Legal Significance of the Term “Green”
The term “Green” is used in a variety of contexts in the legal field. It has become established particularly in environmental law, marketing, finance, construction and energy law, as well as in contract law. “Green” serves as an umbrella term for sustainable, environmentally friendly, or resource-conserving characteristics of products, services, processes, or financial investments. The term is subject to specific legal frameworks, defined requirements, and potential liability risks in its respective fields of application.
Definition and Delimitation of the Term
In legal terms, “Green” is not a fixed, conclusively defined term. Its meaning always depends on the factual context and relevant guidelines, laws, and standards referenced. The term typically refers to products, investments, buildings, or processes aimed at reducing ecological impacts or promoting sustainability. The distinction from terms such as “sustainable”, “climate-friendly”, “environmentally responsible”, or “energy-efficient” is particularly relevant, as these are partly used synonymously, but sometimes differently.
Green in Environmental Law
Use of the Term and Impact in Environmental Law
In environmental law, “Green” usually refers to legally binding requirements for reducing negative environmental impacts. It appears in various legal instruments and ecological standards. Environmental criteria are defined that products, buildings, or services must meet to be declared “Green”.
Relevant Legal Foundations
- EU Law: At the European level, binding regulations exist, such as the so-called Taxonomy Regulation (Regulation (EU) 2020/852), which classifies sustainable economic activities and links terms such as “Green” to mandatory minimum requirements.
- German Law: In Germany, references to “Green” are primarily found in the Circular Economy Act, the Federal Immission Control Act, and the Renewable Energy Act. These set requirements for resource and energy efficiency as well as for emissions reduction.
- International Agreements: On a higher level, conventions such as the Paris Climate Agreement are decisive for the definition and use of the term in connection with emissions reduction measures.
Impact on Companies and Authorities
Companies and public authorities, when advertising and promoting “Green” attributes, are legally required to make objectively verifiable and substantiated statements. Misuse can lead to claims for injunctive relief under competition law, regulatory measures, or liability risks.
Green in Commercial and Advertising Law
Advertising Law Requirements for “Green Claims”
In connection with product labeling and advertising statements, the Act Against Unfair Competition (UWG) and European directives govern the permissible use of the term “Green”. Advertising statements that promote products as “Green” must be clear, truthful, and substantiated.
Prohibition of Greenwashing
The so-called ban on greenwashing prohibits misleading environmental claims. The actual ecological benefit of the advertised product or service is decisive. Incorrect or unsubstantiated statements may result in warnings, injunctions, and fines.
Requirements for Evidence
Companies are required to keep objective evidence for the attributes described as “Green”. This can be done through certificates, test reports, or publicly accessible studies.
Handling Labels and Certificates
The use of labels such as “Green Label”, “Green Seal” or similar is subject to legal review criteria. It must be ensured that any seals or certificates used are issued by recognized organizations and that the underlying criteria are transparent and verifiable.
Green Finance and Green Bonds
Significance in Financial Market Law
The term “Green” is gaining in importance in financial market law, especially in connection with so-called Green Bonds. These are bonds whose proceeds are used exclusively to finance environmentally sustainable projects.
Legal Requirements for Green Bonds
European legal acts, in particular the EU taxonomy and the planned EU Green Bond Standards Regulation, establish binding disclosure obligations and eligibility criteria. Issuers must transparently present and verifiably document the ecological benefit of the projects financed by the bonds.
Disclosure and Transparency Obligations
Financial market participants, especially funds and credit institutions, must, when promoting sustainable (“Green”) financial products, provide detailed information regarding environmental aspects and comply with the disclosure requirements under the Sustainable Finance Disclosure Regulation (SFDR).
Green in Real Estate and Tenancy Law
Use of the Term in Real Estate
In the area of real estate and tenancy law, “Green” describes properties that meet ecological construction and energy efficiency standards. This is supported by standards such as the Building Energy Act (GEG).
Green Building Standards
- Leed, DGNB, BREEAM: Internationally, the term “Green Building” is processed through private and public certification systems, which define requirements for material selection, energy efficiency, water consumption, and emissions.
- Legal Regulations: In Germany, energy standards are set by legal requirements as well as additional municipal statutes.
Relevance in Tenancy Law
“Green” clauses are increasingly common in tenancy law. They oblige tenants and landlords to act in a sustainability-oriented manner, for example, in the context of operating costs clauses or modernization obligations. Case law deals with the effectiveness of such agreements and their impact on the allocation of costs and contract execution.
Liability and Legal Enforcement Regarding Use of “Green”
Possible Liability Risks
The illegal or abusive use of the term “Green” can lead to various liability risks, for example in the area of competition law, contract law, as well as vis-à-vis authorities and third parties.
Competition Law Liability
Companies risk warnings and injunctive actions in case of covert or misleading use of environmental statements (cf. §§ 3, 5 UWG).
Contractual Liability
If green clauses are not adhered to in contracts, counterparties may demand subsequent performance, damages, or rescission. Courts examine whether the characteristics described as “Green” are objectively verifiably fulfilled.
Outlook and Development
The term “Green” will continue to gain legal significance in the future. In addition to ever more precisely defined legal requirements, further harmonization of terminology use at the European and international level is expected. The development of uniform labeling systems and binding sustainability standards is likely to increase, particularly in connection with “Green” products and investments.
Summary
“Green” refers in the legal context to ecological, sustainable, or resource-conserving characteristics of products, services, buildings, and financing. The legal requirements differ depending on the area of application, but in particular cover advertising claims, financial market products, buildings, and contract structures. What is crucial is the provability, transparency, and verifiability of the specified environmental attributes as well as compliance with relevant legal frameworks. Misuse can lead to extensive liability and sanction risks.
Frequently Asked Questions
What legal requirements apply to companies regarding Green Claims?
In the European Union and Germany, so-called “Green Claims”, i.e. environmental advertising statements, are subject to strict legal requirements. The basis for this is in particular the EU Directive on Unfair Commercial Practices (Directive 2005/29/EC), the German Act Against Unfair Competition (UWG) and, in some cases, the German Environment Agency as well as sector-specific regulations such as the EU Regulation on sustainability-related disclosure obligations in the financial services sector (SFDR). Companies may not make misleading statements about the environmental friendliness or sustainability of their products, services, or their company. Statements such as “climate-neutral”, “environmentally friendly” or “sustainable” must be explicit, substantiated, and verifiable. The burden of proof for the truthfulness lies with the company, which must be able to prove the accuracy of its claims through independent studies, certificates, or recognized standards. False statements can lead to warnings, injunctions, fines, and reputational damage. From 2026, the EU-wide legal situation will become even stricter under the Green Claims Directive, requiring even more detailed evidence and disclosures.
What legal risks exist when using greenwashing?
Greenwashing, i.e. the deliberate or negligent misleading promotion of a product, service, or company as environmentally friendly when this is not true, can lead to severe legal consequences. Violations of the UWG can be warned and prosecuted in court by competitors, consumer associations, or the Center for Protection Against Unfair Competition. Additionally, consumers may claim for injunctive relief and damages. Antitrust aspects and special laws such as the Price Indication Ordinance may also be affected. In individual cases, criminal or administrative sanctions may be imposed, especially if consumption or emission values are stated incorrectly. Case law is becoming increasingly strict; even fines and sales bans are possible. Under the Corporate Sustainability Reporting Directive (CSRD) and the Supply Chain Due Diligence Act, in addition to civil consequences, official consequences such as audits and orders may also occur.
How must environmental and sustainability claims be legally substantiated?
Companies are required to back up any environmental claim with sufficient, verifiable, and neutral evidence. The legal situation requires that, for example, CO2 compensation, sustainable raw material sources, or recycling rates must be confirmed by scientific studies, recognized certificates (e.g. EU Ecolabel, Blue Angel, FSC, Fairtrade) or independent auditors. The evidence must be kept up to date and transparent, made available to the average consumer in an understandable way, and presented upon request in case of dispute. Reference to the entire life cycle of a product (Life Cycle Assessment, LCA) is increasingly legally required. If the evidence is missing or doubtful, the claim is considered untrue – with corresponding legal consequences.
What role do national and European laws play in “Green Marketing”?
“Green Marketing” in Germany is subject to both national laws (UWG, BGB, Packaging Act, Energy Industry Act) and European regulations (UCP Directive, Green Claims Directive, CSRD, SFDR, Taxonomy Regulation). The EU often sets minimum standards, which member states may tighten further. While the EU aims to create a unified legal framework with the Green Claims Directive, until it comes into force, the existing national regulations remain in place, so companies must observe both German and European legal requirements. Infringements can therefore be prosecuted before both German and European courts.
Are there binding standards for environmental labels and certificates?
For many environmental labels and sustainability certificates, there are legally binding standards both across Europe and in Germany, such as for the EU Ecolabel, the Blue Angel, or the organic seal. The use of such labels is only permitted after successful testing by an authorized body and in compliance with specific awarding criteria. The requirements are regulated differently depending on the label but usually include concrete test protocols, repeated checks within specific periods, and notification and transparency obligations. Misuse or unauthorized use of such labels or misrepresentation of non-existent certifications constitutes an administrative offense under § 5 UWG and may be criminally relevant.
What requirements apply regarding transparency and disclosure for Green Claims?
Strict transparency and disclosure obligations apply to Green Claims. Companies must disclose in detail how sustainability or environmental benefits are achieved and which scientific bases or methods were used. This includes, for example, disclosure obligations regarding the calculation methods used for CO2 balances, information about compensation mechanisms, and precise definitions of the terms used. According to the Green Claims Directive (still in the legislative process), EU-wide uniform minimum requirements for the traceability, visibility, and verifiability of Green Claims are being introduced. Even now, the UWG requires that all relevant information must be easily accessible and understandable to consumers. Infringements are prosecuted both by competitors and consumer protection associations.
