Greenwashing: Govt unveils new guidelines to rein in misleading ‘eco-friendly’ ads | Mint

New Delhi: Companies using terms such as ‘eco-friendly’, ‘organic’ and ‘natural’ in their advertisements must substantiate their claims and include adequate qualifiers and disclosures under a new law against greenwashing.

Under new guidelines issued Tuesday, companies claiming environmental benefits in advertisements to promote their products or services must ensure that consumers receive accurate and transparent information, said consumer affairs secretary Nidhi Khare.

Misleading or false advertising could result in penalties or even jail terms. 

Mint was the first to report on 12 October on the government’s plans to tighten the screws on greenwashing in corporate promotions. These new rules come amid growing concerns over greenwashing—where companies mislead consumers about their environmental practices to enhance their brand image.

Companies claiming environmental benefits in advertisements to promote their products or services must ensure that consumers receive accurate and transparent information, consumer affairs secretary Nidhi Khare said while announcing the new rules.

Also read | Mint Explainer: What are ESG rating providers and why should investors care?

The Guidelines for Prevention and Regulation of Greenwashing or Misleading Environmental Claims 2024 apply to environmental claims by manufacturers, service providers and traders whose goods, products, or services are advertised.

“No person to whom these guidelines apply shall engage in greenwashing or misleading environmental claims,” Khare said. “All environmental claims must be supported by accessible, verifiable evidence from independent studies or third-party certifications.”

“This is a welcome step that makes information easily accessible to consumers, thereby enhancing consumer awareness and promoting responsible advertising with accuracy, transparency, and accountability,” said Karun Mehta, partner, Khaitan & Co., a law firm.

What’s in a term?

Generic terms such as clean, green, eco-friendly, eco-consciousness, good for the planet, minimal impact, cruelty-free, carbon-neutral, pure, sustainable, and regenerative cannot be employed without adequate qualifiers and substantiation.

For instance, if a product is marketed as sustainable, it must be backed by reliable data and documentation that can be verified by consumers or regulatory bodies. And if a product is described as recyclable, the advertisement must be clear if that applies to the product’s entire structure or just a specific part.

The new guidelines also emphasise the importance of using consumer-friendly language, particularly when introducing technical terms such as environmental impact assessment, greenhouse gas emissions, and ecological footprint.

Advertisers are encouraged to explain these concepts in simple terms to help consumers understand their meaning and implications, the guidelines state.

Also read | The false promise of green jobs

In terms of transparency, the guidelines mandate that any company making an environmental claim must disclose all material information in the relevant advertisement or communication. This can be accomplished by incorporating a QR code or a link to a webpage in the advertisement, allowing consumers to access detailed information.

The guidelines also specify that advertisers avoid cherry-picking data from research studies to highlight favourable observations while obscuring less favourable findings.

“When making environmental claims, it is essential to clarify whether the claim refers to the product as a whole, a specific component, the manufacturing process, packaging, the manner of use, or its disposal,” Khare said.

The guidelines also state that comparative environmental claims that juxtapose one product or service against another must be based on verifiable and relevant data, and disclose exactly what specific aspects are being compared.

Also read | Ethanol: An eco-friendly fuel or another green mirage?

Rights and penalties

Per Section 24 of the Consumer Protection Act, the Central Consumer Protection Authority can impose penalties for misleading corporate claims, with fines of up to ₹50,000, which may escalate to ₹1 crore for repeated violations.

As per Section 21 of the Act, which establishes penalties for misleading advertisements, first-time offenders may face fines of up to ₹10 lakh, while repeat offenders can be fined up to ₹50 lakh with possible imprisonment of up to two years.

Additionally, Section 40 protects the rights of consumers, allowing them to seek compensation for any damages or losses incurred due to violations.

Also read | IAS coaching institutes under CCPA scanner for fleecing aspirants with false celebrity teacher ads

India’s regulations on green claims and greenwashing are similar to those in the United Kingdom and the European Union. All three focus on transparency and accountability in environmental claims made by companies.

The UK’s Competition and Markets Authority introduced a Green Claims Code in 2021 to protect consumers from misleading green claims.

The European Union’s Green Claims Directive requires companies to back up their green claims with life-cycle assessments and third-party verifications.

According to the European Parliament’s website, the European Commission proposed this directive on 22 March 2023 to improve transparency and combat greenwashing. The European Parliament adopted its position in March this year, and its council approved a general approach on 17 June. Interinstitutional negotiations are set to begin shortly, as per the website.