Greenwashing: the current position of the Spanish laws

Introduction

Environmental concerns have grown exponentially among consumers for the past few years. So much so that, the environmental impact of products and services, even of companies themselves, has become of significant importance for consumers to make consumption decisions.

Some companies have taken advantage of this and have embraced a communication strategy commonly known as greenwashing. Through this practice, companies try to project a positive image of their environmental impact, or that of their products and services, which does not match reality. They often resort to generic expressions (e.g., "100% recyclable") or to vague and inaccurate terms such as "green", "eco" and "sustainable". Also, companies associate their products and services to nature-related symbols, images (leaves, trees, fields) or colours (green, blue), without there being a causal link between them.

How this practice has traditionally been dealt with in Spain?

In the absence of specific legislation on the matter, the Spanish consumer protection and unfair competition regulations are of application. In general terms, consumers should be provided with accurate, reliable, and accessible information regarding products and services for them to adopt an informed decision. Re unsubstantiated advertising practices such as greenwashing, practices of the kind could qualify as misleading advertising, which could result -in addition to possible actions under the Spanish Unfair Competition Act- in administrative fines via Spanish consumer protection regulations and lead to reputational risk.

In the absence of Spanish hard law requirements, we should note that there have been many soft law instruments that may shed light to companies on how they should make claims on their environmental commitments. For example, the "Code of self-regulation on environmental claims" of Autocontrol (the self-regulatory body for advertising matters in Spain), which was published in 2009, acts as guidance for companies when developing, implementing, and disseminating commercial communications which include environmental claims. Some of the rules set forth in the Code are, for example, the following:

• Generic claims should be avoided.
• Environmental claims should be displayed together with any additional or explanatory information relating to them.
• Environmental claims should not refer to a product or service in whole, if they are only relevant to a specific part of it.
• Signs and/or symbols used in commercial communications may not misrepresent official approvals or third-party certifications.

Please note that many of these ideas have been embodied or outlined in the proposed European Directives discussed below. In this sense, companies that were following the self-regulatory rules on environmental claims may have a smoother transition to an acceptable level of compliance of the new Directives being proposed at an EU level.

Latest developments: EU proposals for Directives

As part of the actions envisaged in the Circular Economy Action Plan, the European Commission aims to amend Directive 2005/29/EC on unfair commercial practices (through the proposal for a Directive for the green transition – hereinafter, the Green Transition Proposal). The Green Transition Proposal would provide clarity on which practices consisting in the provision of information on the environmental aspects of a product or service may qualify as misleading and unfair.

To this end, the Green Transition Proposal defines, for the first time, "environmental claim" and "generic environmental claim". The approach adopted by the Green Transition Proposal has been to expressly qualify as unfair certain practices such as (without limitation): making environmental claims related to the company's future environmental performance (e.g., its environmental commitments), unless they are properly substantiated and verified by an independent third-party expert; making environmental claims referring to a product as a whole, where -in fact- the claim only concerns a certain limited aspect of such product; or displaying a sustainability label which is neither based on a certification scheme nor established by a public authority.

In addition to the Green Transition Proposal, the European Commission has also published a proposal for a Directive on green claims – hereinafter the Green Claims Proposal. This Proposal foresees that any environmental claim (as defined by the Green Transition Proposal), regardless of whether it concerns a product or service or a company itself, should be duly substantiated based on a methodology that assesses its environmental impact. Such information should be verified ex-ante by an independent third party, regularly reviewed and updated, and made available to consumers alongside the environmental claim (e.g., by means of a hyperlink, a QR or similar).

Regarding the latter, Autocontrol has always advocated that claims (whether environmental or not) should be true and verifiable. However, it has not traditionally required companies to proactively provide consumers with evidence of their claims (except in the context of dispute resolution), unlike the current wording of the Green Claims Proposal.

In addition, the Green Claims Proposal tackles the proliferation of eco-label certification schemes. In particular, it considers that self-certification schemes which do not involve an independent third-party verification and regular monitoring cannot grant eco-labels to companies to promote their products or services. Also, the European Commission sets out that new public schemes at a national level will not be permissible under the Proposal unless they can demonstrate that they provide "added value" at domestic level compared to a harmonised standard at European level.

Lastly, environmental claims made by companies in the EU market following the implementation of the relevant Directives will be supervised by the competent national authorities (as designated by the Member States). Should a potential infringement be identified, the competent national authorities will be entitled to conduct an assessment of the environmental claim and, if necessary, require the company to undertake corrective measures or to cease such communication. In any event, since the Proposals would include amendments to the Unfair Commercial Practices Directive, our understanding is that infringements committed by companies re environmental claims will continue to be sanctioned as at present in Spain, but there will be more clarity in relation to which practices may qualify as unfair.