The BGH rules on advertising using terms like “climate-neutral”

Companies’ clear and transparent practice in advertising

The Federal Court of Justice’s decision on ambiguous terms related to the environment (specifically, the case was about using “climate neutral” in relation to confectionery, but it also applies generally to terms like “carbon-neutral”, “greenhouse gas neutral”, “environmentally friendly”, etc.) set strict standards on environmentally related advertising. Companies must already be clear and unambiguous in their advertising when using terms related to the environment, otherwise they can face cease and desist letters from associations or competitors. They can also receive bad publicity for greenwashing.

But what’s the difference between green advertising and greenwashing? Until now the boundaries were not clearly defined. Now, the Federal Court of Justice’s judgment makes it unmistakably clear that advertisers must act transparently. Why do advertisers use particular terms and what do they mean? The advertising statement must also be provable and verifiable as fact. If false claims are made, this is undoubtedly greenwashing. But in future, even unclear claims that cannot be verified must be considered as greenwashing.

The impact and scope of this decision are broad. For one, the principles apply generally to ambiguous terms related to the environment (not only to “climate neutral”). Also, the decision is not limited to companies in the food industry but is to be complied with by companies in all sectors that plan to advertise using ambiguous environment-related terms or are already doing so.

Examples of unclear use/greenwashing in advertising

There are many examples of ambiguity in advertising – from fast-food chains to food and manufacturers of technical products to supermarkets to fashion discounters. The advertising often sends the message that production is particularly environmentally friendly, sets up a circular economy for waste products (which is usually a matter of course and laid down by law anyway) or uses environmentally friendly materials. But some of the details remain unclear as to what specific measures may have actually been implemented. On closer inspection, it often turns out that what has been done has only a slight or even no benefit to the environment. Advertising messages about a long-term sustainability strategy are often nothing more than empty phrases, which those targeted by the advertising cannot directly verify or follow up on.

Compulsory reconsideration in advertising and marketing

The decision by the Federal Court of Justice and the stance of the EU make it necessary for marketing and advertising departments to reconsider their ways. Companies will now have to review their advertising carefully and, if necessary, make adjustments. To avoid misleading statements, it must in future be explained in the

advertising itself what the company using the advertising actually means by the environmentally related terms. Clarifications will have to be included in the advertisement itself. Explanatory information on websites outside the advertising is no longer sufficient. Due to the requirement on advertisers that statements should be verifiable, they are to provide proof for the claims they make in their advertising.

Besides the Federal Court of Justice’s decision, the situation is also becoming worse for advertising companies because the EU Empco Directive 2024/825 (to be implemented by March 2026 and in force from September 2026) will cause the requirements to develop further. The Green Claims Directive, too, that is still making its way through the legislative process will become relevant in the coming years.

The Empco Directive will introduce a ban on product-related advertising including compensation for greenhouse gases. It is maintained that compensation advertising is misleading in principle because compensation measures and actual savings in CO2 are not equal. In this, the EU and the Federal Court of Justice see it the same way. From September 2026, advertising the climate neutrality of products will only be allowed if it is not based on compensatory measures.

In addition to this, the current draft of the Green Claims Directive stipulates that companies will expressly have to evaluate environmental claims in advance, substantiate them and have them approved by an accredited conformity assessment authority.