On 13 June 2023, the Netherlands Authority for Consumers and Markets (ACM) published its updated Guidelines regarding Sustainability Claims, which replace the ACM's earlier guidelines that were published in 2021. The updated guidelines provide more clarity on what makes sustainability claims compliant with unfair commercial practice rules, and what could make these claims misleading to consumers.
Sustainability is on everyone's mind. It is not only important for businesses, but increasingly so for (individual) consumers. The sustainability impact of a product or service is becoming a key factor that consumers consider when making purchasing decisions. To do so, consumers need – and have a right to - accurate and specific information about the product's environmental impact or sustainability benefits.
However, a 2022 European Commission impact assessment report showed that most environmental claims are too vague, misleading and/or unfounded. This was demonstrated by the absence of clear common rules, with the current framework resembling a patchwork of different EU consumer protection laws – such as the Unfair Commercial Practices Directive (UCPD) – and of EU or national codes and regulations such as the Dutch Code for Environmental Advertising (CDR).
Better framework to navigate current patchwork of obligations
The EU Commission has recognised the need for clarity and better rules, as reflected in two recent legislative proposals. Its March 2022 proposal to amend Directives 2005/29/EC and 2011/83/EU aims to strengthen the consumer's position in the green transition and to protect consumers against unfair commercial practices. And in March 2023, the Commission also put forward a proposal for a directive on the substantiation and communication of explicit environmental claims (Green Claims Directive, or GCD). As the name indicates, the CGD sets out concrete and specific obligations for the phrasing of "green" claims, as well as more extensive requirements on how such claims should be substantiated. Its aim is to strengthen consumer protection against untrustworthy or false environmental claims. Following the ordinary legislative procedure, the proposal is now awaiting approval by the European Parliament and the Council.
Along with these developments at the European level, the Dutch Advertising Code Committee (RCC) published a new version of the Dutch Code for Environmental Advertising (CDR) in February 2023. The new version anticipates the requirements to be introduced by the future GCD. On 13 June 2023, the ACM also updated its Guidelines on Sustainability Claims, in line with the changes made to the CDR and in anticipation of the proposed EU legislation. These updated ACM guidelines also incorporate the ACM's experience with the 2021 version of the guidelines and industry feedback.
As it may take some time before the GCD is implemented, both the updated CDR and the updated ACM guidelines provide welcome tools to navigate the complicated patchwork of obligations currently in place.
The updated ACM Guidelines regarding Sustainability Claims
The ACM guidelines formulate five rules of thumb and specific points for attention to keep in mind for each rule. The updated guidelines also provide clearer explanations and better illustrations of what makes a claim correct or incorrect compared to the CDR and the 2021 ACM guidelines.
The updated Guidelines offer the following key take-aways:
Expected ACM enforcement and other legal risks
Sustainability claims are an enforcement priority for the ACM. This can have serious implications for businesses operating in consumer-sensitive sectors. The 2021-2022 investigations into the use by big retailers H&M and Decathlon of "conscious" and "Ecodesign" labels illustrate this. In both cases, the ACM found the labels to be vague and, consequently, misleading. The RCC has also proven to be strict on misleading sustainability claims, and the threshold to bring complaints before the RCC is low.
And finally, misleading sustainability claims could lead to civil liability, as they constitute unfair commercial practice, and are considered a tort under article 6:162 of the Dutch Civil Code. As such, a sustainability claim that is found misleading by the ACM or RCC may lead to individual consumers or claim vehicles seeking damages.