Key developments in sustainability claims in 2022

EU Law

In 2022, the ACM and the European Commission put the spotlight on the accuracy of companies’ sustainability claims. Notably, the ACM published several market studies and adopted commitment decisions concerning allegedly misleading sustainability claims. At the European level, the European Commission published a proposal for a directive banning misleading environmental claims, early obsolescence practices (i.e. premature failures of goods), and the use of unreliable and non-transparent sustainability labels and information tools. Without a doubt, regulators will continue to target unfair commercial practices that lead consumers away from sustainable consumption choices in 2023 and beyond.

The Netherlands

The ACM announced on 27 January 2022 that it would prioritize "energy & sustainability, the digital economy, and the housing market." Following up on that announcement, the ACM conducted several investigations in 2022 into unclear, imprecise or incomplete sustainability claims. Moreover, the ACM adopted several commitment decisions related to companies’ alleged “greenwashing” practices. More generally, the ACM conducted surveys on consumer's expectations related to the precise meaning of sustainability claims.

The following legislation and market study developments occurred in the Netherlands in 2022:

ACM's call for legislation on reliable sustainability information for consumers

In June 2022, the ACM published the results of a survey on knowledge of sustainability labels among consumers. The survey revealed that although consumers wish to have reliable information regarding the sustainability aspects of products, their actual knowledge of sustainability labels is limited. Indeed, the ACM’s survey found that the myriad of sustainability labels and claims reduces their usefulness to consumers. As the ACM’s view is that clear and reliable information is needed to stimulate consumers to make sustainable choices, the ACM called on the Dutch legislature to create a clear statutory framework for sustainability labels. So far, the Dutch legislature has not publicly responded to this specific request of the ACM.

ACM's survey on sustainability claims regarding carbon offset

In October 2022, the ACM published the results of a survey concerning consumers’ understanding of carbon offsetting claims (e.g. 'carbon-neutral' and 'climate-neutral') when purchasing airline tickets. ACM concluded that the use of such sustainability claims could be misleading, as the survey showed that consumers do not have a clear understanding of the term ‘carbon-neutral’, nor do they understand the difference between carbon reduction and carbon offset. The ACM announced that complaints filed by consumers and businesses about general and vague carbon-offset claims may lead to enforcement action. Consequently, businesses using carbon-offset claims should pay extra attention as to whether their claims are based on facts, and whether they are clear and unambiguous.

ACM and Norwegian Consumer Authority issue sustainability guidelines for the clothing sector

In October 2022, the ACM and the Norwegian Consumer Authority (NCA) announced guidelines setting out how the clothing industry should use the “Higg Material Sustainability Index” in their communications to customers. The Higg MSI is designed to compare the environmental impact of different materials. Major clothing brands use this index to bolster their sustainability, but some statements may be misleading to consumers. The ACM and NCA's guidelines set out how to use the index in a clear way.

ACM highlights need for a clear and trustworthy certification label for sustainable Dutch products in the agricultural sector

In October 2022, the ACM sent a letter to the Dutch Minister of Agriculture, Nature and Food Quality calling for, among other things, a clear certification label regarding sustainable Dutch products. The ACM’s view is that the current proliferation of sustainability labels causes confusion; having a single, clear, properly managed and trustworthy label for more-sustainable products in shops, specialty stores and hospitality will help consumers.

The following ACM enforcement developments occurred in the Netherlands in 2022:

ACM adopts commitment decisions concerning Decathlon’s and H&M’s sustainability claims

Following a broad sector study into sustainability claims in the clothing sector, the ACM found that Decathlon and H&M marketed products with misleading sustainability claims. The investigation revealed that Decathlon and H&M offered their products using general claims such as "Ecodesign" and "Conscious" without clearly specifying the concrete sustainability benefits of those claims. Eventually, the clothing retailers made commitments to the ACM, promising to adjust or no longer use certain claims. Both commitment decisions include various measures aimed at reducing the likelihood of future misleading claims, such as updated marketing communication guidelines and a more stringent compliance policy.

ACM adopts commitment decisions related to sustainability claims of Vattenfall and Greenchoice

In 2021, the ACM initiated an investigation into energy providers Greenchoice and Vattenfall. This investigation revealed that those companies made certain sustainability claims by comparing themselves with others market players. However, according to the ACM it was not clear on which parameters the comparisons were based. In 2022, Greenchoice and Vattenfall committed to the ACM to adjust various claims and their substantiations, and to donate sums of money to sustainable causes.

European developments

In March 2022, the Commission published a proposal for a directive banning misleading environmental claims, early obsolescence practices (i.e. premature failures of goods), and the use of unreliable and non-transparent sustainability labels and information tools. One of the key focus points of the proposal is to provide consumers with clear information on the sustainability of products.

It therefore proposes changes to existing directives. A key change concerns the prohibition on deceiving consumers by communicating misleading products characteristics. That prohibition will, in the future, also cover product characteristics relating to sustainability (Directive 2005/29). In that light, the proposal includes a range of practices that might be considered unfair practices, such as:

  • encouraging consumers to make a transactional decision by making an environmental claim related to future environmental performance without clear, objective and verifiable commitments and targets, and an independent monitoring system;
  • providing a service that uses a sustainability information tool to compare products, without providing proper information on the method of comparison and the products that are being compared;
  • displaying a sustainability label which is not based on a certification scheme or has not been established by public authorities;
  • making a generic environmental claim for which the trader is not able to demonstrate recognised excellent environmental performance relevant to the claim; and
  • making an environmental claim about the entire product when it actually concerns only a certain aspect of the product.

Outlook for 2023

For 2023, the expectation is that the ACM will no longer settle for commitments, but will instead impose fines if companies violate consumer law by using unfound or vague sustainability claims. Moreover, we expect the ACM to continue to focus on energy providers, given the high prices for consumer in this sector and the desire to work towards a green “energy transition”.

This article was published in the Competition Newsletter of January 2023. Other articles in this newsletter: