On 3 May 2021, the Dutch Authority for Consumers & Markets (ACM) announced that it has launched investigations into misleading sustainability claims in the fashion, dairy and energy sector. ACM states that it has “chosen these sectors because it had found many potentially misleading sustainability claims in these sectors in its preliminary investigation. Furthermore, sustainability plays a major role in consumers’ purchase decisions in these sectors.” According to the ACM, various companies in these sectors are increasingly emphasizing the sustainability benefits of their products and services for marketing purposes. Companies should be extra careful when using sustainably claims to prevent that consumers will be misled (by for example overstating the sustainability benefits of their products and services).
The ACM sent letters to more than 170 companies in these three sectors requesting them to check the accuracy of their sustainability claims in all their “communication channels” (both online and offline), and if necessary, adjust these claims to comply with the unfair commercial practices legislation. The ACM stresses that if a company uses resellers “it is important that they also comply with the legislation for sustainability claims.” In particular, the ACM requests companies to comply with the Guidelines Sustainability Claims it published on 28 January 2021. In these Guidelines the ACM has drawn up the following five rules of thumb for businesses to prevent their sustainability claims from being unclear, incorrect or misleading for consumers:
1. Make clear what sustainability benefit the product offers;
2. Substantiate your sustainability claims with facts, and keep them up-to-date;
3. Comparisons with other products, services, or companies must be fair;
4. Be honest and specific about your company’s efforts with regard to sustainability; and
5. Make sure that visual claims and labels are useful to consumers, not confusing.
The ACM will use the above rules in its enforcement investigations. The rules of thumb are based on the EU Directive (2005/29/EC) concerning unfair commercial practices, which has been implemented in Book 6 of the Dutch Civil Code (DCC). In short, the DCC prohibits a trader from engaging in ‘unfair commercial practices’. Unfair commercial practices entail a wrongful act for which damages could be claimed under tort. Amongst others, a commercial practice is considered ‘unfair’ if the practice can be considered misleading. A practice may be misleading if – amongst others – essential information is omitted or is factually incorrect or deceives or is likely to deceive the average consumer.
For each sector, the ACM drafted a specific letter in which it outlines several examples of potentially misleading sustainability claims the ACM has identified in the respective sector. The ACM explains in what way such claims should be amended to comply with the consumer legislation. For example, with regard to the clothing sector ACM outlines – amongst others – the following:
- Vague and general terms such as “Green”, “Circular”, “Sustainable”, “Fair”, “Good for the planet”, “Animal-friendly”, and “Responsible” can mislead consumers. Without further elaboration on the specific sustainability benefits for the clothing item such standalone vague terms should be avoided. For example, in addition to the claim “fair wages” it should be stated that employees at all production stages earn a “living” wage in accordance with ILO standards.
- A clothing company may only claim that a clothing item is “organic” if - in short - more than 95% of materials or ingredients originate from certified organic production. Nevertheless, clothing companies often make the claim that a t-shirt is “made of organic cotton’’ whereas in reality only 50% of the fabric is organic. In such event, the claim “organic cotton” may not be used and the company should state instead: “This t-shirt contains 50% organic cotton”.
- If a sustainable filter on a website is used to select sustainable items, then it must be immediately clear what the sustainability benefit is and what the minimum requirements are for products that fall within the collection or the filter.
- Companies cannot use any sustainability claims about the company itself to make a product seem more sustainable and the other way around. Hence, companies must distinguish between the sustainability efforts of their company or brand itself (“By 2050, we will only use 100% recycled materials”) and the sustainability of their products (“These jeans are made from 20% recycled pants”).
The ACM notes that the information that a company should provide to consumers about sustainability claims consists of (i) the claim itself, (ii) its qualification, (iii) the explanation of the qualification and (iv) any supporting evidence. The ACM provides guidance as to where the information should be placed.
The ACM intends to continue the investigation from 14 June 2021. As of that date, companies making sustainability claims that do not comply with the legislation run the risk of getting fined by the ACM.
Would you like to know more about this topic? Please do not hesitate to reach out to Renske Sinke or Martine de Koning.
Further to the above, we note that sustainability is one of ACM's key priorities in 2021.In addition to the investigations into and publishing the Guidelines Regarding Sustainability Claims, ACM has taken the following actions:
- ACM has called on the Dutch legislature to introduce stricter rules for certification labels to prevent consumers from being misled;
- ACM has published guidelines regarding the opportunities for businesses that wish to work together to promote sustainability;
- ACM has responded to a proposal of the European Commission that aims to have consumers receive better and more reliable information about the sustainability aspects of products.
