It’s getting harder to ignore the regulatory storm clouds gathering around greenwashing. On Jan. 17, the European Parliament overwhelmingly voted to implement a new directive banning businesses from making misleading or unclear environmental claims to consumers.
And the Federal Trade Commission is soon expected to issue its first guidance on responsible environmental advertising since 2012—known as the Green Guide. The eco-marketing party is about to end, and it’s time for in-house counsel to get ready.
The new EU anti-greenwashing legislation is pending approval by the European Council. Member states would then have 24 months to implement the law nationally.
The proposed law would prohibit deceptive environmental marketing practices. It emphasizes transparency and accuracy in green claims, requiring businesses to substantiate their environmental assertions with a comprehensive assessment.
Such language as “environmentally friendly,” “biodegradable,” “sustainable,” and “climate neutral” would be banned in advertising or on packaging without concrete evidence. Only sustainability labels based on official certification schemes or established by public authorities would be allowed in the EU.
There’s little question a regulatory crackdown on environmental marketing claims is overdue. Advertisers know consumers are deeply concerned about climate change and the environment, and see eco-advertising as a way to build their brand.
Studies show consumers want to buy sustainable products. But research also shows the market is awash with misinformation and misleading environmental claims, which can take many forms.
This includes misleading claims around packaging, particularly relating to “recyclable” or “compostable.” There is also vague terminology about products and services, such as “eco-friendly,” “sustainable,” “green,” “net zero by 2050.” Or marketing misdirects consumer attention from a product’s negative environmental impact by using green images.
The EU estimates 75% of products sold within the bloc carry some form of green claim, and over half of those claims are vague or misleading. A 2022 Harvard study found some form of greenwashing in 72% of social media posts by oil and gas companies, often trumpeting small low-carbon projects to rehabilitate their environmental image while expanding their core businesses of oil, gas, and coal.
There’s little doubt that when the new regulatory frameworks take effect, their enforcement will be a priority for the responsible agencies. Investigations will be painful, time-consuming, and well-publicized, and fines will be stiff.
Since green marketing is such a big part of brand advertising for companies of all sizes, it will take time for companies to make the necessary adjustments to comply with upcoming regulatory changes.
Revised corporate policies would include new labels, new social media campaigns, new marketing strategies. This work will all begin with the legal department, so in-house divisions should start budgeting some legal time now for the work that’s coming.
First, I’d start now by cataloging your use of green marketing—look at your packaging, labeling, sales materials, advertising, and social media, including statements made by your influencers. Be comprehensive.
For each claim, start collecting information that substantiates the claim, and ask whether the claim stands up to real scrutiny. Will it mislead the average consumer? You may find you have some bad habits to break—easy catch phrases “everyone uses” that sound good, but lack real meaning.
Second, if you’re a global company, start talking to your marketing team about the pending EU directive, and how it will impact your current practices. Expect updates to the FTC Green Guides, and determine what changes you’ll want to make as a business.
Do you want to change your products and packaging, for example, to better substantiate the claims you’ve been making or want to make? Perhaps your company has been putting off real sustainability-related changes that might now be necessary to live up to how you need to portray your brand. Engage outside marketing law counsel now to help you think through your strategy.
Lastly, think about how you’ll stay on top of the issue going forward. Do you have the legal resources to review all labels, ads, and social media posts before they go live without slowing up the business?
Think about creating a dynamic guidebook for your marketing with pre-approved claims that you’re comfortable making, and specific “no go” claims that might be tempting, but would likely run afoul of the stricter regulations.
If your company has publicly pledged big things in the area of environmental responsibility and sustainability, the approaching regulatory winds may be a time of reckoning—and an impetus for real action.
Rob Chesnut consults on legal and ethical issues and was formerly general counsel and chief ethics officer at Airbnb. He spent more than a decade as a Justice Department prosecutor.
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