection Law and its secondary regulations, offer various obstacles to misleading environmental claims, thus aiming to prevent greenwashing. Moreover, decisions by the Advertising Board and foreign court rulings also provide significant oversight and enforcement mechanisms to curb greenwashing. These legal frameworks and oversight mechanisms promote environmental sustainability while ensuring the principles of transparency and accuracy are upheld.
- European Commission, “Green claims”, https://environment.ec.europa.eu/topics/circular-economy/green-claims_en (Last Access Date: 24.07.2024).
- Republic of Türkiye Ministry of Trade, “The Advertising Board Did Not Allow the Exploitation of Consumers' Environmental Sensitivity”, 20.06.2024, https://ticaret.gov.tr/haberler/reklam-kurulu-tuketicilerin-cevreye-iliskin-hassasiyetinin-istismar-edilmesine-izin-vermedi (Last Access Date: 24.07.2024).
- Republic of Türkiye, Ministry of Trade, Advertising Board’s Decisions, https://ticaret.gov.tr/tuketici/ticari-reklamlar/reklam-kurulu-kararlari (Last Access Date: 24.07.2024).
- Press Release No. 138/2024 of the Federal Court of Justice of Germany, https://juris.bundesgerichtshof.de/cgi-bin/rechtsprechung/document.py?Gericht=bgh&Art=pm&pm_nummer=0138/24 (Last Access Date: 24.07.2024).
- Federal Court of Australia, Australian Securities and Investments Commission v Vanguard Investments Australia Ltd [2024] FCA 308 https://download.asic.gov.au/media/szgi53ba/24-061mr-australian-securities-and-investments-commission-v-vanguard-investments-australia-ltd-2024-fca-308.pdf (Last Access Date: 24.07.2024).
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