Carbon neutrality: attention to the greenwashing risk

As Euromonitor International's data on Claims and Product Positioning shows, the popularity of the wording "carbon neutral" or "carbon reduced" is growing.

Having a "net zero" goal or launching a "climate neutral" product is the new normal for companies. However, these claims are difficult to verify and, in most cases, are not adequately supported by data and measurements. In the most striking cases, it is pure greenwashing.

Given the growing sensitivity of the institutions to combat the phenomenon, we are witnessing a series of measures and rulings aimed at regulating the use and, at the same time, censoring the abuse of "carbon neutrality claims".

French legislation

To correctly use the "carbon neutral" claim, it is first of all necessary to consider Article L 229-68 of the Environmental Code, which prohibits declaring in an advertisement that a product or service is neutral from the point of view of emissions of carbon dioxide or use any wording of equivalent meaning or scope, unless the advertiser makes the following readily available to the public:

• A balance of greenhouse gas emissions that integrates the direct and indirect emissions of the product or service;
•  The process by which the greenhouse gas emissions of a product or service are first avoided, then reduced and finally offset. The GHG emission reduction strategy shall be described using quantitative annual progress targets;
• Methods of offsetting residual greenhouse gas emissions that comply with the minimum standards defined by law.

The aforementioned article refers to a further decree the definition of the application modalities as regards the "minimum standards". In this sense, the reference Decree is the number 2022-539 of April 13, 2022 on offsetting carbon dioxide emissions and carbon neutrality claims in advertising.

Pursuant to Art. D. 229-106, the aforementioned Decree applies to any advertiser who declares in an advertisement that a product or service is "carbon neutral", "zero carbon", "with a zero carbon footprint", "climate neutral", "fully compensated", "100% compensated" or using any wording of equivalent meaning or scope.

In terms of scope, the legislation operates with respect to mailing and print advertisements, billboard advertising, advertisements in printed publications, advertisements shown in cinemas, advertisements broadcast by television or radio services and of online communication and the indications given on the product packaging.

The Art. D. 229-107 establishes that the advertiser must produce a balance sheet on greenhouse gas emissions for the product or service in question that covers its entire life cycle. This budget must be updated annually.

The budget must be drawn up in compliance with the requirements of the NF EN ISO 14067 standard, or any other equivalent standard (the requirements can, however, be further supplemented by order of the Minister of the Environment).

The Art. D. 229-108 requires the advertiser to publish on its publicly accessible website or, failing this, on its mobile application, a summary report describing the carbon footprint of the advertised product or service and the process through the in which these greenhouse gas emissions are first avoided, then reduced and finally offset.

The law also describes the three documents to be attached to the report, in order to specify its content:

1. An appendix presenting the results of the financial statements, as well as a summary of the methodology used to prepare it. This summary specifies in particular the perimeter used to define the product or service in question, the units of measurement used, the boundaries of the system considered, the methods for dealing with the use and end-of-life phases and the emissions data considered for the electricity or gas consumed. In addition, the country(ies) or geographical areas where the emissions occur, as well as emissions due to international transport, to the extent that these data are available, must be specified;
2. An annex outlining the strategy for reducing greenhouse gas emissions associated with the advertised product or service, with quantified annual progress goals, covering at least ten years following the publication of the report. 5 years after publication, the strategy will have to be updated, setting objectives for a new 10-year period;
3. An annex explaining the methods of offsetting residual emissions, specifying in particular the nature and description of the offsetting projects. The annex must also provide information on their cost, classifying them as follows:
4. less than 10 €/tCO₂,
5. between 10 and 40 €/ tCO₂
6. higher than 40 €/tCO₂.

This annex aims to demonstrate that the volume of emissions reduced or seized thanks to the offsetting strategy corresponds to the residual emissions of all products or services sold and affected by advertising. The document also specifies the procedures in place to ensure that offsets are not double-counted. Finally, the annex illustrates the efforts made to ensure the greatest possible coherence between the geographical areas where the projects are carried out and those where the emissions take place.

The financial statements must be updated annually, for the entire period in which the product or service is advertised with the wording "carbon neutral" or equivalent.

The update is also aimed at monitoring the evolution of the emissions associated with the product or service with respect to the above reduction strategy. Therefore, the advertiser must withdraw the claim if it appears that the emissions associated with the product or service before compensation have increased.

Finally, the link or QR code that allows access to this publication must be displayed on advertising or packaging bearing the indication "carbon neutral".

Finally, as regards the methods of compensation for residual greenhouse gas emissions, the reductions in emissions and seizures resulting from the compensation projects must comply with the principles established by article L. 229-55 of the French Environmental Code (i.e. be measurable, verifiable, permanent and incremental).

These projects must not be adverse to the conservation and restoration of natural ecosystems and their functions. Reductions labeled "Low Carbon" are considered to comply with these principles.

The wording "Compensation carried out in France", or any other wording of equivalent meaning or scope may only be used if all the compensation projects are carried out in France.

A comparative look

The legislation described above refers only to France. However, case studies in other European countries similarly seem to reveal a rigid attitude regarding carbon neutrality claims.

In Sweden, the consumer regulator (Konsumentombudsmannen) has launched a series of false advertising proceedings related to the abuse of terms related to carbon neutrality. For example, the provision issued against Arla Food for incorrect use of the wording "net zero climate footprint" dates back to last year.

In Germany, in 2021, the Competition and Market Authority (Wettbewerbszentrale) initiated 12 proceedings against companies that used claims such as "climate neutral", "100% climate-neutral production" or "climate-neutral product" . In six cases, the companies have pledged not to use the claims they deem misleading.

Deutsche Umwelthilfe (German Environmental Action) is also taking action against numerous companies that vaguely and unsupportedly use the label "climate neutral" for their products and services. In addition, the Deutsche Umwelthilfe awards the so-called "Golden Geier" every year for the "most audacious environmental lie". In 2022, most of the "candidates" spread claims regarding carbon neutrality on the market. It goes without saying that winning this unfortunate "award" could damage the company's reputation, further highlighting the risks of greenwashing and emphasizing the importance of fair and clear advertising.

In the UK, the Advertising Standards Authority expressed itself in an even stricter manner in the order issued against Marlow Foods Ltd t/a Quorn. In fact, the authority censored the claim "consumption of meat substitutes was a step in the right direction and a reduction of carbon footprint", asking for "very strong proof according to widely accepted methods of measuring sustainability when making environmental claims".

Conclusions

In order not to incur penalties and prevent advertising campaigns from turning out to be a boomerang for the company, Cikis offers support in drafting and reviewing green claims, in general, and carbon neutrality claims, in particular, in order to place declarations on the market compliant with the legislation applicable in a plurality of European countries.