In today’s global marketplace, where environmental concerns increasingly shape consumer choices, the issue of greenwashing has emerged as a significant challenge. Greenwashing refers to the deceptive practice of companies exaggerating or misrepresenting their environmental commitments to attract eco-conscious consumers. This phenomenon not only misleads buyers but also dilutes the credibility of genuine sustainability efforts.
Indian Regulatory Context
Greenwashing has become prevalent as companies seek to capitalize on the rising consumer demand for environmentally friendly products and services. In India, while there is no specific legal definition of greenwashing, several existing laws and regulatory guidelines implicitly address misleading marketing practices that exploit environmental claims.
• Consumer Protection Act, 2019:
The Act defines unfair trade practice as practices which employ any unfair method or deceptive practice to promote the sale, use or supply of any good/service, including false representations of a certain quality (like “carbon neutral” or “environmental”) and/or false claims about the “characteristics” or “benefits” (like “locally sourced” or “no artificial preservatives” or “no processed ingredients”). Measures to curb such inaccurate assertions come in the form of penalties like fines up to INR 10 lakhs along with imprisonment up to 2 years.
• Guidelines for the Prevention and Regulation of Greenwashing:
The Ministry of Consumer Affairs earlier this year released the draft Guidelines on the Prevention and Regulation of Greenwashing, which address the rising incidence of greenwashed advertisements by companies. The Guidelines put a strict prohibition on greenwashing. The Guidelines define greenwashing as, deceptive and misleading practices, like exaggeration, downplaying, concealing information, etc, while excluding the use of marketing tactics like commercial hyperbole and puffery. The Guidelines have kept the ambit of greenwashing wide, for extensive application.
The guidelines apply to the service provider, product seller, advertiser, advertising agency, and endorser, who advertises a particular product or service. The guidelines, however, don’t apply in a case where a specific product or service is not being advertised. When an advertisement making claims of a green product is concerned, the guidelines necessitate substantiation and disclosure. Generic terms like ‘green’, ‘eco-friendly’ etc, must be appropriately substantiated, and technical terms like Environment Impact Assessment and Greenhouse Gas Emission, need be adequately explained. Further, the Guidelines require all environmental claims to be disclosed via a link or QR on the packaging. The Guidelines also mention that while presenting research, favourable data should not be cherry-picked.
The guidelines possess provisions of penalty, with imprisonment up to 2 years and a fine up to 10 Lakh at first instance and imprisonment up to 5 years and a fine up to 50 lakhs for the following instance in case of contravention.
• Trademarks Act, 1999:
Brands have caught on to the “sustainability” wave, mostly through the use of their expressions in their trademarks – such as “clean energy” and “herbal” – which may not always be true. The Act plays a role in preventing greenwashing by disallowing the registration of a trademarks if they consist exclusively of “green lingo” to designate the “kind” or “quality” of the product to which the mark is affixed or if the mark is too “generic” and consists only of “green words” such as “recyclable” and “biodegradable”. However, there are glaring practical problems in implementation. Apart from the frequent oversight by the Trademarks Registry in accepting such applications without verification, there is also the fact that registration is not compulsory, and proprietors of unregistered and registered trademarks can avail the common law remedy of passing off as available under the Act.
Additionally, there have been efforts taken by various regulators to mitigate this practice:
• Advertising Standards Council of India (ASCI) – Code for Self-Regulation of Advertising Content in India:
Though the Code doesn’t mention greenwashing specifically, it asserts that all claims must be substantiated by transparent factual evidence and research, such as reports which prove that all ingredients used a cosmetic product are “100% vegan” and should not contain exaggerated statements. under further the Guidelines for Celebrities in Advertising states that “endorsements” made by celebrities should contain “genuine” representations and based upon adequate information about the product, and also burden on celebrities to do their own due diligence to cross-check whether the brand they are endorsing is making claims (as to “sustainability”) which are verifiable or “ascertainable” in an “objective” manner so as to get results of not “appearing deceptive” in some form or another. For example, H&M was not only accused of lying about their use of sustainable practices, but they further attracted criticism for naming Game of Thrones star Maisie Williams as their ‘Global Sustainability Ambassador’.
• Securities and Exchange Board of India (SEBI):
Circular on ‘Dos and Don’ts relating to green debt securities to avoid occurrences of greenwashing’: The SEBI (Issue and Listing of Non-Convertible Securities) Regulations, 2021 defines “green debt security” as debt security issued for raising funds that are to be used for sustainability projects. The circular defined ‘greenwashing’ as: “Making false, misleading, unsubstantiated, or otherwise incomplete claims about the sustainability of a product, service, or business operation” was arguably the first time any Indian authority made attempts to define the term. They state that issuers of green debt securities should ensure they do not use any misleading labels, supress any research showing unfavourable results or engage in misrepresentation regarding any certification done by a third-party to circumvent the occurrence of greenwashing. SEBI in 2023 also approved, a regulatory framework for ESG rating providers regarding disclosures, review and compliance based on ESG parameters that is said to reduce greenwashing practices.
• Reserve Bank of India (RBI) – Circular on ‘Framework for acceptance of Green:
After SEBI, the RBI circular also defined greenwashing and proposed to address greenwashing concerns by allocating the funds from ‘green deposits’ through the use of third-party verification/assurance and impact assessments (such as Patagonia being certified by ‘B Lab’), which does seem to be a suitable solution to retain consumer trust and prove the veracity of their commitment to ‘eco-friendly’ practices.
Comparative Status In Foreign Jurisdictions & Concluding Remarks:
In addition to the above, the Indian government with Bureau of Indian Standards (BIS)’s ‘eco-labelling’ standard IS/ISO 14024:1999 and Ministry of Environment, Forest and Climate Change (MoEFCC)’s ‘Green Good Deeds Movement’, has furthered anti-greenwashing efforts by advising companies making environmental claims in their advertising. The third-party certification solution given by RBI might have been derived from UK’s Advertising Standards Authority which has supported the certifications conducted by independent bodies such as the Forest Stewardship Council (FSC) and Rainforest Alliance programs.
While the ASCI’s Code on Self-Regulation doesn’t speak about ‘green advertisements’ specifically, the US’s Federal Trade Commission (FTC)’s ‘Green Guides’ and the EU Commission’s proposed ‘Green Claims Directive’ prohibit the use of unqualified and deceptive terms and claims with reference to the environment in particular. However, India’s ASCI Code, US’s ‘Green Guides’ and EU’s ‘Green Claims Directive’ are similarly non-binding, but their respective aforementioned agencies can take legal action against companies violating the requirement of providing fact/science-based research to back up any advertising claims made. Thus, there is sufficient existing and upcoming Indian law to curb greenwashing on-par with the developments in the international sphere, but there can be more efforts taken by the Indian Trademark Registry in line with EUIPO to harmonize and strengthen their inventory of ‘green’ terms and their existing eco-friendly certification marks i.e., GreenPro and EcoMark.
Authors: Sneha Makaria, Shreeya Sharma & Amitesh Mishra