Greenwashing: scrutinising eco-friendly imagery, labels and claims
Cyril Abrol and Radha Khera discuss the legal framework in India for making misleading sustainability claims
Published in October 1987 by the United Nations, ‘Our Common Future’ – also known as the Brundtland Report – defines ‘sustainability’ as “meeting the needs of the present without compromising the ability of future generations to meet their own needs.” The buzzword thus ought to be more than just false claims to ensure that future generations have access to the same resources our previous generations did.
Today, the perils of overconsumption of resources and a ‘lack of sustainability’ are manifest in the phenomenon of global warming, pollution and climate change. The blame for overconsumption cannot be parked at the door of any one industry – be it travel, energy, food or fashion – culprits are everywhere. With rising (rather, unavoidable) awareness of the damage done to our ecosystems, conscious consumerism is on the rise that takes into account the ethical, social and environmental values of products. The business implication of conscious consumption is forcing brands to rethink the way they innovate and communicate with customers to maintain their brand worth and value.
“We must have zero tolerance for greenwashing,” acknowledged the report released at the COP 27 climate conference in Egypt in November 2022. While some companies are choosing the hard green way and reworking their internal mechanisms, a lot of companies are only deploying what is commonly understood as ‘greenwashing’ – essentially a marketing strategy where brands and companies promote themselves as environmentally friendly when in fact their actions are inconsistent with their claims. In 2021, a global review of 500 websites by the International Consumer Protection Enforcement Network (ICPEN), found that around 40% of those brands make false claims. These false claims not only affect a brand’s worth in the eyes of its consumers, but also invites legal trouble and liability.
Green branding versus greenwashing
With brands feeling the need to emphasise the green-ness of their product as a means to achieving consumer engagement, adoption of trademarks indicative of words or symbols conveying environmental friendliness is on the rise. A European Union Intellectual Property Office (EUIPO) report published in September 2021 – ‘Green EU trade marks analysis of goods and services specifications, 1996-2020’ – found that in 1996, 1,588 out of the 46,700 EU trademark applications received by EUIPO were green trademarks. This number increased to 16,000 green EU trademarks filed in 2020.
‘Green-branding’ is when a brand owner adopts a trademark which makes use of words such as ‘eco’, ‘sustainable’, ‘zero impact’ or includes logos such as clean water, leaves, clear sky and so on. Typically, from the perspective of the Intellectual Property Office in India, objections concerning such green trademarks relate to the distinctiveness factor regarding use of the aforementioned words that may be considered generic or descriptive. This appears to be the position globally. As yet, no separate code or guidelines are published in India in terms of dealing with green trademarks.
However, when false or misleading or unsubstantiated claims about the environmental friendliness of a product or service or practices are made by a company, green-branding morphs into greenwashing and that may have legal consequences under laws regulating advertisement and trade practices. On one hand, there is an increase in the number of green-trademarks and eco-friendly brand promotions. On the other, public awareness is on the rise, making sustainability a social movement. Any instance of a misleading claim by a brand of being environmentally friendly comes under scrutiny with many watchdogs keeping a close eye. Thus, if brought into the limelight, consequences in terms of reputation and economic impacts to brands may be severe.
Legal framework on greenwashing in India
Unlike the United States, even though there is no specific legislation or code on greenwashing in India, the current statutory framework is well designed to regulate it. The law as it stands today, prohibits false and misleading claims. Claims of products being sustainable or environmentally friendly need to be substantiated. There have been several instances where brands engaging in misleading advertisements have been pulled up and fined heavily to deter others from dishonest practices. Use of words like ‘organic’, ‘eco–friendly’ and ‘natural life’ on products with no substantial basis are held to be against consumer rights and misleading.
Consumer protection laws form the basic legislation in India in this regard and the Advertising Standards Council of India (ASCI) play a significant role. With the aim of ensuring that advertisements are truthful and honest, are not offensive, and do not promote products considered to be hazardous and observe fairness in competition, the ASCI has prescribed an Advertising Code. The code mandates that all claims and representations must be substantiated and should not mislead the consumer. The code has been adopted by statutes like the Cable Television Networks (Regulation) Act 1995, which regulates content including advertisements broadcast on television, and the Insurance Regulatory and Development Authority Act regulating the insurance sector. It has also been appended to the advertising guidelines of All India Radio and the Press Council of India’s Norms of Journalistic Conduct. Additionally, various government bodies and ministries, for example, the Food and Safety Standards Authority of India, Ministry of AYUSH and the Drug Controller General of India, have partnered with the ASCI. Through such mechanisms, the code, though intended to be self-governing, has been given a statutory backing. The code specifically mandates that all claims and representations must be substantiated and should not mislead the consumer. As per the ASCI’s annual report for 2021–22, 97.5% of violations it looked into pertained to ‘honesty in representation’ – which come under the category of misleading advertisements.
Importantly, the code applies to advertisements read, heard or viewed in India even if they originate or are published abroad, as long as they are directed to consumers in India or are exposed to a significant number of consumers in India.
To give an example, Sensodyne’s toothpaste advertisement that claimed toothpaste was 'recommended by dentists worldwide', 'World's No. 1 sensitivity toothpaste' and 'clinically proven relief, works in 60 seconds', was ordered to be discontinued with a hefty penalty imposed, since these claims were unsubstantiated. Similarly, Marico, an Indian multinational consumer goods company, filed a complaint before the ASCI for a claim made by fellow Indian multinational consumer goods company Dabur that its product Dabur Honey is ‘100% Pure’. In the absence of any regulatory criteria or substantiated basis for the ‘100% pure’ claim for a naturally sourced food product like honey, the numerical claim ‘100%”’ was not believed to be adequately substantiated and Dabur was required to stop making such misleading claims.
Additionally, in June 2022, ‘Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements 2022’ were introduced and added to the Consumer Protection Act 2019. The purpose of the guidelines is to protect consumers from advertisements or endorsements that circulate incorrect information or misleading, false, exaggerated or unsubstantiated claims. Such advertisements are deemed to violate consumer rights. Hefty penalties for non-compliance have been imposed under the guidelines. Further, an endorser of a misleading advertisement can be prohibited from making any endorsement for up to one year, which can be extended up to three years for a subsequent contravention.
In addition to consumer protection laws, measures for compliance are in place for companies listed on India's stock exchange to ensure commitment to the environment. From what started as a requirement for the top 100 listed companies, the business responsibility report has been replaced by the Business Responsibility Sustainability Report (BRSR), making it mandatory from April last year for the top 1000 listed companies by market capitalisation to comply with the new reporting requirements on steps undertaken by a company towards sustainability. Additionally, the Ministry of Corporate Affairs has prescribed voluntary social, environmental and economic guidelines requiring companies to become responsible actors in society, so that their every action leads to sustainable growth and economic development.
Independent of the these requirements, the Indian government recently launched an eco-labelling scheme known as the 'Ecomark' for easy identification of environmentally-friendly products. The scheme is administered by the Bureau of Indian Standards (BIS) – India's national standards body – under the Department of Consumer Affairs. The scheme follows a cradle-to-grave approach, ensuring the journey from raw material extraction to manufacturing and disposal of the product is environmentally friendly. Similarly, ‘Greenpro’ is a product certification granted by the Confederation of Indian Industry, guaranteeing that the product is environmentally friendly throughout its life cycle.
The fashion and luxury industry is not unaffected and a change in trend bending towards sustainable and slow fashion is noticeable across the globe, including in India. With initiatives such as the ‘Fashion Pact’ launched in 2019 during the G7 Summit, more and more brands are committing to sustainability globally. India also launched Project ‘SU.RE’ standing for sustainable resolution. As a commitment to carve a sustainable path for the Indian fashion industry, this project was launched during the Lakme Fashion Week in 2019 by The Union Minister for Textiles.
What we discern
There is a noticeable shift towards recognising environmental impact as key in every industry and business. Both at the macro and micro level, individual or society at large, sustainability and conscious choices are propelling businesses and consumers. Evidently then, corporate and brand owners are under scrutiny more than ever, specifically in terms of their claims of environmental friendliness. What may have gone unnoticed thus far is news on a daily basis. Several brands have been in the limelight (not for the right reasons) due to misleading claims. The legal framework in India seems competent to address rising concerns on greenwashing. However, issues remain – common uniform standards to assess and verify sustainability and green claims are lacking and this issue is global. So, an enabling infrastructure to complement the legal statutes and guidelines needs to evolve quickly. Meanwhile, the scrutiny is on brand owners to ensure they don’t overstep legal clearances and compliances before making the next move on their product claims and advertisements.