This article has been published by Mondaq at India – Advertising, Marketing & Branding – Green Product – A Bid To Save The Environment Or Yet Another Marketing Gimmick (mondaq.com)

Introduction

In early 1980s, Jay Westerveld was in Fiji when he stumbled upon a note in a luxurious resort which caught his attention. In the note, the hotel encouraged its guest to reuse towels, highlighting its benefit in reducing ecological damage. He found it ironical that while the hotel was encouraging its guests to ‘save the environment’ (a clever trick to save laundry costs), it was busy harming the same ecosystem by building more bungalows and expanding its operations. This relatively small incident ultimately led Jay Westerveld to coin the word ‘greenwashing’.

Almost 40 years on, greenwashing continues to be a global issue, with instances of businesses making false environment claims to attract customers repeatedly coming to light. In this piece, we throw light on greenwashing, with particular focus on the safeguards being installed by the Indian regulatory authorities for gating such instances.

Increasing instances of ‘environment friendly’ products flooding the market

Recently, products claiming to be environment ‘friendly’, ‘conscious’ and ‘sustainable’ have been flooding the consumer markets. Feeding off the increasing environment concerns triggered by the alarming effects of global warming, opportunistic businesses have been launching a wide range of products offering illusory solutions to susceptible customers. However, over time, these have turned out to be mere marketing gimmicks, with parties making false environmental claims/ greenwashing their products to catapult profits.

One of the most widely publicized instances of greenwashing is Volkswagen’s ‘Clean Diesel’ engine ad campaign, trumpeting its cars low emissions.  Over a period of 7 years (2008-2015), Volkswagen managed to deceive consumers with false claims of its cars being low-emission, environment friendly and emissions standards compliant.  Volkswagen sold/ leased more than 550,000 diesel cars during this period, with cars being sold for an average price of approximately $28,000. However, subsequent investigations revealed that Volkswagen had rigged its cars to defeat emissions tests. It pulled off this heist through a software, also known as a defeat device, which could detect when the cars were being tested and would alter its cars’ performance to improve the results. The investigation led to a huge backlash, with Volkswagen being forced to recall millions of cars and posting its first quarterly loss of €2.5 billion in 15 years.

Similarly, the Starbucks’ campaign to reduce plastic straws by replacing traditional cups with a ‘straw-less’ plastic lid backfired when it was later found that the new lid contained more plastic by weight than the straw with the old lid. H&M and Zara were also under scrutiny for their ‘conscious collection’/ ‘sustainable clothing’ ranges, with concerns being raised about the lack of transparency on how such efforts are reducing their impact on the environment.

Over time, various countries have put in place targeted directives and guidelines to tackle this menace and safeguard the interests of its citizens. This includes the United States Federal Trade Commission’s Green Guides and the European Union’s directives empowering consumers for the green transition through better protection against unfair practices and better information. India has also recently introduced targeted guidelines to address this issue.

India’s regulatory framework to protect its customers

In India, the Consumer Protection Act, 2019 (“Act”) is the primary legislation for protecting consumer interests. The Act led to the establishment of the Central Consumer Protection Authority (“CCPA”) which inter alia regulates matters relating to misleading advertisements, by issuing directions and imposing penalties, in case of any violation.

On June 9, 2022, the CCPA had notified the Guidelines for Prevention of Misleading Advertisements and Endorsements for Misleading Advertisements, 2022 (“2022 Guidelines”). The 2022 Guidelines seek to prevent false/ misleading advertisements and inter alia mandate that advertisements must contain a truthful and honest representation. Further, they should not mislead consumers by exaggerating the accuracy, scientific validity or practical usefulness or capability or performance or service of the goods/ product.

While the 2022 Guidelines set out the broad regulatory framework against misleading advertisements, in November 2023, the Department of Consumer Affairs decided to take a more targeted approach against greenwashing. To this end, it constituted a committee comprising of stakeholders from government and voluntary consumer organizations, law firms and all major industries associations to consult on this issue. These efforts ultimately led to the formulation of the Draft Guidelines for the Prevention and Regulation of Greenwashing, 2024 (“Draft 2024 Guidelines”). These were put to the public for consultation in February 2024. The Draft 2024 Guidelines define greenwashing as any deceptive/ misleading practice, including concealing/ omitting/ hiding relevant information, by exaggerating/ making vague/ false/ unsubstantiated environmental claims. This includes the use of misleading words/ symbols/ imagery, placing emphasis on positive environmental aspects while downplaying/ concealing harmful attributes. An exception however has been carved out for use of obvious hyperboles, puffery, generic colour schemes/ pictures, not amounting to any deceptive/ misleading practice.

The Draft 2024 Guidelines warn service provider, product seller, advertising agency etc. against engaging in greenwashing and require advertisements making environmental claims to make adequate compliances, and disclosures. A guidance note was also issued along with the Draft 2024 Guidelines to guide entities in making environmental claims, compliant with the said guidelines. These are still to be notified.

Apart from the CCPA, which is a statutory body, advertisements in India are also monitored by the Advertising Standards Council of India (“ASCI”), which is an independent and voluntary self-regulated body.

While ASCI does not have the authority to penalise parties, it issues cautionary warnings and advises parties against issuing misleading advertisements. In the past, ASCI has called out big market players like Godrej Industries (for its mosquito repellent that claimed to be “100% natural” and “chemical-free”), and Hindustan Unilever Limited (for its detergent, Surf Excel Easy Wash that claimed to be “100% natural” and “environment-friendly”) for their misleading advertisements.

On February 15, 2024, ASCI has also notified targeted Guidelines for Advertisements Making Environmental/ Green Claims, 2024. These guidelines define ‘greenwashing’ as any ‘unsubstantiated, false, deceptive, misleading environmental claims about products, services, processes, brands or operations as a whole, or claims that omit or hide information, to give the impression that they are less harmful or more beneficial to the environment than they actually are’. It inter alia calls upon advertisers making environmental claims to specify whether such claims relate to the product, the product’s packaging, a service, or just to a portion of the product, package, or service. Similarly, in case of any comparative claims such as ‘greener’/ ‘friendlier’, the ASCI Guidelines require the advertiser to provide evidence that the advertised product/ service provides an environmental benefit over previous product /service or a competitor’s products/ services as well as clarify the basis of such comparison.

Earlier this year, the Department of Consumer Affairs and ASCI announced that CCPA and ASCI would be working together to strengthen the regulation of advertisements in India. In fact, CCPA has called upon ASCI to highlight any instance of misleading advertisements, recognizing that any such violation in relation to misleading advertisements may also potentially violate the Act and the related guidelines. This collaboration gives teeth to the ASCI who can now route the instances of non-compliance to the CCPA which can in turn take appropriate action against the party in question.

Conclusion

It will be interesting to see what this CCPA and ASCI collaboration brings to the table and how it paves the way for a robust system in India to identify and eliminate misleading advertisements, particularly attempts to greenwash products. It is also hoped that the Draft 2024 Guidelines are soon put into action and prove to be an effective weapon and assist both the CCPA and ASCI in tackling instances of greenwashing.