Environmental green claims and social responsibility

How is the use of environmental claims evolving? 

In response to growing consumer concern about environmental degradation and climate change, self-declared environmental claims are increasing as a marketing tool. 

Environmental claims are used in many sectors. While some are quite general, e.g. eco-friendly, carbon neutral, green, others are not well-defined, e.g. natural, energy efficient, non-toxic, low carbon, pollutant-free, clean, zero emissions, sustainable and ethical.

While some claims are identified as unsubstantiated and possibly inauthentic—referred to as greenwashing, OECD assessments find that these are generally cases of exaggeration rather than falsehoods.

In the Internet age, people are more educated and are considering their purchase decisions regarding the environment. So there is a need to regulate dialogue regarding claims to avoid manipulative marketing practices.

What are environmental claims? Or, what are green claims?

Environmental claims, also termed “green claims”, are assertions or statements made by companies regarding environmentally beneficial qualities or characteristics of their goods and services. They can refer to how products are produced, packaged, distributed, used, consumed and/or disposed of. In addition to environmental aspects, these claims are sometimes defined to include the socially responsible or ethical manner in which products are produced and distributed. 

The International Organisation for Standardisation (ISO) has drawn up a group of standards governing environmental labelling as part of its ISO 14000 environmental standards. The ISO 14020 family covers three types of labelling and declaration schemes: 

• Type I (ISO 14024) is a label developed by a third party, either a governmental (e.g. European Flower, Nordic Swan) or private organisation (e.g. Forest Stewardship Council). 

• Type II (ISO 14021) is a label developed by the producer or a self-declared environmental or “green claim”. 

• Type III (ISO 14025) declarations are based on quantified life cycle product information. 

A qualified third party establishes reporting parameters; the data subsequently provided by companies using the parameters are then independently verified. 

Legal action and enforcement 

Governments can take legal action on environmental claims under existing general false advertising laws or under specific rules that apply to particular claims. In Aotearoa, New Zealand, these entities are:

• Fair Trading Act, which the Ministry of Business, Innovation, and Employment administers;

• and the Commerce Commission, the independent Crown entity that administers and enforces laws relating to competition, fair trading, consumer credit and economic regulation. 

The Commerce Commission suggests exploring efforts to ensure that:  

• claims are specific and relevant, targeting the key environmental aspects of the products and/or services concerned;  

• environmental claims are truthful be accurate—sufficiently substantiated and supported by adequate and proper tests, as and when appropriate; 

• claims are subject to adequate verification and substantiation and are not exaggerated; 

• measures to combat misleading, confusing and false environmental claims are effective. Where information is sourced from the Internet, additional care must be taken to ensure validity;  

• compliance and enforcement of consumer protection laws and regulations are strong, clear and transparent concerning claims; 

• encourage using plain language so that statements are easy to understand and comparable (i.e., claims can be easily compared when evaluating competing products).
  
  

The European Commission Green Claims Directive 

On 22 March 2023, the European Commission published its Green Claims Directive (GCD) proposal. The Directive aims to eliminate misleading environmental messaging across European Union (EU) markets and address greenwashing concerns by providing detailed rules for how companies should communicate their environmental impacts and performance. 

These rules will require significant changes to how companies currently evidence and communicate their environmental claims. These regulations also impact how companies manage information related to their environmental credentials.

As well as fulfilling regulatory requirements, more robust environmental claims management could help companies reduce reputational and litigation risks while building brand equity. However, some companies may conclude that it is more cost-effective to limit the environmental claims made.

What the Green Claims Directive signals for local business

The GCD will apply to EU and imported products. As the EU exclusively recognises auditing of green claims by public sector bodies, it is unlikely that eco-labelling certified by private sector agencies and trade associations–the norm in Aotearoa, New Zealand, will be accepted as equivalent. The verifiability of green claims depends on clear criteria, a robust methodology for assessment, and regular third-party auditing and enforcement. 

Though it currently needs to be clarified precisely which New Zealand eco-labels will be recognised and accepted under the GCD, several pathways for advancing the mutual understanding, cooperation and alignment in labelling requirements may be available through the EU-New Zealand Free Trading Act. And as Aotearoa, New Zealand looks to address green claims within its market, we must consider that the GCD would impact local frameworks and future legislation for communicating environmental green claims.

What does this mean for your communications? 

The transparency and reliability of environmental claims underpin the ability of people to contribute to consumption behaviours that contribute to diminishing the pressure on the planet.

For further information, you can access the Commerce Commission Environmental Claims guide here, which provides examples explaining how marketing laws and standards apply to environmental claims.