The Indian consumer rights watchdog, Central Consumer Protection Authority (CCPA), has released the draft Guidelines for the Prevention and Regulation of Greenwashing, 2024 (the ‘Guidelines’) for public comments. The last date for providing public comments is 21 March 2024. The Guidelines aim to address the issue of unsubstantiated environmental claims made by businesses in their advertisements and communications. In this article, we will examine the scope of the Guidelines and their potential impact on current advertising practices.
What are the Greenwashing guidelines and what is covered by them?
India’s Consumer Protection Act, 2019 prohibits false and misleading advertisements. The CCPA has powers to penalize businesses that indulge in false and misleading advertisements. In fact, the CCPA has already published Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022 (the ‘Misleading Ad Guideline’). However, the Misleading Ad Guidelines are a general set of guidelines and identify what does not constitute a misleading advertisement, as opposed to what constitutes a misleading advertisement. Therefore, given the large incidence of environmental claims, a need was felt by CCPA to come up with a new set of guidelines to specifically address the issue of misleading advertisements relating to environmental claims. Accordingly, the CCPA has prepared the Guidelines to specifically cover all forms of advertisements relating to environmental claims which attempt to greenwash consumers.
The concept of ‘Greenwashing’ in context of environmental claims
The Guidelines define what is ‘greenwashing’ in context of environmental claims. To make an environmental claim means to make a representation of goods or services suggesting their environmental friendly attributes. For example, when a business advertises that use of its home cleaning liquid spray results in “eco-friendly home cleaning”, it is making an environmental claim for the purposes of the Guidelines.
Greenwashing, in context of environmental claims, is defined under the Guidelines as any deceptive or misleading practice that conceals, omits or makes false and unsubstantiated environmental claims.
So, in the example of home cleaning liquid spray, if the claim of “eco-friendly home cleaning” cannot be substantiated by the business, it would amount to greenwashing by the business.
To take another example, if a business claims that its product is made out of a certain percentage of recycled material, it is making an environmental claim, and if it cannot be substantiated by empirical data, it will amount to greenwashing for the purposes of the Guidelines.
It is also essential to note that the Guidelines borrow the definition of ‘advertisement’ from the Misleading Ad Guideline, which means statement made on the package label or wrapper of the product is covered by the scope of the Guidelines. Therefore, even a product label that makes environmental claims such as ‘sustainably procured’, ‘cruelty free’, etc., will be tested by the greenwashing parameters set out in the Guidelines.
How can businesses comply with the Greenwashing guidelines?
Make disclosures in support of environmental claims
As per the Guidelines, any business that makes environmental claims as part of an advertisement or label claim, by using terms such as ‘clean’, ‘green’, ‘eco-friendly’, ‘eco-consciousness’, ‘good for the planet’, ‘minimal impact’, ‘cruelty-free’, ‘carbon neutral’, ‘sustainable’, ‘organic’, etc. will have to substantiate it through an appropriate disclosure. The disclosure will have to contain verifiable evidence to support the environmental claim.
For example, an advertisement for an LED bulb claiming to be ‘the most energy-efficient LED bulb’ shot against the backdrop of a park with green grass and trees would qualify as an environment claim. It may amount to greenwashing if the claim of being the most energy-efficient cannot be substantiated or scientifically verified, and all such data and scientific test reports are not disclosed to the public.
The Guidelines permit businesses to disclose relevant information and data in support of the environmental claims by way of a QR code or a website link that may be part of the advertisement or the label.
Ensure claims are verified by an independent and recognized third party
While making specific claims such as carbon offsets, carbon neutral, non-toxic, ozone safe, etc., businesses will have to ensure that these claims are credible, scientific and verified by an independent third-party. For example, an air conditioner advertisement claiming to be ozone friendly will have to disclose the coolant it uses, its ozone depleting potential (ODP) and a report from an independent third-party verifying these claims.
Use easy to understand language for environmental claims
If an advertisement uses terms with technical connotations in environmental claims, it will be required to do so in consumer-friendly language explaining the meaning and implication of such technical terms. For example, if a cosmetic brand advertises that it has avoided 1 Mmt of carbon emissions in 2023, the advertisement will have to simplify and explain the meaning and implication of carbon emission and its avoidance.
Avoid cherry picking helpful data
The Guidelines also clarify that when a company intends to use any research data, it should do so in an unbiased manner without cherry-picking favorable observations. Therefore, if an advertisement relies on data from research conducted on four matrices and highlights one matrix from the research favoring it while omitting the other three unfavorable matrices, it will amount to greenwashing under the Guidelines.
What are the penalties if a business is found guilty of Greenwashing in India?
If any advertisement or statement containing environmental claims is found to be unsubstantiated, non-verifiable or otherwise contrary to the provisions of the Guidelines, it may attract imprisonment for a term extending to two (02) years and fine extending to ten lakh Rupees (INR 10,00,000). For every subsequent offence, the punishment may extend to imprisonment for up to five (05) years and a fine of up to fifty lakh Rupees (INR 50,00,000).
Are any environmental claims excluded from the scope of Greenwashing guidelines?
The Guidelines do not apply to obvious hyperbole, puffery and claims that are not specific to any product or service. For example, any statement by a company generally referring to its environmental goals or mission without substantiating it, or to its environmental initiative or achievements without disclosing their details, would not amount to greenwashing under the Guidelines, provided such statements are not related to its products or services.
Conclusion
The Indian Government has finally taken the first decisive step to counter the menace of greenwashing. Businesses in India should be prepared to face heightened scrutiny for every term and phrase they use which attributes environmental friendly character to its products and services. It may be prudent to invest resources now to review the Guidelines closely and take steps to align product and service advertisements and label claims with the Guidelines in order to avoid any issues when Guidelines are enforced, especially on account of the steep penalties.