Use of the term “climate neutral” in advertising – Requirements for transparency and prohibition of misleading information
The designation of a product or company as “climate neutral” has become a central predicate for responsibility and ecological innovation in current market communication. In economic competition, numerous market participants strive to positively distinguish their goods or services from competitors through such sustainability claims. From a competition law perspective, however, the use of the term raises significant questions regarding transparency, consumer education, and admissibility. A ruling by the Federal Court of Justice (BGH, judgment of 27.06.2024, Ref.: I ZR 98/23) has clarified the requirements for using “climate neutral” in advertising and deepened the standards for proper labeling.
Overarching significance of environmental statements in commercial transactions
Relevance of environmental labels
Environmental advertising claims establish special duties of information and clarification. Aspects such as “climate neutral,” “environmentally friendly,” or “CO₂-neutral” are understood by consumers as indicators of ecological advantages and favorable product characteristics. Especially against the background of increased public sensitivity to sustainability issues, there is an increased need for protection against misleading information.
Objectives of competition law control
The prohibition of misleading information pursuant to § 5 UWG is intended to protect the market from deception by requiring clear and truthful information about essential characteristics of goods or services. This includes making it comprehensible to recipients how and by what means the claimed climate neutrality was achieved – whether through actual emission avoidance, reduction, or solely compensation (e.g., purchase of CO₂ certificates).
Content and impact of the BGH ruling of 27.06.2024
Facts and party configuration
The BGH dealt with a case in which a competitor objected to a company advertising products as “climate neutral” without specifically informing how the climate neutrality was achieved. The plaintiff saw this as anti-competitive misleading advertising, as consumers might get the incorrect impression that the product causes no or only negligible emissions.
Key considerations of the court
The BGH clarified that advertising with the term “climate neutral” without accompanying information about the nature and extent of sustainability measures can be misleading and thus inadmissible. The central reasoning: The public generally understands the term to mean that a product, considering its entire life cycle, does not cause relevant net greenhouse gas emissions. It is not readily apparent to the average consumer whether this climate neutrality was achieved through actual emission reductions in the production processes or merely through external offsetting measures – such as investment in climate protection projects.
Requirements for transparency and clarification
The court emphasized the duty to clarify the basis of the properties advertised as “climate neutral.” If external compensatory measures are used, there must at least be a clear indication of how “climate neutral” is to be understood in the specific case. It is not enough to present the addressee with only blanket claims, as differentiating between actual emission avoidance and compensation is indispensable for informed consumer choice.
Admissibility of hidden information access
A mere reference to an external website where detailed information on climate neutrality is available is often not sufficient. The information must be easily accessible, apparent to the average consumer, and specific. The line between supplementary explanation and impermissible relocation of essential information to hard-to-access areas is acknowledged by the transparency requirement.
Implications for companies and need for adaptation by market participants
Increase in the level of clarification
With the ruling, the Federal Court of Justice has significantly raised the standards for using the term “climate neutral” in advertising. Those who use the term must ensure not only the accuracy of the claim but also comprehensive transparency about its actual basis. This particularly strengthens the due diligence in sustainability communication and requires that companies transparently declare their business processes, offsetting measures, and external climate protection projects.
Importance for business competition
The ruling makes clear that sustainability-related advertising claims must not be understood as mere marketing tools. Rather, a legally binding framework is created that demands precise and verifiable communication to ensure uniform competitive conditions and protect consumers from misconceptions.
Risks of violations – Notes on the current situation
Violations of these requirements can lead not only to costly warnings but also to orders for cessation and damages claims. This is established case law of the BGH; nevertheless, further development concerning specific advertising practices and the requirements for the depth of information presentation remains the subject of jurisprudence. Companies are advised to continue to closely follow developments (Ref.: I ZR 98/23, see BGH judgment of 27.06.2024, Source: https://urteile.news/BGH_I-ZR-9823_Werbung-mit-dem-Begriff-Klimaneutral-ohne-Aufklaerung-ist-irrefuehrend~N34129). Regarding individual, not yet definitively adjudicated issues, the presumption of innocence applies.
Summary and further need for legal advice
The ruling makes it clear: The term “climate neutral” in advertising requires special transparency and precise clarification. Companies positioning themselves in the competition with ecological product promises must consistently comply with the requirements for the traceability of their sustainability communication. This affects not only the immediate design of advertising measures but also internal company compliance structures. For questions about permissible sustainability claims and the design of advertising measures in line with current case law, MTR Legal Lawyers offer comprehensive expertise in competition law. Detailed information can be found under legal advice in competition law.
