Permissibility of advertising using the term “climate-neutral”

In today’s world, the issue of sustainability is becoming increasingly important, both for consumers and for businesses. Communication of environmental measures plays a central role in this context. In particular, terms such as “climate-neutral” are frequently used to portray products or production processes as environmentally friendly. However, this can easily lead to misunderstandings if the exact meaning is not clearly defined. A recent ruling by the Federal Court of Justice (BGH) dated June 27, 2024 (I ZR 98/23) clarifies the conditions under which such advertising claims are permissible. The BGH ruled that advertising using the term “climate-neutral” is legally permissible only if the advertisement itself explains in detail exactly what is meant by it. This ruling has far-reaching consequences for companies that wish to advertise their products as climate-neutral.

Background of the ruling

The Federal Court of Justice (BGH) has ruled that advertising using the term “climate-neutral” is only permissible if the advertisement itself explains the specific meaning of this term (BGH, ruling of June 27, 2024 – I ZR 98/23). This is based on the legal principle that an act is deemed unfair if a misleading commercial practice is employed that is likely to induce the consumer to make a business decision that they would not otherwise have made (Section 5(1) UWG).

Facts of the Case

The plaintiff, the Center for Combating Unfair Competition, filed a lawsuit against a company that manufactures fruit gum and licorice products and sells them in food retail stores, at kiosks, and at gas stations. The company advertised in a trade journal for the food industry with the statement: “Since 2021, [the defendant] has been producing all products in a climate-neutral manner” and used a logo with the term “climate-neutral” that links to the website of a “ClimatePartner.” However, since the manufacturing process itself is not CO2-neutral, the company supports climate protection projects through “ClimatePartner.”

The plaintiff argued that this advertising claim was misleading, as consumers might assume that the manufacturing process itself is climate-neutral. At the very least, the advertising claim must make it clear that climate neutrality is achieved through offsetting measures. Both the Regional Court (LG) and the Higher Regional Court (OLG) initially dismissed the lawsuit.

Decision of the Federal Court of Justice

However, the BGH ruled in favor of the plaintiff and ordered the defendant to cease the advertising and to reimburse pre-trial warning costs. The BGH stated:

• Misleading Advertising: The advertisement is misleading within the meaning of Section 5(1) of the Unfair Competition Act (UWG), as the term “climate-neutral” is ambiguous. Readers could interpret it as either a reduction of CO2 in the production process or merely the offsetting of CO2.
• Increased need for clarification: Environmental advertising carries a high risk of misleading consumers and therefore requires clear explanation of the terms used. An explanation of the term “climate-neutral” must be provided directly within the advertisement, not merely outside of it.
• Priority of reduction: Clarifying the term “climate-neutral” is particularly important, as the reduction and offsetting of CO2 emissions are not equivalent measures. From the perspective of climate protection, reduction takes priority.
• Competitive Relevance of Misleading Claims: The misleading claim is relevant to competition, as advertising a product as climate-neutral could significantly influence the consumer’s purchasing decision.

This ruling makes it clear that special care and transparency are required when using environmental terms in advertising to avoid misunderstandings and misleading claims.

If you or your company also advertise using sustainability claims and you want to ensure that environmental terms in your advertising and presentation materials are presented in a legally sound manner, we would be happy to advise you. At Trimborn . Partner, we have been supporting our clients with exceptional dedication in all economic and tax matters since 1979. With our offices in Düsseldorf and Oberhausen, we offer you direct points of contact. Contact us to schedule a consultation. We look forward to meeting you.