German Federal Court of Justice on advertising with an ambiguous environmental term
The First Civil Senate of the German Federal Court of Justice, which is in charge of competition law, has ruled that advertising with an ambiguous environmental term (here: “climate neutral”) is generally only lawful if the specific meaning of the relevant term is explained in the advertising itself.
Judgment of June 27, 2024 – I ZR 98/23
The Center for Combating Unfair Competition (Zentrale zur Bekämpfung unlauteren Wettbewerbs) claimed that an advertisement in a food industry journal of a food manufacturer was misleading by using the term “climate-neutral” by referring to the website of a “ClimatePartner” only and without giving further details. The manufacturing process of the food manufacturer itself is not CO2-neutral. Rather, the food manufacturer supports various climate protection projects via the “ClimatePartner” to offset CO2 emissions.
The German Federal Court of Justice (BGH) ordered the food manufacturer to cease and desist the advertising. It held that the advertising is misleading within the meaning of Section 5 (1) of the German Act Against Unfair Competition (UWG). The advertising is ambiguous because the term “climate-neutral” can be understood by the readers of the journal – no differently than by consumers – both in the sense of a reduction of CO2 in the production process as well as in the sense of a mere compensation of CO2. The BGH stressed that in the area of environment-related advertising – as with health-related advertising – the risk of misleading is particularly high and that there is an increased need to inform the target public about the meaning and content of the terms and signs used.
In the case of advertising that uses an ambiguous environmental term such as “climate neutral”, the specific meaning must therefore be explained in the advertising itself in order to avoid misleading. Informative references outside the environmental advertising are not sufficient in this respect. An explanation of the term “climate-neutral” was necessary here in particular because the reduction and compensation of CO2 emissions are not equivalent measures for achieving climate neutrality, but the reduction takes precedence over compensation from the point of view of climate protection. The misleading statement is also relevant in terms of competition, as the advertising of a product with a supposed climate neutrality is of considerable importance for the consumer’s purchasing decision.
In line with this decision by the German Federal Court of Justice, the European Parliament passed a law on greenwashing in January1. According to this, slogans such as “environmentally friendly”, “climate neutral” or “biodegradable” should no longer be printed on products without reliable evidence. This development on the part of both legislation and the courts is not only relevant for food producers, but can also be applied to any other form of advertising, such as advertising for sustainable financial products. The decision of the BGH shows the level of detail required for transparency and that potential customers and addressees of advertising must be informed about the significance of sustainability for the specific product in question by means of the advertised product. The customer should be able to receive the relevant information directly without further action, e.g. by being forwarded via a link.
1 Available at https://eur-lex.europa.eu/eli/dir/2024/825/oj
