“Greenwashing” Directive confirms the importance of trademarks for consumers protection in the agri-food market also in relation to sustainability and ecological transition
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By Cesare Galli and Angelo Rainone
The EU has recently intervened on the regulation of unfair commercial practices and certification marks with Directive (EU) 2024/825, approved on February 28th, 2024 and to be transposed by Member States by 2026, aimed at leading the market toward more environmentally sustainable choices and at protecting consumers from the phenomenon of "greenwashing".
This expression encompasses all communication or marketing strategies implemented by companies, institutions or other entities aimed at concealing the actual negative environmental impact of certain economic activities by deceptively presenting them as environmentally sustainable.
This issue is particularly relevant in the agri-food sector: numerous studies, including the 2018 "Nielsen Sustainable Shoppers Report" and GS1's "Immagino Observatory" of 2023, have in fact shown that in this field, "green claims" are able to affect consumers' economic behavior in a particularly incisive way, leading them to prefer allegedly "environmentally sustainable" food products over other goods that do not claim this characteristic. This is, therefore, an area in which transparency in business communication is vital for the proper functioning of the market. To this effect, the EU has amended the two Directives that protect consumers’ interests under EU law, namely the Unfair Commercial Practices Directive (Directive 2005/29/EC) and the Consumer Rights Directive (Directive 2011/83/EU).
In the former, the list of possible objects of misleading information that are sanctioned referred to in its Art. 6 (to which corresponds, in our domestic legislation, Art. 21 of the Consumer Code) now also includes environmental claims that contain "untruthful" or misleading information regarding certain characteristics misleadingly attributed to the promoted products, which are believed to be environmentally relevant in the eyes of the consumer, such as durability, repairability or recyclability (para. 1, relating to misleading commercial practices), and environmental assertions regarding future commitments made by an economic operator, sanctioning promises that are not backed up by adequate and concrete guarantees (Paragraph 2, relating both to confusing commercial practices and to those involving the failure of an economic operator to comply with "commitments set out in a detailed and realistic implementation plan that includes measurable and time-bound targets and other relevant elements necessary to support its implementation, such as allocation of resources, and that is regularly verified by an independent third party expert, whose findings are made available to consumers”.
In addition to these cases, the deceptiveness of which must be assessed on a case-by-case basis, the “black list” in Annex I of the Directive (translated within our legal system in Article 23 of the Consumer Code) has been updated with a list of conducts that constitute ex se misleading commercial practices, in the pursuit of "greater legal certainty" (thus Recital 17 of Directive 2005/29/EC).
On closer look, in the first case, the new discipline does not have a truly innovative scope, given that both cases now expressly included in Article 6 of the Unfair Commercial Practices Directive were already covered by the general definitions contained in the previous text of the same provision: and in fact on the basis of the corresponding domestic norm, namely Article 21 of the Consumer Code, the Italian Antitrust Authority has repeatedly had the opportunity to sanction misleading "green" promotional messages. The AGCM's best-known measure on this topic is certainly the Decision dated December 20th, 2019 No. 28060, regarding the "Eni" case, in which the Authority imposed a penalty of €5 million (i.e., the maximum fine) on the company Eni S.p.A. for the diffusion of misleading advertising messages aimed at promoting the fuel "Eni Diesel+", which was defined in the advertising communications as a "Green Diesel". This conduct was deemed unlawful because the promotional messages disseminated by Eni regarded a type of fuel that, by its nature, is a highly polluting product (and which, evidently, cannot be considered "green"); the company, however, omitted to report the characteristics of such fuel in a precise and unambiguous manner, thus misleading consumers and inducing them to attribute to the product qualities - specifically, a positive environmental impact - that the “Eni Diesel+” did not have, given that it, albeit less than other fuels, has a clear negative environmental impact.
The inclusion of new definitions is supported by the 2020 European Commission study, "Environmental claims in the EU: Inventory and reliability assessment Final report," which found that 53.3% of environmental claims by companies in the EU were vague, misleading, or unfounded. This underscores the need to explicitly sanction such behaviors, ensuring uniform interpretation of prohibitions across EU countries, emphasizing the Union's commitment to environmental protection, and enhancing the law's educational role.
The impact of including a list of business practices associated with cosmetic environmentalism in the blacklist of Annex I of Directive 2005/29/EC is particularly significant. This inclusion renders any further assessment of their unlawfulness unnecessary. Consequently, the "Guidance on the interpretation and application of Directive 2005/29/EC of the European Parliament and of the Council concerning unfair business-to-consumer commercial practices in the internal market” recommend that interpreters first verify whether a commercial conduct falls within the blacklist when assessing potential deceptiveness.
Among the newly "blacklisted" conducts, the most significant is the first one, which deems it inherently unlawful to display a sustainability label that is not based on a certification system or established by public authorities. According to the definition introduced by the newly approved Directive, a "sustainability label" is understood as "any voluntary trust mark, quality mark or equivalent, either public or private, that aims to set apart and promote a product, a process or a business by reference to its environmental or social characteristics, or both, and excludes any mandatory label required under Union or national law”.
The premise underlying this statement is the acknowledgment that distinctive signs, particularly trademarks, now serve as potent communication tools, transmitting a message from the owner to all those who engage with its distinctive signs. Specifically, in the context of innovations, as well as the unique features of a product or service—especially its sustainability—the trademark primarily signifies the commercial origin of the product or service embodying these attributes. This enables the public to recognize and associate a particular innovative or sustainable characteristic with a specific company, thus elevating it as an "added value" in the marketplace. Consequently, consumers are guided in their purchasing decisions by their desire for this value, prompting companies to compete in delivering such added value, including environmental sustainability.
The communication facilitated by trademarks between consumers and enterprises inherently benefits both parties. Enterprises are incentivized to invest in the positive associations of their products, which cater to evolving needs, including sustainability. By effectively communicating these attributes, enterprises gain a competitive advantage that enhances their overall competitiveness. In essence, intellectual property enables environmentally conscious enterprises to garner visibility and economic returns for their sustainability endeavors, thereby encouraging them to adopt more environmentally friendly production practices.
The equilibrium between exclusivity and safeguarding competition and consumers is maintained through regulations that penalize corporate communications capable of misleading the public. These regulations may even extend to the revocation of trademarks that have been associated with deceptive values and meanings. Among these regulations is the provision mandated by the new Directive, which stipulates that the ecological messaging conveyed by such trademarks must be "based on a certification system" or alternatively endorsed by "public authorities". This requirement necessitates the implementation and enforcement of an effective mechanism of monitoring and penalties, whether through public or private entities. Failure to adhere to these standards results in the classification of the trademark as deceptive.
In this context, it is important to consider the sustainability trademark established by accredited entities, whether they are public or private, which conduct assessments on the production processes of authorized entities through standard co-branding practices. This involves utilizing these sustainability trademark alongside the corporate brand. By aligning its brand with collective or certification marks (including individual marks for multiple use, which are also subject to truthfulness requirements and thus, if they convey messages related to "environmental or social characteristics", must provide a certification system), a company enables consumers to readily identify a certain level of quality in some or all of its products or services, guaranteed by these marks. This approach allows the company to maintain its overarching brand message while still leveraging the added value associated with that specific quality, particularly in the context of sustainable or socially responsible production covered by the certification.
By incorporating collective or certification marks alongside their corporate brand, companies effectively communicate their commitment to certain environmental or social standards, thereby enhancing their reputation. These marks, which may include those of environmental associations, serve as an endorsement for products and companies deemed to meet specific environmental or social criteria. However, it is crucial that these assessments are based on objective evaluations, and thus, the responsibility for implementing a certification system lies with the companies. This framework is particularly significant in sectors such as agriculture and food production, where collective or certification marks play a pivotal role in conveying quality and sustainability to consumers.
As a supplementary point to the preceding discussion, the significance of combating counterfeiting becomes apparent. Unlike the legitimate trademark owner, counterfeiters lack the motivation to uphold product quality or eco-sustainability standards. They bear no responsibility for any negative repercussions stemming from inferior quality or environmental harm, as blame is invariably directed solely at the trademark owner. This indifference often enables counterfeiters to cut production costs, thus bolstering profits, albeit at the expense of consumer well-being and environmental integrity.
Hence, by implementing these new regulations, both the market and intellectual property can be harnessed as tools for advancing sustainability. This proactive approach yields tangible advantages for both consumers and businesses alike.