Nowadays, climate and environmental issues are increasingly important to many consumers. Being “eco” has become fashionable nowadays. Environmental issues are now recognized as an important market factor that allows a given company to improve its market position.
However, the desire to attract customers for whom ecology is important often brings undesirable effects in the form of “greenwashing”. In short, “greenwashing” can be described as a marketing strategy of companies that is based on false or misleading declarations intended to create the impression that a given company is environmentally friendly and its products or parts thereof comply with environmental protection principles. In reality, however, such marketing activities are aimed only at attracting customers, and not at real concern for the environment.
The market analysis has shown that consumers’ behaviour is strongly influenced by green claims on the packaging, which have an impact on purchase intentions, despite the fact that the consumers are ofthen unaware of the exact meaning of the green claims.
Regulatory environment of greenwashing
EU: The European Commission has defined corporate social responsibility (“CSR”) as “the responsibility of enterprises for their impacts on society”. The Unfair Commercial Practices Directive (2005/29/EC) does not provide specific rules on environmental claims, but it does provide a legal basis to ensure that traders do not present such claims in an unfair way. Guidelines for the implementation of the Directive (SWD/2016/0163), however, defines the claims of environmental friendliness and the notion of ‘painting green’.
POLAND: The Act of April 16, 1993 on Suppresion on Unfair Competition Act insists a whole range of claims that can be claimed by entrepreneurs whose interests have been threatened or impaired by an act of unfair competition, and sometimes also by organizations acting to protect the entrepreneurs’ interests. Entrepreneurs may additionally demand repairing of the damage inflicted and the release of unjust benefits.
Polish legal regulations contain a general description of unfair market behaviour, which may or may not be considered an example of this phenomenon. The applicable Suppresion on Unfair Competition Act lists such practices as: misleading markings of goods and services, dissemination of false or misleading information about company, or the use of unfair or prohibited advertisement. However, it does not regulate the issue of the impact of the above-mentioned acts of unfair competition on the environment. In the case of some more complex forms of greenwashing, under the current legal framework it may be impossible to prove such an unfair practice.
HUNGARY: In Hungary, according to Article 6 of Act XLVII of 2008 on the Prohibition of Unfair Commercial Practices against Consumers, a commercial practice is misleading if it contains false information or presents a true fact in such a way that the commercial misleads the consumer. The Act mentions the environmental impact of the goods among the possible misleading factors. The Hungarian Advertising Code also provides rules for environmental advertising. Article 22 of the Code sets out the rules in 7 points, whose rules essence is to ensure that they are clear, understandable and, where necessary, enforceable by the competent organisation.
What requirements must green claims meet?
POLAND: The activities of the Advertising Council, which was established in order to create, promote and protect the principles which should be followed business entities dealing with advertising activity on the territory of the Republic of Poland and Polish entrepreneurs advertising their businesses abroad, are also intended to protect consumers against unfair marketing practices of entrepreneurs. Advertising standards have been written down in the form of the Code of Ethics in Advertising - a document constituting a set of rules specifying what is acceptable and what is unethical in advertising.
The Code of Ethics in Advertising also regulates environmental issues and indicates that environmental advertising, among others: they cannot violate public trust in actions taken to protect the natural environment, and the advertising message cannot be inconsistent with the facts, immeasurable or impossible to verify and they should be formulated in a transparent, simple and understandable way,. Everyone has the right to lodge a complaint based on the Code of Ethics in Advertising, also in relation to greenwashing.
HUNGARY: The Hungarian Competition Authority (“GVH”) advises businesses to be clear and specific. It must be clear which aspect of the product the claim refers to, (e.g. the product itself, the packaging, the manufacture or the delivery). Clarity also means that the language used must be understandable to the average consumer. Nor should a business use claims that hide the real impact of a product or service on the environment by highlighting a single characteristic.
It is considered bad practice for a company to emphasise legal compliance as a distinguishing advantage over identical or similar products of other companies, when it is required for all products by manufacturers in the sector. Marketing materials that highlight environmental performance relative to the company’s past performance can also be misleading, because if a company has not paid attention to this, achieving a significant improvement is not a real challenge for the company.
Reactions to infringements
EU: In January 2024, the European Parliament formally approved a new greenwashing directive, requiring member states to introduce stricter rules surrounding the use of environmental claims by companies.
POLAND: The effectiveness of the application of the law in the fight against unfair ecological marketing is also to be supported by the functioning of the Office of Competition and Consumer Protection (“UOKiK”) - an institution established, among others, in order to counteract practices that violate the collective interests of consumers. The President of the Office of Competition and Consumer Protection may order the cessation of a prohibited practice if it is detected.
Polish regulations on ecological farming and ecological production provide for a wide range of potential legal actions in the fight against greenwashing. An example may be the provisions of the Act on Ecological Agriculture and Ecological Production, which provide penalties for an economic entity that uses in advertising or in the commercial description of a non-ecological product the markings reserved for ecological products (such as “ecological” or derivatives of this term, “eco” or “bio”).
HUNGARY: In Hungary GVH is responsible for fighting against fake green statements and other greenwashing techniques. GVH has issued recommendations to businesses to ensure that green washing is discouraged and that consumers receive truthful information about a product or service, GVH also warned the consumers regarding to misleading advertising The GVH imposes fines to businesses that make false or unprovable green claims in order to make their products easier to sell. These fines can reach up to 30 million HUF.
Overall, we can see that, although the application of green washing methods can in theory have serious financial consequences, both the Hungarian and the Polish authorities are trying to help reduce the green washing phenomenon, mainly by providing guidance and recommendations. This seems insufficient. To effectively combat greenwashing, both countries need to introduce regulations that specifically protect consumers against greenwashing activities, such as the establishment of a specialized body to combat greenwashing.
By Michal Tyszka, Associate, and Lili Horvath, Junior Associate, Act Legal
