The growing expectation of consumers towards manufacturers in offering environmental-friendly products and the impact of this expectation to commercial practises did not go unnoticed in Hungary either. At the end of 2020 the Hungarian Consumer Authority (“HCA”) assessed marketing and commercial practises related to ‘green’ and ‘eco-friendly’ claims and the phenomenon called greenwashing. As a result, the HCA issued a set of guidelines with useful prompts, examples and explanations businesses should consider in order to comply with Hungarian law.
The document addresses compliance with national law, in particular, the Act on Unfair Commercial Practices against Consumersand the Act on Competition but does not include the EU regulatory landscape and so should be consulted with this proviso. The guidelines of the HCA are not legally binding, yet it serves as a signpost on how the HCA will assess environmental and sustainability claims.
The phenomenon of greenwashing and ‘green’ claims
The HCA being the market supervisory authority noticed the growing use of marketing and PR messages claiming sustainability and environmentally friendly features at the cost of confusing or misleading consumers. This phenomenon is called greenwashing, which is designed to make people believe that your company is doing more to protect the environment than it really is.
Products and services can either explicitly claim to be ‘green’ or 'eco-friendly' by using direct statements appearing on labels, with text; or more implicitly through the use of backgrounds, figurative elements depicting natural symbols or sound effects, which may only suggest to the consumer that the product or service is in some way sustainable or eco-friendly. The use of these claims and features are problematic when these are not, or at least not entirely, true.
Using claims relating to sustainability is regulated by EU and national laws. Commercial practise around these claims is overseen by numerous authorities, including the HCA. Irrespective of the claims being explicit or implicit there are general preconditions to observe in compliance with Hungarian law.
Rules of thumb
When businesses wish to market their products and services by using sustainability claims the following rules of thumb may come handy to set the right tone and message in order to avoid misleading consumers:
- Be direct and unambiguous
Avoid overly wide and general claims, because those are not capable of conveying a clear message to consumers which allows them to make an informed decision. It can cause confusion on what the business actually does and what the consumer understands it does. It follows that ads including green claims and environmental advantages must be specific to a certain aspect of the product or production method and should not be general. Examples of overly wide and general claims include ‘eco-friendly’; ‘green’; ‘environmentally friendly’; etc.
- Use clear and understandable language
No jargon or technical terms should be used in commercial communication. Consumers should not be expected to understand technical language and terms and so this should be avoided. Without clear and easily understandable information, consumers may base their decision on their assumptions or expectations leading to misleading commercial practises.
- Claims should be true and accurate, without exaggerating
The truthfulness of a claim is a matter of fact. This means that the intention of the company is irrelevant, when assessing what the consumer may think or understand based on the claim. Statements, figures and percentages must be presented in a true and correct way, without exaggeration. If a claim only proves to be true for certain aspects of a product, method or service, this needs to be clarified.
Green claims and features that are required by legal provisions or guaranteed by law may not be construed as advantages or specialities.
- Claims must be backed by relevant evidence
As for any commercial claims, the golden rule of supporting evidence applies to sustainability and green claims as well. This, in practice means that all such claims and statements must be supported by relevant and up to date evidence specific to the claim such as authentic and reliable research studies or test results. A useful tip is to ensure the evidence contains factual proof or data and that the evidence is already available prior to publishing the claim. Also, if due to recent evidence a claim is no longer accurate, the information should either be corrected or no longer used. The same applies if the product or service is redesigned or changed with the result that the claim is no longer entirely correct.
Typical and frequent green claims identified by the HCA
Businesses should be aware that compliance is expected irrespective of the environmental claim appearing as text, picture or symbols. The HCA categorized typical claims in four groups depending on which feature of the production process the claim relates to and established recommendations for each of those groups. The main groups are:
- Composition of the products;
- Production method/characteristic;
- Claims concerning the future of the product; and
- Comparative statements.
In addition to the general rules of thumb, the guidelines provide useful insight to the more specific claims within these groups. Most notably on recyclability, organic/bio and “free from …” claims; the use of green/renewable energy; statements on CO2 emissions; and claiming being the greenest/most sustainable etc.
When using certification marks or labels companies should make sure that the criteria required for the use of such mark or label – may it be an official mark or a certification issued by a not for profit or for profit organization – are met and regularly reviewed. Moreover the criteria required for using the label should be easily accessible for consumers. Official certification marks and labels, such as the ‘EU Ecolabel’ or the ‘Environmental-friendly product’ (in Hungarian ‘Környezetbarát Termék’) are issued pursuant to legal provisions and only by designated bodies.
In summary, if your company’s commercial messages or marketing makes use of environmental features and claims, here is a quick checklist for you to run through:
- Formulate the environmental advantages of your products, services or operations clearly and unambiguously in a language easily understood by consumers;
- Provide consumers with the possibility to ascertain and check the accuracy of your claims;
- Your claims should be true and accurate and your proof clear, objective and persuasive. Base your claims on the most up to date studies, data and methods;
- Avoid using claims which can only be supported by dubious evidence regarding the claims’ environmental impact;
- Update your communications regularly;
- Do not claim any environmental advantages as special features if that is required in compliance with legal regulations, or if it is already available for consumers as a general market practise;
- Communicate your achievements rather than any future plans.
The full guidelines of the HCA is available here in Hungarian. Please note that this is not the first time the accurate use of environmental claims is under investigation. As we reported earlier, in the UK the Competition & Markets’ Authority launched an investigation on greenwashing practises with the ultimate aim to provide guidance for businesses, so keep an eye out for recent developments and use our tips to stay on top of your game.
For more information please contact Daniel Aranyi or Bettina Kövecses.