The fight against misleading and vague sustainability claims

Updated guidelines provide more clarity on misleading and vague sustainability claims.

In August, the Dutch competition authority, the Netherlands Authority for Consumers and Markets ("ACM"), took another step in raising consumer awareness regarding sustainability claims. For instance, the ACM launched the social media campaign 'Green gossip’. The campaign helps consumers to distinguish justified sustainability claims from unjustified ones. After all, companies should not pretend to be more sustainable than they are. On 13 June 2023, the ACM published (updated) guidelines providing more clarity on misleading and vague sustainability claims.

Consumer research 

The ACM commissioned research among consumers on how sustainability claims come across. This survey shows that many consumers are still easily misled, but that they also react sceptically towards sustainability claims. Absolute and vague claims are often found less credible, while the more specific and nuanced claims are often considered credible. The survey also found that (according to the Guidelines) incorrect claims were less likely to be understood by consumers than correct claims. For example, consumers found the claim 'this truck runs 100% electric' more understandable and credible than 'green on the road'. With the help of the 'Green gossip' campaign, the ACM provides information to consumers that can help them assess sustainability claims.

In addition, the ACM has announced that its investigation into sustainability claims will focus on the transport sector. Previously, the clothing and energy sectors have been investigated, but many sustainability claims are also used in the transport sector. In this sector, the level of emissions is increasingly a factor that consumers take into account for purchasing choices. However, this does not mean that other sectors are not being watched. Consumers can still file complaints about misleading sustainability claims and the ACM will consider which ones it investigates and which ones it does not.

Guidelines Sustainability Claims

Reason

Consumers increasingly want to contribute to a world that remains livable in the long term. Therefore, they find it increasingly important to make sustainable choices. In the opinion of the ACM, consumers should receive clear, complete and specific information about the sustainability of products and services. Terms such as climate neutral, environmentally conscious or sustainable are too vague and therefore easily misleading. With the right information, consumers should be able to make a more sustainable choice. That is why the ACM has updated the Guidelines Sustainability Claims. The updated guidelines contains five rules of thumb and practical examples entrepreneurs should follow when formulating sustainability claims.

Content

In recent years, the ACM has gained experience in applying the guidelines and sustainability claims in practice. The updated guidelines incorporates responses from industry associations and companies. European legislative and regulatory developments have also been incorporated in the renewed guidelines. The European Commission has published guidelines on competition and sustainability. The revised guidelines provides more clarity on the formulation and substantiation of a sustainability claim. It also provides clear examples of good and bad sustainability claims.

As mentioned, the guidelines contains five rules of thumb:

1. Use correct, clear, specific and complete sustainability claims
2. Substantiate sustainability claims with facts and keep them up to date
3. Make fair comparisons with other products or competitors
4. Describe future sustainability ambitions in specific and measurable terms
5. Make sure visual claims and labels are helpful to consumers and not confusing 

Rules of thumb 1 and 2 contain general rules for the wording and substantiation of all sustainability claims. Rules of thumb 3, 4 and 5 explain additional requirements that apply to certain claims. The rules of thumb in the guidance complement each other. It is therefore possible that there is some overlap. In the following, each rule of thumb is explained in more detail.

Rule of thumb 1: Use accurate, clear, specific and complete sustainability claims

For formulating a sustainability claim, the following considerations apply:

1. Be aware of the overall impression a claim creates through word combination and imagery
2. Make sure the claim is factually correct
3. Formulate the claim specifically
4. Formulate the claim in understandable language
5. Do not use statements about the company's sustainability goals as a claim for promoting a product
6. Do not create the impression with claims that legal obligations or standard features are sustainability benefits

The guidelines includes examples of correct and incorrect sustainability claims. For example, sustainability claims should be specific: 70% recycled polyester or The TV's cardboard packaging is recyclable. However, it can be misleading to highlight small sustainability benefits if the product has a (large) negative impact on humans, animals and the environment. For instance, companies from heavily polluting sectors should be extra careful when using sustainability claims (e.g. clothing and fossil industries). Using general or absolute terms is also misleading in many cases. A general or absolute claim creates the impression that a product as a whole has sustainability benefits or no negative impact on humans, animals and the environment. For such claims, the burden of proof is high. Examples of general/absolute terms include eco-friendly, eco, green, sustainable, climate-friendly, biodegradable and CO2 neutral. In addition, terms such as conscious and responsible are vague and ambiguous because they can cover a variety of topics. The guidance also contains rules on the wording of specific terms, such as CO2 offsetting and organic as these are terms that have additional requirements or legal protection attached to them. 

Rule of thumb 2: Substantiate sustainability claims with facts and keep them up to date

If a sustainability claim is used, it should be based on facts. Consumers should be able to understand the claim and associated explanation. Three concerns apply to the substantiation of sustainability claims:

1. Use a specific claim: Specific claims make it immediately clear what the sustainability benefit of the product/company is (e.g., this truck drives 100% electric). Avoid using absolute/general claims (such as the term sustainable or green). The requirements for substantiation of these claims are high and can only be used in exceptional cases.
2. Explain the sustainability claim: Just a sustainability claim is insufficient. It is important to provide further information about the product's sustainability benefit and the size of the sustainability benefit. This explanation should be at most one click or action away from the claim. Furthermore, it is important that this explanation is concise and clear.
3. Prove the claim: The claim being made must be able to be proved by evidence. The type of proof a company should be able to provide depends on the claim being made. Furthermore, there is a difference in quality regarding evidence, so pay attention to reliability, independence and verifiability. Check regularly whether the claim is still true and revise it if necessary. This way, consumers can be confident that the claim is true.

It follows from rule of thumb 2 that companies must be able to prove the claim. For example, a clothing supplier advertising a T-shirt with the recycled polyester claim should also mention the distinctive sustainability features. It is also important that it is clear to consumers how much recycled polyester the product consists of.

Rule of thumb 3: Make fair comparisons with other products or competitors

Comparative claims can help consumers by making it clear what advantages the product or company has over other products or competitors. Make sure comparisons with other products or competitors do not lead to consumer misunderstandings. When using a comparison, it is important to pay attention to the following points:

1. Make it clear what the product is being compared to and what part of a product the comparison looks at.
2. Make sure the product or company on which the claim is based is similar and uses the same calculation methods.
3. Substantiate the comparison with actual and objective facts.
4. Use common standard units (such as percentages) for comparison.
5. Make sure the comparative claim is about a significant feature/sustainability benefit.

Rule of thumb 4: Describe future sustainability ambitions in specific and measurable terms

It can be useful for consumers to know what sustainability ambitions the company/product has. Only use a claim about future ambitions for marketing purposes if there is a clear plan for achieving these sustainability ambitions. The following points of interest apply to this plan:

1. Make sure the plan is specific, measurable and achievable.
2. Make sure the plan consists of continuous improvements/developments to achieve the objectives.
3. Make sure the plan is accessible to consumers.
4. Ensure that implementation of the plan has started or will start in the near future.

If a car brand advertises in a bus shelter with the claim: zero CO2 emissions by 2030, depicting the brand with a green landscape, it may be a misleading claim. This is the case, for example, if research shows that the company has not yet taken any specific plans or steps towards the goal of zero CO2 emissions by 2030. If a plan is already in place and the plan consists of specific actions and implementation of the plan has started, a company could use a claim such as 40% less CO2 emissions by 2030, compared to 2023.

Rule of thumb 5: Make sure visual claims and labels are helpful to consumers and not confusing

Visual claims and labels can inform about certain sustainability characteristics of products in an easy way, but visual claims and labels can also be confusing. The ACM distinguishes between visual claims, independent labels and company labels. Different concerns apply to each type of claim/label:

1. Visual claims should support a claim and not create a false impression about the product's characteristics. There should be a direct and verifiable link between the image and the sustainability benefit.
2. Independent labels are preferable to company labels. Only use a label if the product meets the requirements. When using independent labels, clearly state what the label stands for and which criteria have been met.
3. Corporate labels are discouraged because corporate labels raise high expectations among consumers that often cannot be met. This is because consumers think that corporate labels are issued by the government or that there is an independent audit. Practice shows that independent control is often lacking for a company label.

Suppose a shop uses the image of a green leaf when selling a chair, without further explanation, this is misleading. This is because the image could create an expectation that the chair has no negative impact on the climate. The shop could use a specific claim, such as: recycled wood has been used for this chair. This clarifies what the sustainability benefit is.

Conclusion

Sustainable products and consumption are essential for a sustainable society. Monitoring sustainability claims contributes to this. The rules of thumb in the guidelines can be used to assess whether sustainability claims are sufficiently clear and not misleading. In addition, the guidelines contains several examples and points of attention, including how to formulate CO2 compensation claims and "organic" claims.