Guidelines to Curb False Eco Claims Could Raise Costs for Businesses

The new greenwashing guidelines given by the Central Consumer Protection Authority (CCPA) will lead to increased costs for businesses and also help in weeding out false environmental claims used to advertise their products, as per the experts NDTV Profit spoke to.

The rules given by the consumer authority, define "greenwashing" as misleading practices that hide or exaggerate environmental claims and use vague terms or images to highlight positive aspects while minimising negative ones.

However, certain uses, like obvious exaggerations or generic images, are not considered greenwashing. For example, if a company says, "its growth will be based on sustainability principles," that’s not seen as an environmental claim. But a claim stating that "all its products are manufactured in a sustainable manner" would be examined for possible greenwashing.

The guidelines apply to all environmental claims made by manufacturers, service providers, or traders in advertisements, including those by advertising agencies and endorsers. Importantly, they prohibit any misleading environmental claims and require substantiation for all environmental assertions.

Guidelines, going forward, would act as a deterrent to the companies who are not making the right claims, as per Karun Mehta, Partner, Khaitan & Co.

The new guidelines will steer businesses towards adopting genuine sustainable practices, and their marketing teams to abandon vague claims, and provide clear evidence to avoid penalties, as per Ruchi Khatlawala Pandya, partner at Little and Co.

For consumers, these stricter regulations will boost trust in eco-friendly labels and drive demand for authentic sustainable products, though compliance costs may result in higher prices for these goods, he said.

Apart from the increased cost, there will also be a delay in publication of the advertisements as per Ameet Datta, partner at Saikrishna & Associates.

No entity under these guidelines can make misleading environmental claims and must provide clear explanations and proof for general terms like "clean," "eco-friendly," and "sustainable."

Consumer-friendly explanations of any technical terms used, like "Environmental Impact Assessment" or "Greenhouse Gas Emissions", also need to provided.

As per Ramya Suresh, partner at Saraf and Partners, even the advertisements for Ayurvedic or natural products claiming to be eco-friendly without proper scientific backing would be considered greenwashing.

Verifiable evidence should be provided from independent studies or third-party certifications to support all environmental claims.

Advertisements must disclose all material information related to environmental claims, which can include QR codes or URLs for further details. Data should not selectively highlight favorable observations while obscuring unfavorable ones, and any claim should specify whether it pertains to the product as a whole, its manufacturing process, packaging, or disposal.

As per Suresh, who was also a part of the CII Committee that gathered industry stakeholder comments on the draft guidelines and placed them before the Department of Consumer Affairs, a QR code on the packaging could link to documents verifying reduced plastic usage and third-party certifications as well.

Any claims comparing products or services must be based on verifiable and relevant data, clearly specifying the aspects being compared.

Claims like "compostable" or "recyclable" must be backed by credible certifications and reliable scientific evidence.

Such claims may only be made if accompanied by clear and actionable plans detailing how objectives will be achieved.

The only challenge that may arise would be in identifying as to what really qualifies as credible, reliable and verifiable. We may require more clarity on such aspects, as per Nawneet Vibhaw, partner at JSA Advocates and Solicitors.

The guidelines also clarify that they do not supersede existing laws; instead, they are an additional regulatory framework for environmental claims. In case of ambiguity or disputes regarding the guidelines, the CCPA's interpretation will be final.