Dutch Advertising Code Committee tightens rules for sustainability claims

On 1 February 2023, the Dutch Sustainability Advertising Code (Code) entered into force. It replaced the Environmental Advertising Code (MRC), which came into force on 1 January 1991 and was last updated on 1 October 2000. The Code sets conditions for green/sustainability claims in advertisements.  The Dutch Advertising Code Committee (RCC) will monitor compliance based on submitted complaints.

Sustainability

Consumers and businesses increasingly want to contribute to a world that remains livable in the future. and many consumers want to make green and sustainable choices. However, sustainability claims are often seen as unreliable by consumers and businesses can be tempted to exaggerate their green credentials. It is therefore important to have regulations in place that set out what is permitted in relation to green claims in advertisements. The European Commission recently proposed a new Green Claims Directive to tackle 'greenwashing' as we discuss here but it is in very early stages so National law will apply.

In the Netherlands, the new Code sets out how to advertise in a responsible manner and applies to all sustainability claims: environmental claims as well as ethical claims. An environmental claim refers to a claim that suggests that a product or activity has - directly or indirectly - a positive, less or no impact on the environment. The term 'environment' is broadly defined in the Code and can cover particular aspects of the environment, such as the air, water, soil, ecosystems, biodiversity or climate. An example of an environmental claim is: 'This packaging is 100% biodegradable.' An ethical claim refers to a claim that gives the impression that the production or activity of a company takes place according to certain ethical standards, for example in relation to working conditions, animal welfare and/or corporate social responsibility. An example of an ethical claim is: 'These clothes are made without the use of child labour.'

In 2021, the Netherlands Authority for Consumers & Markets (ACM) published its Guidelines on Sustainability Claims (Guidelines), which provide practical advice to companies in relation to the use of sustainability claims. Last year, the ACM enforced the Guidelines against companies that had breached them. Commitment decisions were published involving parties including Ryanair, Greenchoice, H&M, Decathlon and Vattenfall. Ryanair had agreed to adjust its sustainability claims, even before a formal commitment decision was made by the ACM. In relation to the other commitment decisions, the companies promised to amend their sustainability claims so as not to mislead consumers.

There is a substantial difference between the powers of the RCC on the one hand and the ACM on the other. The RCC results from a self-regulation system of advertising in the Netherlands and mainly concerns soft law, while the ACM is an independent regulator charged with competition oversight and enforcement of sector-specific regulations and consumer protection laws.

The Code

Since the last update of the MRC, a lot has happened in terms of sustainability, which obviously necessitated an expansion and an overhaul of the MRC.  The MRC was limited in scope, applying only to 'environmental claims' in advertisements and it explicitly excluded claims related to animal welfare and/or working conditions. This has been adjusted and the updated Code states that a consumer should not be misled by ‘sustainability claims’ in advertisements. This covers both ethical and environmental claims.

Key points

Misleading consumers is prohibited

Consumers should be able to identify to what extent a claim covers the sustainability of a product or service and should not be misled. For example, if the term ‘green’, ‘eco’ or ‘fair’ is used, the advertisement should make clear how the company interprets and/or explains this sustainability claim.

When a company expresses a sustainability ambition in an advertisement, this ambition must be verifiable. There must be underlying, concrete plans available to achieve this (green) ambition. If an advertiser claims it wants to be climate-neutral in 2030 and it is obvious that it will not succeed and/or there is no concrete plan to achieve this ambition, the consumer is misled and the Code is breached. An example is Vattenfall's ambition to deliver fossil-free energy within one generation. Vattenfall stated that it was generating energy from clean sources ‘all along’, but that producing fossil-free energy is not enough, and therefore the help of consumers is required to achieve this ambition in relation to the energy transition. The RCC stated that Vattenfall's claim made consumers believe that Vattenfall was already supplying fossil-free energy. Vattenfall therefore adjusted its claim as follows: 'At Vattenfall we put all our time and effort into that challenge. All to achieve that one goal. Fossil-free living within one generation. Join us on this journey.' This claim was approved by the RCC.

Production chain

The Code attaches great importance to the transparency of sustainability claims. Sustainability aspects can be linked to the entire lifecycle of products or activities, such as the production (including raw material processing), distribution, delivery, storage, consumption or waste processing of products. However, if the advertiser cannot prove that the claim applies to the entire supply chain, this should be made clear to consumers. For example, if an advertiser claims that its chicken fillet is produced completely sustainably, the advertiser must prove the climate neutral impact of the entire supply chain, starting with the production process, including transportation methods and packaging.

Demonstrability

Sustainability claims by companies must be correct, and verifiable. The advertiser is responsible for the accuracy of the claim(s). The burden of proof is highest in relation to 'absolute claims'. An absolute claim means that certain words, such as ‘environmentally friendly’, ‘animal-friendly’, ‘slave-free’, ‘clean’ and ‘green’ are being used.

In the case of an absolute claim, it has to be demonstrably correct that the sustainability claim will be achieved no matter what. Remarkably, in the explanation to the Code, the RCC itself already clarified that the current state of technology makes it impossible to prove that a product is 'absolutely' sustainable. The RCC therefore indicates that absolute claims should be treated with great caution.

Frequently used sustainability claims are claims that stipulate that certain - harmful - ingredients have been replaced. Typical examples are shower gels that contain aluminium substances. These substances can be harmful to consumers and the environment and can be replaced with something less harmful. This kind of claim will only comply with the Code if the ingredients have actually been replaced by demonstrably proven less harmful substances. If an advertiser claims that comparable products contain harmful substances (compared to its own product), the advertiser must be able to prove its claim.

Comparison is permitted

Comparing products with equivalent third party products is allowed subject to meeting the Code's requirements. The comparison must be concrete, up-to-date and should be objectively done by comparing one or more substantial, relevant, verifiable and representative characteristics of the product.

The RCC ruled that a sustainability claim made by the Belgian mineral water producer Spadel was permitted. Spadel claimed: 'New 5 L ECO Pack, convenient and ecological with 65% less plastic' with a reference to other Spa Reine packaging. The RCC ruled that it was clear to the average consumer that (the packaging of) Spa Reine 5 L Eco was presented as the more ecological option, compared to Spa Reine's 6*1.5 litre packs.

In its explanation of the Code, the RCC included another example of permitted comparative advertising: 'As of the beginning of this month we are selling more animal-friendly chicken because we no longer sell 1-star Better Life chicken, but only 3-star Better Life chicken.'

Quality assurance marks, labels and symbols

Quality assurance marks can be used where they are issued by reputable bodies and can justify the use of sustainability claims.

The RCC also leaves room for advertisers to create and use their own symbols to demonstrate their green claims/impact. The symbols used must meet two criteria: the origin must be clear, and there must be no potential for confusion as to their meaning. Clarity about the origin can be created by mentioning in the advertisement or in generally accessible information what the origin of the specific label is. In doing so, the label should make it absolutely clear that the advertiser is using its own created mark, label or symbol. The own label should prevent any risk of confusion and should under no circumstances suggest that the product meets higher requirements than is actually the case.

Waste treatment and recycling

Claims that concern waste collection and/or waste processing are permitted if the advertised method is available and actually implemented by the advertiser. Environmental claims that refer to the reuse (recycling) of products or parts of products is only permitted if this reuse is achieved. If this is not the case, it must be directly apparent from the statement. For example, a further description of the extent to which waste collection, waste disposal and/or recycling is achieved should be made. This can be included in the advertisement itself or through a reference in the advertisement (e.g. a clear link to the website). It is very important that the advertised method is actually used and applied, or that the extent to which the advertised method is used is explained. Also in this context, the advertiser must be clear, fair and transparent.

Enforcement

If the RCC finds that an advertisement does not comply with the Code, the RCC (or chairman of the RCC Board of Appeal) may rule that the advertisement must be amended. The RCC will then send a compliance form to the advertiser provided no objections are raised against the RCC's ruling. The advertiser must return a completed form and confirm that the advertisement will be adjusted or removed. If an advertiser does not respond to the RCC's compliance form, does not remove the advertisement, and/or simply states that it will not remove the advertisement, the RCC will bring the advertiser's conduct to the attention of the ACM which can take enforcement action.

What does this mean for your business?

The Code helps ensure that sustainability or green advertising is done in a more responsible way and prevents greenwashing. By applying both environmental and ethical claims, the Code provides broad protection, but the bottom line is that an advertiser must not mislead consumers when making green claims and must focus on transparency.