Advertising in Germany with the term "climate neutrality" - can you still say that?

The term "climate neutrality" is on everyone's lips and is also being used more and more in advertising. It has also been the subject of recent German case law, which assumes that such terms have a strong influence on purchasing behaviour. Most recently, a judgement was issued by Munich Regional Court I in December 2023[1]; earlier in 2023, in July, three courts had already dealt with the question of how (safely) the term "climate neutrality" may be used in advertising.[2] There were also some judgements in 2022 and 2021[3], but a decision by the German Federal Court of Justice is still missing.

The following article provides an overview of this case law. It outlines the points on which the more recent decisions agree and those on which they do not and provides general recommendations to minimise the risk of unlawful advertising. Finally, it outlines what can be expected next on this topic.

Why is this relevant?

But first: Why is it useful to deal with the standards of case law at all? Or in other words: Why is it relevant? 

The relevance arises from the fact that unlawful advertising can constitute an offence under the German Unfair Competition Act (UWG). An advertisement could, for example, be qualified as misleading according to Sections 5 and 5a UWG. While Section 5 UWG penalises that a misconception is created (in particular among consumers) through a misleading statement, Section 5a UWG regulates the violation of information requirements. When advertising "climate neutrality", Section 5 (2) No. 1 UWG (misleading product-related information) and Section 5a (1) UWG (misleading by withholding material information) are particularly relevant.

The consequences of unlawful advertising can be quite unpleasant for the advertiser, e.g., warning letters or injunctions from competitors or competition associations are possible, with which claims for injunctive relief and damages can be asserted. In addition, it is logistically time-consuming and expensive for companies if it turns out that the advertising of products that have already been placed on the market is unlawful.

Similarities in recent case law

There is broad agreement among the courts on two aspects: Firstly, what is meant by the term "climate neutrality" and secondly, that the consumer must be provided with some further information - regarding the "what" and the "how". 

Meaning of "climate neutrality": Balancing the books

In some cases – for example in a first instance decision[4] – it was ruled that the term "climate neutrality" may (only) be used in advertising if it refers to an emission-free manufacturing process. If this was not the case, the labelling "climate neutral" on a product was considered to be misleading.

In the meantime, however, some of the superior German courts have agreed that the consumer does not necessarily think of an emission-free manufacturing process when hearing the term "climate neutral".[5] Instead, the term "climate neutral" should be interpreted in a way that the emissions caused are offset. The consumer is aware that this balance can be achieved by different measures: either by avoidance and/or by offsetting or compensation measures. These measures also include the support of climate protection projects by third parties.

It is therefore not misleading if a product is advertised as climate-neutral where neutrality is also – or even solely – achieved through offsetting or compensation measures. The argument of the Higher Regional Court of Düsseldorf in this context is convincing: consumers are regularly aware that goods and services are also advertised as climate-neutral that cannot be produced or provided emission-free (in particular: air travel).

Need for further information: On what?

There is also agreement that certain additional information must be provided. These further information should answer two questions in particular: The "to what", i.e. to which areas exactly the climate neutrality refers, and the "how", i.e. with which measures climate neutrality is achieved. 

The first question to be answered is therefore the reference value of the term "climate neutrality". This can vary greatly, which leads to major differences in the measures required to achieve it. 

For example, climate neutrality can only refer to part of a product's life cycle, such as the manufacturing process alone. It is also possible for the entire life cycle of a product to be considered in terms of its climate impact, from manufacture through its period of use to disposal. Finally, it is even possible for a company to advertise itself as climate-neutral in its entirety - i.e. detached from individual products. It is therefore essential to provide information on the reference value of climate neutrality if this is not already evident from the advertising itself (e.g. if a product is advertised with "climate-neutral production").

Need for further information: How?

The second question to be answered is the "how". The consumer has a considerable interest in knowing how climate neutrality is made up in detail. They need to be informed about this because they know that an even emissions balance can (also) be achieved through offsetting measures - and that the effectiveness of some of them is sometimes controversial (keyword: greenwashing).

It must therefore be clear to what extent the company is endeavouring to make its own avoidance measures and to what extent certificates are being purchased, offsetting measures are being implemented or third-party projects are being supported.[6] In the case of certificates, the verification criteria for these must also be stated. The comparison with product tests, which is sometimes used in case law, is catchy here: An essential component of such a test is that the criteria and standards according to which the assessment is made are communicated. The same applies to the concept of climate neutrality.

The Higher Regional Court of Düsseldorf puts it in a nutshell: In order for the consumer to make an informed decision, information is required as to whether the climate neutrality claimed in the advertising is achieved in whole or in part through savings or compensation measures.[7] In addition, information must be provided as to whether and which emissions are excluded from the assessment. This is material information according to Section 5a (2) No. 1 UWG. 

Therefore, information must be provided on the "how" of climate neutrality - i.e. details about the measures by which it is to be achieved. If this information is lacking, this usually means a breach of the duty to inform and makes the advertisement unlawful. 

Differences in recent case law

In addition to these similarities, however, there are also aspects in which the previous decisions disagree. Three of these are outlined below:

Distinction between "climate neutrality" and "CO₂ neutrality"

To date, only the Regional Court of Karlsruhe has marginally addressed the distinction between the terms "CO₂ neutrality" and "climate neutrality". Other courts have used these terms synonymously in some cases or have not made any comments on this distinction.

The judges in Karlsruhe pointed out that CO₂ is not the only climate-impacting gas, which is why the term "climate neutral" cannot (only) be understood as an even CO₂ balance.[8] The term "even greenhouse gas balance" is therefore more appropriate.

To be on the safe side, advertisers should therefore refrain from using these terms synonymously and check which term should be used for advertising purposes (and whether this can be done justice).

Checking whether supported third-party climate protection projects are suitable

In addition, there is another specialty from Karlsruhe: In the case to be decided there, climate neutrality was to be achieved by supporting a climate-effective third-party project (forest protection), among other things. The Karlsruhe Regional Court made an assessment as to whether the supported project was at all suitable for "achieving" climate neutrality.

The court took a strict view here: It was admitted that the protection of forests is a recognised measure for climate protection. However, the support of a forest protection project per se was not suitable for achieving compensation in such a way that makes advertising with climate neutrality permissible. The judges argued that the greenhouse gas released into the atmosphere by a forest is not permanently offset – firstly because a forest only binds CO₂ temporarily and secondly because the supported project only runs until 2040. In contrast, CO₂ emissions can be detected in the atmosphere for hundreds or even thousands of years. 

Due to this lack of permanent compensation, the Karlsruhe Regional Court qualified the specific advertising with climate neutrality as misleading. In short: If the compensation is not permanent, it is not suitable as a measure to achieve climate neutrality. 

It is doubtful whether this rather strict view will prevail. Two points speak against it: Firstly, such an assessment of effectiveness will generally not be easy for advertisers (or even claimants challenging this), as this may require extensive (scientific) surveys. Secondly, the effectiveness of such compensation measures could always be denied, as it is never surely predictable at the time of advertising whether and for how long a supported climate protection project will be continued. As a result, this would always make advertising with climate neutrality unlawful which is (also) based on compensation measures through the support of third-party projects. 

Nevertheless, the key message of this consideration should not be neglected. Although the Regional Court of Karlsruhe has adopted a strict approach, it is nevertheless advisable to consider the underlying, fundamental idea - namely the question of the effectiveness of the respective measures or the supported third-party projects. From an advertiser's point of view, it should therefore be critically questioned whether and in what form the supported projects are suitable for neutralising climate-damaging emissions.[10] If this is not the case and this fact is (more or less) easily recognisable, it is likely that the advertising is qualified as misleading – and regardless of the legal aspects, the advertising company would then have to accept the (moral) accusation of greenwashing.

What information must be included where

Finally, there are also differing views on where and in what form the aforementioned information must be provided. The Düsseldorf Higher Regional Court has ruled that it is sufficient if this information is located on a website to which the advert on the product refers (e.g. with an QR code). It is also permissible if reference is made to the website of a partner. In other words, it is not necessary to break down the term of climate neutrality on the product itself. The Oldenburg Regional Court took a different view and demanded a short reference on the product or its packaging itself.[11]

Nowadays, however, almost everyone has a smartphone that can be pulled out of their pocket in a shop or is already to hand when shopping online. Therefore, it is likely to prevail that the provision of additional information by means of a QR code is permissible, provided that it is placed in the immediate vicinity and in connection with the advertising and refers directly to the additional information. This provides the public with an easily accessible information, the actual receipt of information (which may be more difficult for a person without a smartphone) is not decisive.[12]

However, it is important to note that it is not sufficient for this information to be located on a website that is only generally "linked" to the product without reference to the advertisement. Likewise, it is not sufficient if only the general website of the company is referred to. There must be a direct link between the information and the advertising, i.e. the information must be directly accessible (for example: "Further information on climate neutrality can be found here: ..."). 

Accordingly, Munich Regional Court I recently ruled that is not sufficient that the QR code used was not printed directly next to the advert. In addition, it only provided a general link to the company's website, where the customer then had to search for the information themselves. 

Conclusion and outlook

It is positive that a consensus in initial aspects and therefore the first tendencies of "established case law" can be identified. In other aspects, however, there is still disagreement and therefore legal uncertainty. 

Further decisions on this question will follow and (hopefully) contribute to further clarification of the requirements: In its two decisions from July 2023, the Higher Regional Court of Düsseldorf ascribed fundamental importance to the question of whether and under what conditions advertising with the term "climate neutral" is permissible and allowed an appeal to the German Federal Court of Justice (which was done by the plaintiff). As an appeal has been lodged against the judgement of the Regional Court of Karlsruhe and the judgement of the Regional Court of Munich I has presumably also been challenged, decisions by other superior courts will follow. It will be interesting to see to what extent these courts will agree with the existing views.

Based on the previous judgements, an advertising company should go through a checklist that clarifies and answers the following questions:[13]

• Which term should be used? (e.g.: CO₂ neutrality/climate neutrality);
• What is the exact reference value of the term? (e.g.: (parts of) the life cycle of a product/production of an individual product or all products/the company as a whole);
• What measures are used to achieve neutrality, which emissions are included or excluded from the balance?;
• Are the offsetting measures used or supported – as far as the advertiser knows – really effective or suitable?;
• Is sufficient, easily accessible information provided on the above points? (so that it is clear how neutrality is achieved);
• Is the reference to this information directly related to the advertising claim?;

If these questions can be "ticked off" or answered in the affirmative, the risk of successful attacks against the advertising is minimised. 

Apart from case law, the topic will remain present due to the Green Claims Directive, which provides for extensive requirements for environmental claims. A first draft of this was presented by the EU Commission in March 2023. The preliminary review (by means of a certification procedure for environmental advertising) provided for therein, among other things, could be a novelty for advertisers in the future. If this procedure is introduced, the bureaucratic burden on companies is likely to increase significantly – whether this will also lead to an increase in legal certainty, however, remains to be seen, as this certificate is expressly not intended to prejudge the judicial assessment. 

The question of what can actually still be said, at least with regard to advertising with "climate neutrality", will therefore continue to be pursued for a while...

[1] Munich Regional Court I, judgement of 8 December 2023 (Ref. 37 O 2041/23).

[2] These are the Regional Court of Karlsruhe (judgement of 26 July 2023 - Ref.: 13 O 46/22 KfH) and the Higher Regional Court of Düsseldorf in two judgements of 6 July 2023 (Ref.: 20 U 152/22 and 20 U 72/22).

[3] Including the judgement of the OLG Frankfurt am Main of 10 November 2022 (Ref.: 6 U 104/22), the judgement of the OLG Schleswig of 30 June 2022 (Ref.: 6 U 46/21) and the judgement of the LG Oldenburg of 15 December 2021 (15 O 1469/21).

There are also other judgements from 2021 that deal with this or a similar question, including the Higher Regional Court of Hamm, the Regional Court of Constance and the Regional Court of Kleve. However, a discussion of these judgements is beyond the scope of this article. See for an overview of these decisions: Thomalla, VUR 2022, 458 et seq.

[4] LG Mönchengladbach, judgement of 25 February 2022 - 8 O 17/21.

[5] See also: Wasner, GRUR-Prax 2023, 588 (589).

[6] Higher Regional Court Düsseldorf, judgement of 6 July 2023 - 20 U 72/22, para. 27.

[7] OLG Düsseldorf, judgement of 6 July 2023 - 20 U 72/22, 2nd headnote.

[8] different opinion: OLG Frankfurt am Main, judgement of 10.11.2022 - 6 U 104/22 para. 29, OLG Schleswig, judgement of 30.6.2022 - 6 U 46/21, para. 27 and LG Oldenburg, judgement of 16.12.2021 - 15 O 1469/21, according to which the average consumer understands "climate-neutral" to mean a balanced CO₂ balance.

[9] Karlsruhe Regional Court, judgement of 26/07/2023 - 13 O 46/22 KfH, para. 65 et seq.

[10] Also Wasner, GRUR-Prax 2023, 588 (589).

[11] LG Oldenburg, judgement of 15 December 2021 (Ref.: 15 O 1469/21), with the reference example: "Compensation through support of international climate projects". 

[12] Lamy/Lamers, KlimR 2022, 142 (146).

[13] Similar recommendations are also made by Wasner, GRUR-Prax 2023, 588 (590 f.).