Ruling of the Federal Court of Justice (BGH) on June 27, 2024 – Case No.: I ZR 98/23
Climate protection is an important issue for many people, which is reflected in their purchasing behavior. Manufacturers and producers have responded by promoting their products with the term “climate neutral.” The BGH has now ruled on June 27, 2024, that advertising with climate neutrality is only permissible if the advertisement itself explains what is meant by climate neutrality and how it is specifically achieved (Case No.: I ZR 98/23).
Environmental protection and climate neutrality are important attributes for many consumers that can influence their purchasing decisions. It is therefore understandable that manufacturers like to advertise their products as climate neutral. However, if they engage in greenwashing and mislead consumers with this advertising, it constitutes a violation of competition law, according to the economic law firm MTR Legal Rechtsanwälte, which advises, among other things, on competition law.
BGH Takes a Stance
The I. Civil Senate of the BGH, which is responsible for competition law, has now clarified under what conditions a product may be advertised as climate neutral and when misleading advertising occurs. It made clear that the advertisement itself must explain what is meant by the ambiguous, environmentally-related term “climate neutral.” Otherwise, the advertising is misleading.
The case involved the products of a food manufacturer. The company advertised in a trade journal of the food industry that it had been producing its products climate neutrally since 2021, with a logo bearing the term “climate neutral” that referred to the website of a “ClimatePartner.” However, climate neutrality was not achieved by producing the products in a CO2-neutral manner. Instead, the manufacturer supports climate protection projects and thus achieves compensation for its CO2 emissions.
Misleading Advertising with Climate Neutrality
The Competition Center considered this advertising misleading and sued the Federal Court of Justice for an injunction. They argued that consumers understand the statement “climate neutral” to mean that the manufacturing process itself is climate neutral. Therefore, the advertisement itself must at least indicate that climate neutrality is achieved through compensatory measures.
The Kleve District Court and the Düsseldorf Higher Regional Court dismissed the lawsuit. The Düsseldorf Higher Regional Court concluded that there was no misleading, as readers of the trade journal should be aware that climate neutrality can also be achieved through compensatory measures. Additionally, by visiting the partner’s website, the information on how climate neutrality is achieved can be obtained, which the Higher Regional Court deemed reasonable.
Successful Injunction at the BGH
The BGH overturned the decision in the revision procedure and granted the injunction. The advertisement is misleading according to § 5 Abs. 1 UWG (Act Against Unfair Competition). The Senate reasoned that the term climate neutral can be understood by consumers and readers of the trade journal either as CO2-neutral production or as a compensatory measure.
The BGH emphasized that the risk of misleading is particularly high in environmental advertising, hence a greater need for clarification exists. Therefore, in advertising with an ambiguous environmental term like “climate neutral,” the specific meaning must already be clarified in the advertisement itself. An explanatory note outside the advertisement is not sufficient to prevent misleading.
Non-Equivalent Measures
The BGH further elaborated that explaining the term climate neutral is necessary because the reduction of CO2 emissions and compensatory measures are not equivalent methods to achieve climate neutrality. The reduction of emissions is considered a priority over compensation.
As advertising with supposed climate neutrality can significantly influence consumers’ purchasing decisions, the misleading nature is also relevant under competition law, the BGH concluded.
The economic law firm MTR Legal Rechtsanwälte advises on all essential issues in competition law.
Please feel free to contact us!
