The Netherlands Authority for Consumers and Markets (“ACM”) has launched an investigation into possible misleading sustainability claims by companies that sell products to consumers. ACM has asked more than 170 companies in the energy, dairy and clothing sectors to check the accuracy of their product range against the Guidelines on Sustainability Claims published at the beginning of this year.
The Guidelines on Sustainability Claims contain five rules of thumb for the use of sustainability claims by companies when offering products (or services) to consumers. Making false claims is known as “greenwashing”: a misleading trade practice consisting of claiming that products are more sustainable than they actually are.
The companies in question have until 14 June 2021 to bring their product range and sustainability claims in line with consumer legislation. ACM also requires the companies’ resellers to comply with the rules. After that date, ACM will continue its investigation and companies run the risk of (high) fines, also if their resellers fail to comply with the Guidelines. The main tips for companies are listed in this blog on the basis of the Guidelines (see this, this and this blog for earlier tips).
Five rules of thumb for sustainability claims
Rule of thumb 1 – Clarify the product’s sustainability benefit
A claim must make immediately clear what the sustainability benefit is. ACM provides four tips for that purpose.
Provide a clear and comprehensible description of the sustainability benefit
A sustainability claim must be described in plain and comprehensible terms and must be geared to the target group. Jargon, vague terms and subjective terms such as greenest, most environmentally friendly, most economical, etc., must be avoided. Subjective terms may give too positive an impression and may mislead consumers. If subjective terms are used nevertheless, they must be substantiated. A company must also state whether the sustainability claim relates to all or part of a product.
ACM’s example: the claim “100% recycled material” on a box of paper is ambiguous, because it is not clear whether the claim refers to the box or the paper. It is clearer to say: “This box is made of 100% recycled material”.
Describe the specific sustainability benefit
The sustainability benefit must be specifically described and substantiated on the basis of water usage, emissions, soil contamination, animal welfare or working conditions. That information should preferably be provided close to the sustainability claim, for instance on the front of the packaging, so that the sustainability benefit is immediately clear to the consumer.
Vague general claims, such as clean, fair, sustainable, etc., must be avoided. They may give an overly positive impression of a sustainability benefit. If a company nevertheless wishes to use such terms, the tips under rule of thumb 2 should be taken into account.
ACM’s example: a web shop offers consumers the possibility of filtering the range of clothing for “sustainability”. Consumers who use the filter are presented with a list of clothing marked as “sustainable choice”, but without it being specified what makes the clothes sustainable. Both the “sustainability” filter and the “sustainable choice” claim are unclear. The web shop must state the exact sustainability benefits of each “sustainable” garment.
Be honest about a product’s sustainability
Companies must be honest about their sustainability claims: they may not claim that the product has certain sustainability benefits when that is not true, and may not exaggerate the sustainability (see here, p. 123). They also may not claim that a product does not contain a component if that component is unlawful or never occurs in products (see here, p. 133).
ACM’s example: a company advertises hydrogen as an alternative fuel, claiming that “driving on hydrogen reduces CO2 emissions”. But the hydrogen is still being produced from natural gas at this time. The claim wrongly suggests that the hydrogen offered causes less or no CO2 emissions.
Beware of using protected terms
Some claims, such as “organic” for food products or “climate neutral”, are protected by law and may be used only if the product meets certain legal requirements. A product is “climate neutral” or “carbon neutral”, for instance, if its total emissions have been calculated and are zero. Offsetting CO2 emissions in respect of a product is permissible, provided that it is clear how much CO2 emissions are offset, in what manner and in which specific projects.
Products to which no statutory conditions apply, such as textiles and cosmetics, may be referred to as “organic” if:
- more than 95% of the materials or ingredients come from organic production; and
- the remaining materials do not undo the benefit of organic production.
If these two requirements are not met, only the fact that a product contains, for instance, 60% organic material may be mentioned.
ACM’s example: a car rental company offers its customers the possibility of offsetting their CO2 emissions for a fee. The company claims that the customer’s trip is thereby carbon-neutral. The company invests the money that customers pay for this in CO2 offsetting projects, but fails to mention how the CO2 offset is achieved and how much emission is offset. The company must explain that the rented car has a CO2 emission of X per km, which is compensated by investing in forestry projects set up by organisation X and certified according to standard Y.
Rule of thumb 2 – Back up sustainability claims with facts and keep them up to date
Companies that use sustainability claims must be able to prove the claim and the benefit. The evidence must be factual, accurate and up-to-date (see here, p. 129). It must also be regularly evaluated and adjusted if necessary. Furthermore, the company must be able to explain how it arrived at the sustainability claim. ACM recommends using the standards developed by ISO for various environmental claims.
As stated above, ACM advises against the use of vague or subjective claims. If a company nevertheless wishes to make such a claim, it must be able to substantiate it with evidence. The more general or absolute the claim, the greater the burden of proof. A product’s “footprint”, “life cycle” or “real price” may be used to prove such claims.
ACM’s example: a company claims that its packaging “generates less waste than that of the national market leader”. The company introduced this packaging a few years ago and substantiated the claim at the time by calculating the relative waste contribution of the two packages. The company must be able to prove that that comparison is still valid.
Rule of thumb 3 – Comparisons with other products, services or companies must be fair
Sustainability claims may contain comparisons such as “30% more economical”. This is permissible provided that it is clear what the product is being compared with. Only products that meet the same need or are intended for the same purpose may be compared (see here, p. 133).
ACM’s example: a company claims that “our trainers contain 20% more recycled materials”. It is unclear whether that claim relates to a comparison with an earlier version of the company’s trainers or with a competitor’s trainers. The company must clarify the comparison, for instance by claiming “our trainers contain 20% more recycled materials than those of type X.”
Rule of thumb 4 – Be honest and specific about your company’s sustainability efforts
Many companies nowadays have sustainability or “CSR” objectives. Companies must avoid the use of general information about their sustainability efforts to make their product appear sustainable. They must strictly distinguish between the company’s sustainability efforts and sustainability claims regarding a specific product.
With regard to the company’s sustainability efforts, claims must be specific and verifiable and may not be exaggerated. Claims regarding future targets (such as “on the road to 100% sustainability”) are permitted if the company has a clear, specific and measurable approach for achieving those targets.
ACM’s example: an energy supplier will be supplying heat via a new heat network. It makes claims on its website and in advertisements such as “sustainable heat supply” and “towards a sustainable society”. But most of the heat comes from a power plant that uses fossil fuels. Moreover, the supplier mainly supplies gas and grey electricity. The energy supplier’s claims may be misleading because they create the impression that the company is more sustainable than it actually is.
Rule of thumb 5 – Make sure that visual claims and labels are helpful to consumers
Symbols, pictures or labels are nowadays indispensable in sustainability claims. Their use offers the advantage that the sustainability claim is immediately apparent to consumers. The disadvantage is that visual sustainability claims and labels lack nuance, which may create the wrong impression. ACM explains, for instance, that the colour green or images of nature that accompany a product (such as toilet paper) create the impression that the product offers environmental benefits, regardless of its actual environmental impact.
ACM therefore imposes conditions on the use of visual sustainability claims and labels. Visual sustainability claims and labels must send a clear message, may not give a false impression of a product’s characteristics and must directly support the sustainability claim. The colour green and nature symbols may be used only if there actually is a “direct and verifiable link between the image and the implied benefit.”
When labels are used, ACM insists that it must be clear what the label stands for and what criteria apply to it. If a label is used whereby the buyer “contributes” to the production of more sustainable raw materials, that must be stated as such. It must furthermore be stated what contribution the customer makes when purchasing the product and that no guarantees are given that the actual products contain more sustainable raw materials. A label is considered reliable if it is introduced and monitored by an independent authority. In that context ACM is calling on producers not to develop labels of their own, but rather to use existing labels. Official labels can be found using the Keurmerkenwijzer or Milieu Centraal.
ACM’s example: a paint manufacturer uses the claim “Green Globe” on some products, with a symbol of a green globe. The manufacturer does not clarify the specific sustainability benefits of the paint and does not specify what requirements the paint must meet in order to be classified as “Green Globe”. Moreover, the claim and the logo are a company symbol and may be misleading for consumers: they may think that the globe represents an independent label with sustainability standards for paint. The paint manufacturer should check whether an existing label is available on the base of which the paint products could be certified or should make a specific claim, such as “this paint does not contain ingredient X”.
What’s next?
ACM is clear: companies that use sustainability claims when offering products (or services) to consumers must demonstrate that their claims meet the aforesaid rules. If companies make use of resellers, ACM insists that those resellers must also comply with the rules. Companies therefore run a risk if their resellers fail to do so. ACM can – and most likely will – impose high fines for violation of the consumer rules. Companies, even those not called to account by ACM, are therefore well advised to thoroughly scrutinise their sustainability claims.
More information on the consumer rules can be found at www.consumentenrecht.info
Information on dawn raids by ACM can be found at www.invalacm.nl
