ʹClimate neutral' and ‘environmentally neutral’ advertisers facing increasingly stringent requirements

At the end of July, the Karlsruhe Regional Court upheld a lawsuit filed by Deutsche Umwelthilfe (DUH) against the drugstore chain dm, according to which dm is no longer allowed to advertise liquid soap, sunscreen, shower cream and washing-up liquid offered under various private labels as ’climate neutral’ and ’environmentally neutral’.

The DUH claimed that dm did not transparently communicate on the products how the claimed climate neutrality was achieved and to which steps in the life cycle of the product the statement referred. In addition to the ’climate-neutral’ label, dm had printed a note on its products that the neutral CO₂ balance had been achieved through compensation measures. However, the court found that no clear reference was made to a website or other source where consumers could find out more about these compensation projects and the label's test criteria.

The court also followed the DUH's argument that climate neutrality could not be achieved through forest protection projects. Since the CO₂ released during production of the products remains in the atmosphere for several thousand years but trees can only bind it for a much shorter time, it will be released again in the long term. However, the average consumer does not just expect a delay in climate damage, but permanent prevention of that damage – something that forest protection products cannot deliver.

Dr. Fabian Klein, an expert in unfair competition law at Pinsent Masons, described the ruling as a continuation of the trend towards stricter monitoring of environmental statements.

"In the case of environmental advertising claims, the courts are increasingly assuming that consumers are strongly interested in environmental issues, and in particular are very critical of compensation projects,“ he said. ʺAs a result, the courts in this area are moving further and further away from the model of the ʹaverage’ consumer, which is actually prescribed by European law. When advertising with environmental claims, companies should therefore use this environmentally conscious, critical consumer as a yardstick in their internal review and approval."

And it is not only here that Klein sees a tightening: "The current ruling clearly states that, from the court's point of view, reforestation projects can never help to achieve ʹneutralityʹ. The Karlsruhe Regional Court is by no means alone in this. The possibilities of how compensation projects can be communicated in advertising are becoming more and more limited. In any case, various courts are already demanding that compensation measures may only be advertised once their own reduction options have been exhausted. At least from a marketing point of view, investing in such projects is therefore becoming less and less interesting – in the long term, probably to the detriment of the projects themselves," he said.

The Karlsruhe judges also found it misleading for a product to be described as ‘environmentally neutral’ where not all negative environmental impacts have been included in the assessment basis for compensation. The average consumer, who is interested in the environment, expects an ʹenvironmentally neutral‘ product to have a balanced environmental balance in all respects. In this case, of the 13 impact categories listed by the GREENZERO approach used by dm, dm had only covered five of those categories: CO₂ emissions; eutrophication; acidification; summer smog; and ozone depletion.

On its packaging, dm explained that the neutral environmental balance claimed for the products is based on the compensation of these five impact categories. However, the court found that this was misleading, because in doing so dm gave the impression that only these five environmental consequences had to be compensated for in order to achieve a balanced environmental balance.

Franziska Mauritz, an expert in advertising law at Pinsent Masons, emphasised the importance of precise communication by those making environmental claims:

"The ʹexcessiveʹ use of the claim ʹenvironmentally neutralʹ was dm's undoing here,“ she said. ʺdm deliberately did not include all impact categories in the chosen GREENZERO approach, but nevertheless designed the statement in such a way that it could be understood comprehensively. In order to avoid a misconception on the part of the consumer, dm should have made this limitation to the categories actually included clear on the packaging. The judgment therefore exemplifies that it depends on the exact design in the individual case."