Companies will now have to provide verifiable evidence for eco-friendly assertions like “organic,” “pure,” or “recyclable,” in their product advertisements as per the new guidelines on greenwashing and misleading environmental claims. FE explains how this will help curb dubious claims
What is greenwashing?
Greenwashing refers to the deceptive marketing practice where companies exaggerate or falsely claim their products or services are environment-friendly. With consumers increasingly prioritising eco-friendly choices, brands use greenwashing to project a false image of sustainability. The term was coined in 1986 by American environmentalist Jay Westerveld, drawing an analogy to “whitewashing,” where flaws or issues are deliberately hidden.
The Guidelines for Prevention and Regulation of Greenwashing or Misleading Environmental Claims, 2024, issued by the Central Consumer Protection Authority (CCPA), define greenwashing as deceptive practices that involve exaggerating, making vague or unverified environmental claims, or omitting relevant informa-tion. This includes misleading words, imagery, or symbols that highlight a product’s positive environmental aspects while concealing its harmful attributes. The guidelines exclude obvious exaggerations, broad mission statements unrelated to specific products or services, and generic colour schemes or imagery from the definition of greenwashing.
What are the mandated disclosures?
The guidelines define the types of environmental claims that must be substantiated by evidence. These include assertions that a product has a neutral or positive environmental impact, causes less harm than other products or previous versions or contributes to sustainability. Any entity making such claims is required to disclose all material facts either directly in the advertisement or through a QR code, URL, or other digital medium. The data cannot be selectively presented to only highlight favourable aspects while obscuring unfavourable ones. For comparative environmental claims, the specific aspects being compared must be clearly defined. Specific claims like “compostable,” “recyclable,” “climate-positive,” or “net-zero” need to be backed by credible certification, reliable scientific evidence, or third-party verification.
What are the penalties for false claims?
The penalties for greenwashing are governed by the Consumer Protection Act of 2019, with the Central Consumer Protection Authority (CCPA) holding the power to take action against companies making false claims. Under Sections 21, 24 and 89 of the Act, first-time offenders can face imprisonment for up to two years and fines of up to Rs 10 lakh. For repeat offenders, imprisonment can extend up to five years and fines reach up to Rs 50 lakh, said Rishi Agrawal, CEO and co-founder of TeamLease Regtech, a regulatory technology solutions provider.
Additionally, companies found guilty of greenwashing may face reputational damage, which can lead to a loss of consumer trust and credibility in the market.
The global experience
The World Federation of Advertisers (WFA) introduced its “Global Guidance on Environmental Claims” in 2022, marking a global effort to curb deceptive environmental marketing practices. In the European Union, Directive 2024/825 aims to empower consumers to make sustainable choices by regulating environmental claims. This directive prohibits unsubstantiated claims such as “eco-friendly” or “green” unless they are backed by scientific evidence and official certification. Other regions have also implemented stricter measures. The UK’s Green Claims Code requires businesses to be truthful, clear, and not hide information when making environmental claims. The US Federal Trade Commission is revising its Green Guides to update guidelines on terms like “recyclable” and “sustainable.” Meanwhile, China’s 2023 guidelines target misleading advertising language, and South Korea is set to pass an anti-greenwashing law. Australia’s ACCC has similarly begun cracking down on false green claims, with hefty fines for violators.
Do consumers care about sustainability?
The importance of laws addressing greenwashing is underscored by shifting consumer attitudes toward sustainability in India. Recent findings by PwC India say around 60% of consumers choose sustainable products, demonstrating heightened environmental awareness. Consumers are willing to pay 13.1% more for sustainably sourced goods, surpassing the global average of 9.7%. Moreover, a Bain report says 20% of Indian consumers prioritise environmental and social considerations, with 43% listing sustainability among their top purchasing criteria. However, the landscape is complicated by findings from the Advertising Standards Council of India, which reveal that 79% of brands’ environmental claims are often exaggerated or misleading. Additionally, a YouGov study found that 71% of Indian consumers have encountered greenwashing, with 60% expressing concern. With only 29% trusting sustainability claims, the necessity for stricter regulations is evident.