India – Greenwashing – Drawing A Line Between Green Marketing Or Green Misrepresentations.
Greenwashing, inspired by the term “whitewashing,” is the practice of engaging in “unsubstantiated, false, deceptive, misleading environmental claims about products, services, processes, brands or operations as a whole, or claims that omit or hide information, to give the impression that they are less harmful or more beneficial to the environment than they actually are.”[1]
It would be greenwashing, for instance, if advertising products/services as “organic”, “eco-friendly” or marking them with promises of a “green” tomorrow knowing such claims to be untrue. The problem aggravates when customers, tricked by such misleading claims, are charged a premium for such alleged green products.
A more known version of greenwashing is climate washing[2] – which is misleading claims made in the context of climate change.[3] Examples of greenwashing include unclear and false claims about its CO2 emissions[4] by prominent airlines, about selecting products can save the planet and energy[5] by an electronics company, or about a reduction in the carbon footprint[6] by a manufacturer of food items, etc.
Such misleading and unsubstantiated advertisement or claims have caught the attention of regulators globally in the recent past.
In India, greenwashing is a form of misleading advertising. It has come under the radar of the Advertising Standards Council of India (“ASCI”), the Central Consumer Protection Authority (“CCPA”), the Securities Exchange Board of India (“SEBI”), and the Reserve Bank of India (“RBI”) in particular.
ASCI
The ASCI is a self-regulatory body for regulating advertising and related activities in India. On February 15, 2024, the ASCI released the Guidelines for Advertisements Making Environmental/Green Claims[7] (“ASCI Guidelines”), which provides guidance on greenwashing in advertising.
| Claims | Common words used | Examples[8] | Validity |
| Absolute claim[9] Statements claiming that the entire product/service (i) has no impact, or (ii) has a positive impact, or (iii) causes a reduction in the adverse impact on the environment. Such claims should be backed by data/credible accreditation and not be limited/qualified by disclaimers. | Environment friendly, eco-friendly, sustainable, planet-friendly, etc. | “Our ISO 140001 certified products are made from eco-friendly materials like withered flowers, hay, dried grass etc., and no trees were cut in the making of our products.” | P |
| “Our paper pencils (excluding lead) are made from recycled materials and are eco-friendly.” | O | ||
| Comparative Claim[10] Advertised product/service has an environmental benefit not available in the advertiser’s previous product/service or competitor’s product/service. The parameters of comparison must be clear. | Greener or friendlier etc. | “Choose our LED-light bulbs for better energy-efficiency.” | P |
| “Our LED-light bulbs use 90% less energy than CFL bulbs.” | O | ||
| General claim[11] A claim made in relation to the full life cycle of the product/service. If the claim is not for the entire life cycle, the limits must be stated. If the claim cannot be justified for the full life cycle, then the claim should be limited to a specific aspect of the product or service, which can be justified. If a claim is made in relation to a part of the product or service’s life cycle, then the claim should not mislead a product or service’s total impact. | “Our containers for food and beverages do not impact the environment.” “Our notebooks do not harm the environment.”“Our air conditioner is energy-efficient and uses 1000 watt per hour.” The claim implies that the air conditioner would consistently use only 1000 watts per hour and disregards wear and tear or aging of the air conditioner. | P | |
| “We serve our food and beverages in 100% recycled containers which can further be fully recycled.” “Our notebooks are produced using 100% recyclable materials.”“Our air conditioner is energy efficient and uses 1000 watt per hour.* *when tested for 16000 hours at the time of product testing.” | O |
The ASCI Guidelines also lay down certain specific requirements for a claim to not be construed as greenwashing, which, among other things, include:
- A claim should not contain any forward-looking statements unless a clear and actionable plan has been prepared, detailing how such claims would be achieved.[12]
- A claim containing colours, graphics, or design elements associated with the environment theme is not prohibited unless such usage is connected with or supported by environmental claims made in relation to such product or packaging or services or brand identity.[13]
- A claim in relation to:
- grant of certification/accreditation from a third-party must specify the aspects of the product/service evaluated;[14]
- a product being compostable, biodegradable, recyclable, etc., must (i) specify the aspects of the product that bear such attributes, and the extent of such attributes and (ii) be backed by evidence to indicate the time taken for disposal to be completed, and the absence of any hazardous elements;[15]
- carbon off-setting should (i) provide specific disclosure if it cannot be achieved in two years; and (ii) not be made if it is required by law.[16]
- the absence of environmentally damaging ingredients should not be made if (i) such ingredient is not found in any competing product or services; (ii) the removal of such ingredient is mandated by law and such law applied to competing products as well; or (iii) ingredient/component is replaced by another similar/more harmful ingredient/component.[17] Having said that, if a claim in relation to (ii) above is still made, then the law requiring such removal must be sated.[18]
The ASCI has been vigilant and issued notices against a variety of products and unsubstantiated claims such as (i) hand wash liquid[19] and vegetable cleaning liquid[20] are eco-friendly; (ii) the container of a strawberry shower scrub[21] is made of 30 per cent recycled plastic, etc. In both these cases, the ASCI has, among others things, noted that such claims were misleading and was likely to lead to widespread disappointment in the minds of the consumers.
CCPA
Released merely five (5) days after the ASCI Guidelines, the CCPA issued its draft guidelines on greenwashing[22] (“Draft CCPA Guidelines”) for public comments on February 20, 2024,[23] and are yet to be enforced.
While the provisions of the Draft CCPA Guidelines are very similar to the ASCI Guidelines, the Draft CCPA Guidelines, in contrast to the ASCI Guidelines, expressly restrict cherry-picking of favourable observations from research backing the environmental claims and require disclosure of the favourable and unfavourable observations from such research.[24] For example, a product packaging could be made of 100 per cent recyclable materials but could take up to eight (8) months to completely recycle. In such a case, it is required to mention that it could take up to eight (8) months to completely recycle the product packaging if a claim is made in relation to the recyclable nature of the product packaging.
Additionally, the Draft CCPA Guidelines also mandate all advertisements containing (a) technical terms[25] to use consumer friendly language and explain the meaning of such terms in such advertisements[26] and (b) environmental claims to be easily accessible to the consumer and not contradict the claim itself.[27]
SEBI
The SEBI took cognisance of greenwashing before the ASCI and CCPA. In February 2023, the SEBI issued a circular[28] providing guidance in relation to advertising green debt securities[29] (“SEBI Guidance”). The SEBI Guidance, among other things,requires issuers of green debt securities to:
- not use any misleading labels, hide any trade-offs, or cherry pick data from research to highlight green practices while obscuring data unfavourable to themselves (similar to the ASCI Guidelines and Guideline 7(b) of the CCPA Guidelines [discussed earlier]);[30]
- not make untrue claims giving a false impression of certification by a third-party entity;[31] and
- monitor and assess the measures undertaken for sustainable operations, reduction in the adverse impact on the environment, and contributing towards a sustainable economy, as envisaged in the offer document issued at the time of raising funds for transitioning to a greener pathway.[32]
The SEBI Operational Circular[33] pertaining to the issuance and listing of, among other things, green debt securities mandates compliance with the SEBI Guidance.
RBI
Following SEBI’s footsteps, the RBI, too, issued a circular[34] dated April 11, 2023 (“RBI Circular”), to encourage regulated entities, i.e., scheduled banks, and non-banking financial companies (including housing finance companies),[35] to, among other things, permit customers to make green deposits (i.e., deposit for financing activities/projects that contribute to climate risk mitigation, climate adaptation, and other objectives, including biodiversity management and nature-based solutions),[36] protect the interest of the depositors, address greenwashing concerns, and help augment the flow of credit to green activities/projects.[37]
Greenwashing, ESG, and India
While the regulatory measures, prima facie, appear as an attempt to only regulate advertising and protect consumer/investor interests, it also attempts to cover a wider subject matter, i.e., ESG commitments and compliances. For example, the ASCI Guidelines are applicable not only in relation to the advertising of goods or services but also to the advertising of processes, brands, and operations. Accordingly, any environmental claims made in relation to the processes, brands, or operations of a body corporate could be under the lens of the ASCI, if not another regulator.
Further, the Ministry of Corporate Affairs has issued the National Guidelines on Responsible Business Conduct (“National Guidelines”) to encourage companies to align their practices with India’s global commitment to social, environmental, and economic responsibilities. [38] While these National Guidelines are non-binding in nature, SEBI has issued the BRR,[39] BRSR,[40] and the BRSR Core,[41] which mandates public-listed companies to make ESG disclosures in accordance with the National Guidelines. The BRSR Core, among other things, also requires assurances to be made in relation to the nature and extent of the greenhouse, water, and energy footprint, and waste management supported by the measurement of total emissions by top 250 listed companies by market capitalization in FY 2024–25 and increases to up to top 1,000 listed companies by market capitalization by FY 2026–27.
It appears that conscious consumerism has also led to ESG commitments, and its disclosures being held in high regard by all kinds of investors, retail or sophisticated, at the time of making investment decisions.[42]
The Indian consumer market is aware about the environment and climate problem, which is linked to their consumption, and is willing to adopt greener and better alternative options.[43] Consequently, the commercial itch to seize on the willingness of the consumer in exchange for a profit is palpable. However, if an environmental claim can grow interest and preference, a false environmental claim can also result in the permanent loss of consumer/investor interest, goodwill, and raise regulatory concerns.
As in India, regulators across the globe are reacting to the rampant greenwashing practices. In the United States of America, the Federal Trade Commission has placed reliance on its Green Guides[44] (i.e., guides issued to help marketers ensure that claims are true and substantiated) to prosecute[45] greenwashing practices while also requesting comments from the public to amend the Green Guides.[46] In the European Union, legislative measures in relation to greenwashing are two-fold: (i) amending the existing Unfair Commercial Practices Directive[47] which purports to regulate unfair commercial practices and (ii) adopting the Green Claims Directive,[48] which is similar to the ASCI Guidelines and the CCPA Guidelines.
In Singapore, environmental claims in advertisements can be assessed under the Singapore Code[49] (a self-regulation similar to the ASCI Code in India) and the CPFTA.[50] Under the Singapore Code, the Advertising Standards Authority of Singapore may require an advertisement to be modified or removed if found to be greenwashing, and such practice may be prosecuted under the CFPTA. The Competition and Consumer Commission of Singapore is also considering specific regulations in relation to greenwashing,[51] as misleading representations may be considered as unfair practices under the CPFTA or a breach of the Singapore Code.
The consumer is conscious, and the regulator is vigilant. The growing awareness of the impact of businesses on the environment, climate and consumerism, and the demand for integrity and accountability has awakened regulators globally and the inclination to not tolerate any kind of greenwashing is evident. Consequently, it is essential for businesses to know about greenwashing and be cautious, correct, and well-equipped with data to back any green claims.
For further information, please contact:
Aarushi Jain, Partner, Cyril Amarchand Mangaldas
aarushi.j@cyrilshroff.com
[1] Definition of Greenwashing, ASCI Guidelines for Advertisements Making Environmental/Green Claims.
[2] Greenwashing Exposed: A Close Look at the Existing Case Law (Part 1) | Oxford Law Blogs
[3] CSSN Research Report 2022:1: Climate-Washing Litigation: Legal Liability for Misleading Climate Communications.docx (lse.ac.uk).
[4] Air France, Lufthansa Group airlines part of EU greenwashing probe | Reuters.
[5] Prism+ air-con ad deemed ‘greenwashing’ by S’pore watchdog; company defends it as ‘tongue-in-cheek’ | The Straits Times
[6] Marlow Foods Ltd – ASA | CAP.
[7] Guidelines-for-Advertisements-Making-Environmental-Green-Claims.pdf (ascionline.in).
[8] The examples provided are for reference purposes only. Claims in practice may be complex and require further assessment.
[9] Guideline 1 of ASCI Guidelines
[10] Guideline 2 of the ASCI Guidelines.
[11] Guideline 3 of the ASCI Guidelines.
[12] Guideline 7 of the ASCI Guidelines.
[13] Ibid.
[14] Guideline 6 of the ASCI Guidelines.
[15] Guideline 10 of the ASCI Guidelines.
[16] Guideline 9 of the ASCI Guidelines.
[17] Guideline 5 of the ASCI Guidelines.
[18] Guideline 5 of the ASCI Guidelines.
[19] Ekam Eco Solutions Pvt. Ltd. – Zerodar CARE Natural Hand Wash Liquid. Can be accessed here: Complaint Outcomes Details – ASCI (ascionline.in). The claim made in this case was that the product is “eco-friendly”.
[20] Eco Natural Venture – Veggie Washer – Natural Fruit and Vegetable Cleaner Liquid. Can be accessed here: Complaint Outcomes Details – ASCI (ascionline.in).
[21] Quest Retail Private Limited – The Body Shop – Strawberry Shower Scrub 200 ml. Can be accessed here: Complaint Outcomes Details – ASCI (ascionline.in). The claim made in this case was that the product is made of 30% recycled plastic.
[22] Draft Guidelines for the Prevention and Regulation of Greenwashing, 2024. Draft Guidelines with approval.pdf (consumeraffairs.nic.in). (like the draft guidelines in the name instead of repeating words)
[23] Press Release:Press information Bureau (pib.gov.in).
[24] Guideline 7(b) of the Draft CCPA Guidelines.
[25] Technical terms such as Environmental Impact Assessment (EIA), Greenhouse Gas Emissions, Ecological Footprint.
[26] Guideline 6(b) of the Draft CCPA Guidelines.
[27] Guideline 7(f) of the Draft CCPA Guidelines.
[28] Dos and don’ts relating to green debt securities to avoid occurrences of greenwashing, Circular No.: SEBI/HO/DDHS/DDHS-RACPOD1/P/CIR/2023/020 dated 3 February 2023. Can be accessed here: SEBI | Dos and don’ts relating to green debt securities to avoid occurrences of greenwashing.
[29] Regulation 26 of the SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021 define ‘green debt security’ as a means a debt security issued for raising funds that are to be utilised for project(s) and/or asset(s) falling under any of the following categories, subject to the conditions as may be specified by the Board from time to time: (i)Renewable and sustainable energy including wind, solar, bioenergy, other sources of energy which use clean technology,(ii) Clean transportation including mass/public transportation, (iii) Sustainable water management including clean and/or drinking water, water recycling;(iv) Climate change adaptation,(v) Energy efficiency including efficient and green buildings, (vi) Sustainable waste management including recycling, waste to energy, efficient disposal of wastage;(vii) Sustainable land use including sustainable forestry and agriculture, afforestation,(viii) Biodiversity conservation, or (ix) a category as may be specified by the Board, from time to time.
[30] Para 4(iv) of the SEBI Guidance.
[31] Para 4(vii) of the SEBI Guidance.
[32] Para 4(i) of the SEBI Guidance.
[33] Operational Circular for issue and listing of Non-convertible Securities, Securitised Debt Instruments, Security Receipts, Municipal Debt Securities and Commercial Paper (can be accessed here: SEBI_NCS_2021_Aug_10.pdf (bseindia.com) read along with the Revised Disclosure Requirements for Issuance and Listing of Green Debt Securities, Circular No.: SEBI/HO/DDHS/DDHS-RACPOD1/P/CIR/2023/023dated 6 February 2023 (Can be accessed here: SEBI | Revised Disclosure Requirements for Issuance and Listing of Green Debt Securities.)
[34] RBI Framework for Acceptance of Green Deposits dated April 11, 2023. Can be accessed here: Reserve Bank of India – Notifications (rbi.org.in).
[35] Para 1 of the RBI Guidance
[36] Para 2(b) of the RBI Guidance.
[37] Para A of the RBI Guidance.
[38] National Guidelines on Responsible Business Conduct, Can be accessed here: NationalGuildeline_15032019.pdf (mca.gov.in).
[39] Circular No. CIR/CFD/CMD/10/2015 dated November 04, 2015. Can be accessed here: SEBI Circular CIR/CFD/CMD/10/2015 dated 04/11/2015 | Companies Act Integrated Ready Reckoner|Companies Act 2013|CAIRR (ca2013.com).
[40] Circular No. SEBI/HO/CFD/CMD-2/P/CIR/2021/562 dated May 10, 2021. Can be accessed here: 1620655793598.pdf (sebi.gov.in).
[41] Circular No. SEBI/HO/CFD/CFD-SEC-2/P/CIR/2023/122 dated July 12, 2023. Can be accessed here: The circulars may be defined in two parts, one to convey background, rationale, objective of a decision and the other to commu – 1689166456465.pdf (sebi.gov.in)
[42] Trends in ESG Litigation and Enforcement (harvard.edu).
[43] Conscious consumerism is taking root in India | World Economic Forum (weforum.org)
[44] Part 260 of the Code of Federal Regulations – Guides for the se of Environmental Marketing Claims. Can be accessed here: eCFR :: 16 CFR Part 260 — Guides for the Use of Environmental Marketing Claims (“Green Guides”).
[45] Under Section 5 of the Federal Trade Commission Act.
[46] FTC Seeks Public Comment on Potential Updates to its ‘Green Guides’ for the Use of Environmental Marketing Claims | Federal Trade Commission.
[47] Directive 2005/29/Ec Of The European Parliament And Of The Council Of 11 May 2005 concerning unfair business-to-consumer commercial practices in the internal market and amending Council Directive 84/450/EEC, Directives 97/7/EC, 98/27/EC and 2002/65/EC of the European Parliament and of the Council and Regulation (EC) No 2006/2004 of the European Parliament and of the Council. Can be accessed here: Directive – 2005/29 – EN – EUR-Lex (europa.eu).
[48] Proposal for a Directive of the European Parliament and of the Council on substantiation and communication of explicit environmental claims (Green Claims Directive) COM/2023/166 final. Can be accessed here: EUR-Lex – 52023PC0166 – EN – EUR-Lex (europa.eu).
[49] Singapore Code of Advertising Practice. Can be accessed here: Code (asas.org.sg).
[50] Consumer Protection (Fair Trading) Act. Can be accessed here: Consumer Protection (Fair Trading) Act 2003 – Singapore Statutes Online (agc.gov.sg).
[51] Study on Greenwashing in Online Marketing Funded by CCCS Finds Use of Vague Environmental Claims and Confusing Technical Jargon | CCCS
