9 July 2024
Update on advertising using ‘climate-neutral’ statement: First decision of German Federal Court of Justice
As already reported in detail (see our Insight of 2 August 2023 here [German only]), the first case regarding advertising using the term ‘climate-neutral’ was brought before the highest German civil court, the Federal Court of Justice (Bundesgerichtshof), in July last year (case no. I ZR 98/23). On 27 June 2024, the Federal Court announced its eagerly awaited decision. Even though the full text of the judgment is not yet available, one thing is clear: it is a major blow to advertisers with significant practical implications for all companies making green claims in advertising.
What happened?
The German confectionery manufacturer "Katjes" advertised a type of fruit gum as ‘climate-neutral’ in an advertisement in a trade journal for food. This advertisement prompted the ‘Wettbewerbszentrale’ (German self-regulatory institution for the promotion of fair competition) to file a lawsuit. The ‘Wettbewerbszentrale’ considered the advertisement to be misleading as it did not provide sufficient information or substantiation about the background to achieving climate neutrality. In this case, climate neutrality was only achieved through (additional) compensation measures, specifically through the purchase of CO2 certificates. This detailed information was not provided in the advertisement itself, but only via a reference within the ad to a ‘ClimatePartner’ (QR code plus URL).
In the first two instances (Regional Court of Kleve, case no. 8 O 44/21, and Higher Regional Court of Düsseldorf, case no. 20 U 152/22), the ‘Wettbewerbszentrale’ was unsuccessful. Both courts did not recognise any misleading information, in particular due to the reference to further information (accessible via the QR code and URL) contained in the advertisement. In its oral hearing in April 2024, the Federal Court of Justice had already shown a tendency to be strict in its assessment of environment-related advertising, the judgment was therefore eagerly awaited – not least because although there have been numerous 'climate-neutral’ judgments by various regional and higher regional courts in recent years (see the summaries in our Green Claims Enforcement Tracker here [German only]), no consistent line has developed.
What did the Federal Court of Justice decide?
On 27 June 2024 the Federal Court of Justice (BGH) finally handed down its judgment. And it is very clear: The Court turned the opinion of the lower courts.
Unlike the two previous instances, the Federal Court of Justice classifies the advertising as misleading. Its reasoning: the risk of being misled is – such as with health-related advertising – particularly high with environment-related advertising. Therefore, there is an increased need for clarification. The reduction of CO2 emissions on the one hand and the compensation of CO2 emissions on the other, are not equivalent measures. Rather, the reduction is given priority over the compensation. Contrary to the previous instance, the Federal Court is of the opinion that information made available outside of the specific advertisement is not sufficient and the claim needs adequate qualification or substantiation within the advertisement. Katjes should therefore have provided further explanations regarding their claimed 'climate neutrality' directly in the advertisement itself. The reference to further information on the internet (via QR code and URL) is insufficient.
And what does this mean for companies and their advertising?
The German Federal Court of Justice has given the leading authority on advertising using the term ‘climate-neutral’. The judges set very high standards. Of particular note is that if compensation measures are used to achieve climate neutrality, advertising a product as 'climate neutral' will be particularly hazardous, because from now on, the compensation measures must be referred to in the advertising itself – not always easy to achieve in media with confined space limits.
Unfortunately, the ruling does not eliminate all the uncertainties and ambiguities that companies face when advertising with the term ’climate-neutral’. However, at least there are now clear guidelines on the question of when and where explanations of how neutrality is achieved are required. It remains to be seen how the lower courts will deal with this ruling in future cases.
In addition, companies should keep an eye on the fact that the EU wants to completely put an end to the advertising of products as ‘climate-neutral’ based on compensation measures (such as the purchase of CO2 certificates):
Until then, however, companies should adhere to the current requirements of the Federal Court of Justice when advertising in Germany if they do not want to be denounced as 'greenwashers'. The Taylor Wessing Germany team has lots of experience navigating this complex and rapidly-evolving area of law, we would be happy to help you legally safeguard your planned advertising measures.
