On 18 April 2024 the German Federal High Court of Justice [Bundesgerichtshof – BGH] heard arguments on the conditions under which the term “climate neutral” may be used as an advertising claim (case ref. I ZR 98/23). At the hearing the BGH indicated a willingness to depart from the decisions of lower court instances and seemed inclined to impose more stringent requirements when it comes to environment-related advertising claims.

Facts of the case

The plaintiff is an association committed to fighting unfair competition. The defendant is a confectionery maker with fruit gums and liquorice as its main product lines. The products can be purchased from various outlets including food retailers. The ads which the defendant ran for the disputed products in a food industry trade magazine went as follows: "Since 2021 [the defendant] has produced all products climate-neutrally". Furthermore, a logo with the term "climate-neutral" was added. In actual fact, the defendant does not produce the products carbon-neutrally. However, it does support climate change mitigation projects through an environmental consultancy firm and also draws attention to this in the contested ads.

The plaintiff is challenging the advertising claim as misleading. The relevant public concerned would assume that the manufacturing process itself is climate-neutral. At the very least, the advertising would have to be changed to include a statement that climate neutrality was achieved only through offset measures. The plaintiff is bringing cease-and-desist claims against the defendant as well as claims for reimbursement of the costs of issuing warnings pre-trial.

History of the case

The Regional Court [Landgericht – LG] of Kleve dismissed the complaint by Judgment of 22 June 2022 – 8 O 44/21. The appeal lodged by the plaintiff was also dismissed by the Higher Regional Court [Oberlandesgericht – OLG] of Düsseldorf (Judgment of 6 July 2023 – I-20 U 152/22).

The Higher Regional Court of Düsseldorf held that the plaintiff did not have any claim to have the defendant cease and desist from misleading statements pursuant to Sec. 8 Para. 1 Sentence 1, Sec. 3 Para. 1, Sec. 5 Para. 1 German Unfair Competition Act [Gesetz gegen den unlauteren Wettbewerb – UWG]. Since the advertisement had been published in a trade magazine, the readers understood the term "climate-neutral" to mean an overall balance of carbon emissions achieved through offsetting measures. Specifically, it was known to the readers that neutrality could be achieved through both avoidance and offsetting measures. A cease-and-desist claim under Sec. 5a Paras. 1 and 3 UWG as well as Sec. 5a Paras. 1 and 2 UWG in the version in force up to 27 May 2022 (old version) for withholding information on the basis of which the "climate neutrality" of the advertised product was achieved was also excluded. Although such information was essential, the required explanation of the nature and scope of the relevant offsetting measures could be obtained from the Internet site of the cooperation partner. This was stated in the advertisement and could be retrieved with a QR code also provided there. This was something that could be reasonably expected of the readers of the trade magazine.

Given the fundamental importance of the matter, the appellate court granted leave to appeal on questions of law [Revision], by which the plaintiff is now further pursuing its claims.

Further course of the proceedings

A decision in this matter is slated by the BGH for 27 June 2024.

Potential consequences for the advertising industry

Already at the oral hearing, the BGH indicated that it will not relax the strict standards already applied by the courts in the rulings of case law going back many years in the area of advertising with environmental benefit claims. Instead, it now seems quite possible that the BGH will even take a more stringent stance in its relevant case law.

Although the BGH did make clear at the oral hearing that climate neutrality can be achieved both through emissions reduction and offsetting measures, the Court also emphasised that the question as to whether or not a statement is misleading always had to be assessed in the specific context. Here, the Court made reference to the BGH’s “Umweltengel” ruling (BGH, Judgment of 20 October 1988 – I ZR 219/87). In that case, it held that clarifying statements had to be made directly on the product or directly in the ad.

Should the BGH uphold and continue this case law from 1988, it will likely depart from the decisions of the lower court instances and qualify the clarifying statements on climate neutrality as insufficient. In that case a mere reference (e.g. in the form of a QR code, but also a link, etc.) to the Internet site of a cooperating environmental consultancy firm will no longer be permissible in future.

Classification

With a view to Directive (EU) 2024/825 as regards empowering consumers for the green transition through better protection against unfair practices and through better information (EmpCo Directive), which was published on 6 March 2024 and now has to be transposed into national law by the Member States by 27 March 2026, it therefore appears conceivable that the BGH will adopt similarly stringent standards already now.