Misleading claims about neutral impact of products on climate and environment

Promoting products with expressions such as "climate neutral" has the potential to be misleading and to fall foul of competition law. Such was the verdict of the Landgericht (LG) [Regional Court of] Karlsruhe in a judgment dated July 26, 2023 (case ref.: 13 O 46/22 KfH).



Germany"s Unfair Competition Act (UWG) deems business practices misleading that cause a market participant to make a transactional decision that they would otherwise not have made. This includes deceptive statements relating to, among other things, the type, execution, advantages, risks, accessories, or method of production, notes commercial law firm and competition law specialist MTR Legal Rechtsanwälte.



It is with this in mind that the LG Karlsruhe found a drugstore chain"s promotion of certain products from within its own range as having a neutral impact on the climate and the environment to be unlawful. The products in question were liquid soap, sunscreen, shower cream, and dishwashing detergent. The court held that the claims would give rise to expectations among consumers that the products themselves would not live up to. The court concluded the case by upholding the lawsuit brought by Deutsche Umwelthilfe (DUH), a nonprofit environmental and consumer protection association, which also goes by the English name Environmental Action Germany.



Its complaint against the chain was mainly focused on an alleged lack of transparency, with the relevant packaging failing to provide information about how CO2 emissions were being offset.



The LG Karlsruhe noted that although it is generally acceptable in these instances - where products are touted as being climate neutral without an accompanying explanation of how CO2 is offset - to provide a reference to a relevant website, no such reference could be identified for two products. The court also noted that the expression "climate neutral" should no longer be used in connection with all three products, as this represented a promise to consumers that could not be kept. While purchasing these products ought to result in payments being made to a forest reserve, the court went on to clarify that this alone is not sufficient to achieve a net-neutral impact on the climate. Indeed, what is being claimed about a product by carrying this label goes far beyond that which can be achieved by means of CO2 certificates from forest conservation.



Promoting the dishwashing detergent as having a neutral environmental impact was also deemed to be misleading. Consumers were being led to expect a balanced environmental footprint, something which the product did not deliver on, according to the LG Karlsruhe. This misleading advertising was found to be in breach of competition law, with the court issuing a cease-and-desist order.



The team of antitrust and competition law experts at MTR Legal Rechtsanwälte can provide counsel.



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