Background

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:

1. When evaluating a claim, its overall impression on the public should be taken into account. The impression that the claim gives may not create greater expectations of the product or service's sustainability benefit or performance than what the company can meet. Words, pictures, symbols, colours and labels should all support and accurately reflect the message of the claim.
2. Using specific terms and plain language is important, as is avoiding the use of jargon or words that could be misinterpreted or interpreted in various ways.
3. Providing additional explanations or additional information should be presented as close to the claim as possible or within one action away. This means that consumers should not be unnecessarily burdened by having to find this information by themselves. An example of this would be providing a QR code that links the consumer directly to the webpage where the explanation or additional information can be found.
4. Perhaps most importantly, claims that cannot be corroborated with facts are misleading. The updated guidelines emphasise the importance of using trustworthy, independent and verifiable data, and of transparency with regard to methods used for corroboration.
5. Vague and absolute terms must be avoided. This includes wording such as: "environmentally friendly", "eco", "green", "sustainable", "biologically degradable", etc. Apart from being difficult to understand and interpret, vague and absolute terms are subject to even more stringent substantiation requirements: they can only be used if you can demonstrate that the whole or part of the product does not have any negative impact on animals, humans or the environment in general.
6. Companies must clearly indicate whether a claim relates to a future sustainability goal, explain the plan that they will use to attain this goal, and how progress can be evaluated. Moreover, such sustainability ambitions or goals cannot be used to corroborate current or future claims.
7. Comparisons with competing products, services or companies must be fair and understandable. This means making comparisons with similar products or product elements. Moreover, it is necessary to be specific about what is being compared and what the comparison relates to. The ACM recommends using verifiable data and common standards (such as percentages) when making comparisons.

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.