"Climate neutrality" put to the test – landmark judgement by the German Federal Court of Justice

Subject of the legal dispute:

The Wettbewerbszentrale, a qualified organisation for combating unfair competition, objected to an advertisement by Katjes in 2021 in the "Lebensmittel Zeitung". In the advert, Katjes advertised its products with the statement "Katjes has been producing all products climate-neutrally since 2021" and used a corresponding label. The Wettbewerbszentrale considered this advertising to be misleading and complained that essential information was missing.

Decision of the German Federal Court of Justice:

On 27 June 2024, the German Federal Court of Justice (BGH) handed down its long awaited judgment on this matter (see I ZR 98/23).

The BGH overturned the judgement of the Düsseldorf Appeal Court, which had dismissed the action brought by the Wettbewerbszentrale. As a consequence, the BGH prohibited Katjes from continuing to advertise with the objectionable statement.

In doing so, the BGH primarily emphasises that special legal standards apply to the assessment of environmental advertising claims. Similar to advertising with health-related claims, advertising with environmental terms and symbols is subject to particularly strict requirements regarding the accuracy, unambiguity and clarity of the advertising claim.

The BGH sees the main reason for this in the fact that, as a result of the general recognition of the environment as a valuable asset in need of protection, an increased environmental awareness has developed and the public therefore often favours goods and services whose particular environmental compatibility is pointed out. Such purchasing behaviour is also encouraged by the fact that advertising measures linked to environmental protection prove to be particularly suitable for appealing to emotional areas in people, ranging from concern for their own health to a sense of responsibility for future generations.

It is not uncommon for the meaning and content of the terms used - such as "environmentally friendly", "environmentally compatible", "environmentally friendly" or "organic" - to be unclear. In addition, the advertised products are regularly not more or less environmentally friendly or less environmentally destructive than other goods in every respect, but usually only in certain areas. In addition, the general public usually has little factual knowledge of the scientific correlations and interactions.

It follows from these circumstances that, in principle, strict requirements must be placed on the explanatory information necessary to avoid being misleading, which are determined in each individual case according to the type of product and the degree and extent of its "environmental friendliness". In the case of an advert that uses an ambiguous environmental term, these requirements are generally only fulfilled if the advert itself clearly and unambiguously explains which specific meaning is relevant. The advertiser must accept the different meanings in the event of ambiguity in its advertising statement.

An explanation in the advertising itself is necessary when using the term "climate neutral", which includes both the avoidance of CO2 emissions and CO2 compensation, in particular because the reduction and compensation of CO2 emissions are not equivalent measures for achieving climate neutrality. Rather, the principle of prioritising reduction over offsetting applies.

Information provided outside of the advertising, which the consumer has to research, is not sufficient. This applies regardless of “space restrictions” on the means of communication chosen by the advertiser.

Relevance of the decision

Stricter requirements for green advertising statements are also in the works at EU level. 

Directive (EU) 2024/825 on Empowering Consumers For The Green Transition (EmpCo Directive) came into force at the end of March and must be transposed into national law by the member states by the end of March 2026. As a result, the German legislator must include so-called "per se prohibitions", i.e. practice that are considered unfair per se without the courts having to examine their admissibility in specific cases. This includes, among other things, the claim that a product has a neutral, reduced or positive impact on greenhouse gas emissions due to offsetting measures. Statements such as "climate-neutral product", "CO2-neutral product" or "reduced CO2 footprint" are no longer permitted. Also, it will be prohibited to refer to future environmental performance with a statement such as "climate neutral by 2030" if the company has not made clear, objective, publicly available and verifiable commitments that are set out in a detailed and realistic implementation plan that has measurable and time-bound targets and is regularly reviewed by an independent expert.

The EU is also currently working on the Green Claims Directive ("GCD"), which will regulate further requirements for sustainability advertising. The European Parliament adopted its proposal on the EU Commission's original draft in March 2024.

Nevertheless, the BGH decision is of enormous relevance. This is because it emphasises once again that a strict standard applies to advertising with environmental protection terms and symbols, similar to health advertising, and that there are strict duties of disclosure. Ambiguities are generally at the expense of the advertiser. 

Conclusion for companies

Against this background, companies should bear the following points in mind when advertising with environmental terms or labels:

• Precision: Make sure that your advertising claims are precise. Explain clearly to what extent your products or services have a positive environmental effect and what specific measures you are taking. Avoid misleading or ambiguous wording. And avoid general terms such as "environmentally friendly" or "sustainable" and use specific, measurable claims instead.
• Avoidance before compensation: If possible, emphasise measures that avoid environmental impacts, as these are generally rated more positively than compensation measures.
• Legal advice: If in doubt, seek legal advice to ensure that your advertising complies with the applicable regulations and does not contain any misleading statements. A lot is currently in flux here. It is therefore important to stay informed.

We will be happy to advise you on this!