MC Exclusive: Consumer protection body may impose fines, bans on products that violate greenwashing norms

Greewashing

The Central Consumer Protection Authority (CCPA) plans to impose fines and may even consider banning products that violate its guidelines on prevention and regulation of greenwashing, officials told Moneycontrol.

Greenwashing refers to false or misleading claims by organisations about the positive impact that a company, product, or service has on the environment.

"Once the guidelines on prevention and regulation of greenwashing are made a law, companies will be given three months to ensure that their products comply with the guidelines. If companies are found violating the guidelines, they will be fined," a senior government official told Moneycontrol on February 27.

The official added that if a product is found violating greenwashing guidelines on multiple occasions, those products may also be banned from sale.

Another official aware of the discussions on greenwashing guidelines said that so far the government has received positive feedback from the industry to the newly introduced draft guidelines on the prevention and regulation of greenwashing.

Draft guidelines

The CCPA, on February 20, 2024, released the draft guidelines on the prevention and regulation of greenwashing for public consultation.

Stakeholders have been asked to send their comments by March 21, 2024.

The draft guidelines state that all green claims must be backed by “verifiable” evidence and full disclosures regarding claims should be made either directly or through QR code or web links. It also specifies that generic claims such as “environmentally friendly”, “green” or “clean” cannot be made without ample substantiation.

"The current draft guidelines released by the CCPA are in line with European standards and will benefit consumers in the long term in India," the first official said.

He added that the CCPA will enforce strict compliance with the guidelines once they are finalised and is even considering enforcing fines starting from Rs 1 lakh ranging up to Rs 1 crore. In cases of multiple violations, even higher fines will be considered.

The penalty for misleading advertisements on greenwashing by companies will be governed under the Consumer Protection Act, of 2019, and the guidelines are just like clarification to the stakeholders, the government said in a statement on February 20.

The proposed guidelines to regulate ‘greenwashing’ or false pro-environment claims in advertisements of products and services come at a time when it has become a much-used marketing trend.

“Comparative environmental claims that compare one product or service to another must be based on verifiable and relevant data. Substantiate specific environmental claims with credible certification, reliable scientific evidence, and independent third-party verification for authenticity," the government said in a press statement on February 20.

How consumers are duped

Rohit Kumar Singh, Secretary, of the Department of Consumer Affairs (DoCA), had, on January 18, told Moneycontrol (give link) that the new guidelines are being enforced to prevent consumers from paying a premium for 'green' products.

"Consumers are willing to pay a premium for a green product. So people are putting their products in recyclable packages and calling it green," Singh had said.

"We are coming out with guidelines in the next fortnight that this is greenwashing, please don't fool consumers. The consumer is paying 1.2 to 1.5 times more because he thinks it is a green product. But it is not a green product," he added.

Singh had also said at Moneycontrol's Policy Next summit on January 18, that the government is considering making it compulsory for e-commerce platforms to adopt a system of preventing fake reviews based on its guidelines.

"You see 4.5 stars and you think it is a good product. You don't know who the seller is. Who is going to authenticate those stars? So we have developed standards in BIS (Bureau of Indian Standards) for systems to manage fake reviews," said Singh.

"We are toying with the idea of making it compulsory for all e-commerce platforms that, by next month, they should have systems where they manage fake reviews," he added.

Unfair trade practice

Greenwashing is classified as an unfair trade practice by the Consumer Protection Act, of 2019. The BIS too has a green product certification scheme to monitor products labelled as eco-friendly, while green labels like Energy Star and EcoMark are given to products that meet energy efficiency, water conservation, and sustainable raw material sourcing standards. Even so, many brands push their products as green and circular. It remains to be seen what the DoCA will do to address this.

The proposed guidelines will apply to all advertisements and service providers, product sellers, advertisers, advertising agencies, or endorsers whose service is availed of for the publicity of such goods or services.

The guidelines also specify that aspirational or futuristic environmental claims can be made only when clear and actionable plans have been developed detailing how those objectives will be achieved.

As per the draft guidelines, all environmental claims should be accurate and should disclose all material information either in the advertisement or communication or by inserting a QR code, or any such technology including a web link, which will be linked to relevant information.

While making disclosures about environmental claims, data from research should not be cherry-picked to highlight only favourable observations while obscuring others that are unfavourable.

Any person making an environment-related claim should specify whether it refers to the goods, manufacturing process, packaging, manner of use of the good or its disposal; or service or the process of rendering the service.

All environmental claims should be backed by verifiable evidence.

In the case of comparative environmental claims that compare one product or service to another, it must be based on verifiable and relevant data that is disclosed to the consumers.

"Specific environmental claims must be supported by credible certification, reliable scientific evidence, and independent third-party verification to maintain their authenticity," the draft guidelines said.