Authored By: Advika Singh
Faculty of Law, University of Delhi
INTRODUCTION
“Using ‘net-zero emission’ pledges is a toxic cover up that can push our world over the climate cliff.” decried the UN Secretary-General António Guterres while commenting on the first report published by the High Level Expert Group on the Net-Zero commitments of Non-state entities. The report highlights the urgency of addressing false or ambiguous ‘net-zero emission’ pledges that only create an appearance of climate action without real emission reduction. The committee calls these false pledges, ‘greenwashing.’ The term was first coined by New York environmentalist Jay Westervelt, however it only became popular after being featured in literature on environmental marketing in 1996.
The Oxford English Dictionary describes ‘greenwashing’ as “creating or propagating an unfounded or misleading environmentalist image.” Companies and other business firms use greenwashing to project an environmentally friendly image. Z. Yang et al. (2020) suggest three major reasons behind this marketing tactic. Firstly, due to growing public concerns over global warming, the consumers have become increasingly conscious of the products they buy. Greenwashing helps firms enter the green consumer market and acquire new customers without actually making their supply-chain environmentally friendly. The second reason is competitive pressure. Within the market, firms often interact with their competitors to attract more consumers. Hence, the greenwashed reputation of a firm helps it separate itself from its competitors and get ahead in the market. The last reason too stems from the growing concerns over global warming and environmental damage. The governments all over the world have begun integrating legislative changes into their approach by creating pro-environment policies for commercial markets. These regulations range from involving environmental specialists to operational issues such as integration of environmental accounting, green supply chains etc. Furthermore, government sanctions and punishments on certain activities that cause environmental degradation as well as subsidies on those that support the environment create an additional motive for greenwashing.
Staying aligned with the objective of environment protection, governments all over the world have identified ‘greenwashing’ as a corollary to the existing policies and have taken steps towards restraining its usage. This paper delves into these very steps taken specifically by the Indian government. The initial Consumer Protection Act, 2019 provided a large framework, however, to address greenwashing and the related nuances requires more explicit clauses. To fulfill this, the government introduced The Guidelines for Prevention and Regulation of Greenwashing or Misleading Environmental Claims, 2024. The paper analyses the extent to which the new guidelines, from hereon referred to simply as the Greenwashing Guidelines, 2024, are successful in addressing the previous gap.
To understand the concerns of the laws against greenwashing, it is imperative to recognize the consequences of greenwashing by firms. The practice of greenwashing affects all stakeholders of the market; the consumers, the investors and the corporations themselves. For the consumers, continuous exposure to greenwashing may cause consumer cynicism. While this prevents the consumers from buying from the greenwashers themselves, it also leads to consumers being sceptical of other brands selling green products. Greenwashing also emerges as a tactic to misinform or withhold information from the investors and shareholders about the firms’ real social performance. Hence it directly endangers investor confidence and prevents investment into other green brands. Investors and consumers rarely possess enough information to assess a firm’s environmental footprint, therefore, they rely on advertising. Greenwashing betrays this belief. This leads to both a monetary and a moral loss for consumers who become victims to greenwashing.
STATUTORY FOUNDATION: CPA 2019
The Consumer Protection Act, 2019, from hereon referred to as CPA 2019 or the act, was a landmark legislation that aimed to protect the rights and interest of consumers from harmful business practices and provide formal redressal mechanisms to address grievances. Prior to the Greenwashing Guidelines, it was this act that regulated and addressed greenwashing and the related grievances of the consumers.
Section 2 (9)(ii) – Consumers’ Right to be Informed
Consumers have the right to be informed about the quality, quantity, potency, purity, standard and price of the products or services, to protect them from unfair trade practices. The practice of greenwashing is a direct breach of this right, as the consumers are led to believe that the products they are buying are “eco-friendly” or “sustainable.” When these claims are either vague, exaggerated, or entirely false.
While the act guarantees the right, it lacks the operational mechanism to address the “net-zero emission” claims. The right is largely reactive instead of preventive. Unless a consumer has a reasonable doubt over the claims, they continue to believe the companies’ advertisements.
Section 2 (9)(v) – Consumers’ Right to Seek Redressal
Consumers further possess the right to seek redressal against unfair trade practices. However, similar to the previously discussed clause, this too is reactive in nature. The right is guaranteed to the consumers, but it can only be enforced against a company once the consumer approaches the redressal mechanisms. It provides remedy once the harm is done. These guarantees are viable when the consumers are aware of the false claims. In the case of greenwashing, the consumers have no way of ensuring the veracity of the environmental claims.
Section 2 (28) – Definition of Misleading Advertisements
According to the CPA 2019, an advertisement becomes misleading when it falsely describes a product or service; or gives false guarantee to mislead consumers; or conveys a representation, whether expressed or implied, that constitutes an unfair trade practice; or deliberately conceals important information. This section is the most important in addressing greenwashing within the act, as most greenwashing takes place via misleading advertising, including but not limited to, packaging, marketing slogans, or celebrity endorsements. Through this section, the CPA bans misleading advertising in general. This is where the gap lies. Within the wide scope of “misleading” , phenomena such as greenwashing, need more nuanced and specific clauses. The act never mentions what makes an environmental claim misleading, or to what extent do the vague claims of sustainability count. Furthermore, what is to be done with partial claims (such as recyclable packaging but polluting production process).
Section 2 (47) – Definition of Unfair Trade Practices
An “unfair trade practice” can be defined as a practice which for the promoting sale of a good or service adopts unfair method or unfair or deceptive practice including (i) making any statement, whether orally, by writing or by representation which falsely represents that the goods are of a particular standard quality, quantity, grade, composition, style or model. This section further encompasses a variety of unfair practices. Nonetheless, it is this sub section that was often extended to greenwashing. Since, at large, greenwashing is a false representation of the products’ effects on the environment. However, this is where greenwashing distances itself from outright falsity. It hides behind technical ambiguity of half-truths, aspirational marketing, vague imagery and eco-claims that are unverifiable without proper resources.
Section 21 – Power to discontinue/modify misleading advertisements
This section underlines one of the major enforcement powers of the Central Consumer Protection Authority, or simply the CCPA. According to this section, the CCPA possesses the power to discontinue or modify an advertisement which it finds to be false or misleading. Further, it can also impose a penalty on the producer for such advertisements, extending upto ten lakh rupees. Hence, the CPA establishes an enforcement power, but the gap exists in the benchmark for environmental claims. Without an explicit framework, the enforcement of the consumer’s right against misleading advertisements becomes discretionary, inconsistent and easier for brands to defend.
Section 89 – Punishment for Misleading Advertisements
According to this section, misleading advertising may create criminal liability in certain cases. The perpetrator may be sentenced to imprisonment for upto 2 years and fines that extend upto ten lakh rupees. Separate punishments may be given for subsequent offences. This section acts as a strong deterrent in many cases. However, it never specifies the criteria for the evidence that is required. While this may be too grave a punishment for environmental claims, it can act as an appropriate deterrent against the misleading claims.
NEW & NUANCED: GREENWASHING GUIDELINES 2024
The CPA 2019 provides a large statutory framework for addressing a variety of consumer grievances, including misleading advertising, which encompasses within itself greenwashing. However, it did not prove to be enough to address the unique nature of “net-zero emissions” and other such claims. This is because these environmental claims rarely, if ever, use directly false narratives. Greenwashing exists through vague terminology, eco-imagery and half-truths. It is nearly impossible for individual consumers to verify these claims, and are hence misled by the false narratives set by the companies.
The Government of India recognized this issue and introduced the Guidelines for Prevention and Regulation of Greenwashing or Misleading Environmental Claims, 2024. These guidelines not only address the gaps present in the act, with regards to greenwashing, but also add more mechanisms for further protection of consumers against the false environmental claims.
Definitional Clarity
- Clause 2 (e) – Environmental Claims
According to this clause, environmental claims include all those claims that either have a neutral or positive impact on the environment or contribute to sustainability; or cause less harm to the environment in comparison to a previous version of the same product or service; or cause less harm to the environment in comparison to its competitors; or possesses specific environmental advantages.
- Clause 2 (f) – Greenwashing
Any deceptive or misleading practice including concealing, omitting, or hiding information for making vague, false or misleading environmental claims; or placing emphasis on positive environmental aspects while concealing harmful attributes, is included within greenwashing under the purview of the guidelines. Further Clause 4 explicitly prohibits greenwashing and any misleading environmental claims.
Section 2 provides explicit definitions of both greenwashing and environmental claims. These definitions make enforcement easier for both the consumers and the redressal authorities. It also prevents companies from escaping liabilities based on technical loopholes.
Substantiation & Disclosure
- Clause 5
This clause does away with the biggest issue faced with the CPA, it removes all vagueness. This clause explicitly mentions how generic terms like ‘clean’, ‘green’, ‘organic’ etc. cannot be used without tangible, verifiable evidence, which shall be disclosed to the consumers as provided under the following section. Further, all technical terms must be explained in consumer-friendly language which must be made accessible.
- Clause 6
This clause constitutes the procedure in which the disclosure of the evidence of ‘environmental’ claims must be made accessible to the public. The possible methods given include various types of technology or digital medium. Further, the data that is present must be whole in nature, and must specify whether only a specific part of the production process is actually environment friendly. The disclosures made must be accessible to the consumers and not contradict a relevant environmental claim.
Prevention of Partial Truth
A loophole within the misleading advertising as given under CPA was the advertisements based on partial truths. Companies would promote the environmentally advantageous part of the product, while intentionally hiding the harmful parts. Clause 6 (3) challenges this practice by ensuring that any environmental claim must specify whether it refers to the good, manufacturing process, packaging, manner of use of good or its disposal is relevant to the advertisement. This ensures that companies cannot claim environmental benefits based on half truths.
Additionally, Clause 7 addresses any aspirational or futuristic claims by ensuring that they can only be made once clear and actionable plans have developed to achieve these objectives.
WAY FORWARD
The Greenwashing Guidelines, 2024 manage to address multiplicity of issues regarding greenwashing. It is a stepping stone in the direction of heightened consumer protection and responsible advertising, especially with regards to heightened climate conscionability. Despite the timely intervention of the government, these guidelines still do not eliminate all issues. The guidelines mention substantiation and disclosure, however there is no benchmark set for the independent third parties responsible for the verification of evidence. Furthermore, environmental claims vary massively across different sectors. Without sector-specific regulation, the enforcement of the guidelines will remain inconsistent.
To strengthen the regulatory framework, the future policy should focus on a clear benchmark for the substantiation, especially with regards to the third-parties that are to be involved. Additionally, a clear period should be set for the verification of claims and how long can the companies continue to use these claims. Sector-specific guidelines should be introduced as well to ensure consistency.
In addition to these measures, a national database should be created of all approved claims with relevant certifications, evidence and data added. If strengthened along these lines, the Indian consumer protection framework will more effectively protect consumers’ rights, and promote genuine sustainability and environmentally friendly innovation.
