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“Climate-neutral” in advertising: requirements for transparency
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The use of environment-related terms such as “climate-neutral” is of considerable relevance in commercial practice. Companies use such statements to present their products in a positive light and to point to an ostensibly sustainable corporate philosophy. Nevertheless, the informative value and transparency of using the designation “climate-neutral” are subject to increased legal requirements.
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German Federal Court of Justice decision on the term “climate-neutral”
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Reason for the dispute and procedural history
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The German Federal Court of Justice (BGH) had to address the question under which conditions the promotional emphasis of the term “climate-neutral” is permissible. The background was a dispute between an association for the protection of competition and a company that highlighted on its packaging—without further explanation—that its product was “climate-neutral.”
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Standard for assessment under unfair competition law
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The decisive criterion for the legal assessment is the risk of misleading consumers within the meaning of the Act Against Unfair Competition (UWG). The information on climate neutrality must be designed in such a way that it can be correctly understood by an average, reasonably well-informed consumer and does not give rise to misconceptions about the actual climate-relevant characteristics of the advertised product.
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Requirements for duties to provide information
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According to the BGH’s recent decision, merely using the term “climate-neutral” is not sufficient unless it is disclosed in what way climate neutrality is achieved. In particular, it is material whether emissions were avoided directly in the production process or whether they were offset by so-called compensation measures (e.g., certificates for reforestation or emissions trading). A blanket claim of climate neutrality without further clarification constitutes an unfair commercial practice, as it is capable of giving rise to erroneous impressions on the part of consumers. They might assume that the product is emission-free in its process of creation, even though in fact only subsequent compensation has taken place.
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Implications for companies
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Transparency requirements and risk of misleading consumers
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Companies that advertise using the term “climate-neutral” are required to comply with the described transparency obligations and to provide appropriate information on the basis for the claim of climate neutrality. If they fail to do so, there is a risk of an objection under unfair competition law due to misleading consumers.
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Significance for competition
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The BGH’s current requirements strengthen the duty to provide information and thereby promote fair competition. Companies cannot retreat to mere compensation of emissions without openly communicating this to consumers. A more detailed explanation is essential to enable an informed purchasing decision.
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Legal classification and outlook
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The BGH’s decision underscores that the term “climate-neutral” in advertising must not be used independently of an explanation of the underlying mechanisms. The transparency obligation is an essential component of the requirements under unfair competition law in connection with environmental advertising. Current and future commercial measures must be assessed accordingly against this background. Companies should continue to closely monitor the competitive law environment in this area, as further adjustments in case law are to be expected (BGH decision of 27 June 2024, case no. I ZR 98/23; source: urteile.news).
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Anyone with legal questions regarding the promotional use of environmental claims or the design of advertising measures in commercial practice can find further information at MTR Legal under legal advice in competition law.
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