At the heart of any policy measure to curb greenwashing lies clear articulation of what qualifies as “green” – a framework that can help create transparency. Outlook Business looks at how the proposed guidelines for the prevention and regulation of greenwashing addresses this.
The Centre is set to release the final rules for preventing greenwashing. This comes seven months after the draft Guidelines for the Prevention and Regulation of Greenwashing, 2024 were put up for suggestions and comments from the public. The guidelines have been framed under section 18 of the Consumer Protection Act, 2019 and will apply to product sellers, advertisers and service providers who use terms like “green”, “clean”, “eco-friendly” and “carbon neutral”.
There has been growing awareness around sustainability and responsible consumption, says a 2022 study on green consumerism in India. Green consumerism means making purchases that takes into consideration the environmental and social impact of products and services, states the study. Decisions regarding what to buy are shaped by perception around sustainable attributes of a product. Labels, adverts and claims regarding green attributes of a product go a long way in creating these perceptions.
Take for instance the case of ban issued by Advertising Standards Council of India (ASCI) in 2017 on an advertisement by Bharat Petroleum on “Go Green With Speed For IT Reduces Emissions”. The campaign promoted Speed97 as an eco-friendly fuel that reduces vehicular emissions. The ban was made on the grounds that the claims were unsubstantiated. In a similar episode, Hindustan Unilever Limited (“HUL”) encountered accusations of presenting misleading ecological assertions concerning its Surf Excel laundry detergent and the advertisement campaign was banned in United Kingdom. The advertisement also showed visuals of children planting trees and cleaning beaches. This was alleged to be a tactic to depict “green” commitment of the brand and had nothing to do with the product that was being advertised. Subsequently, a fine was imposed on the company.
As environmental concerns intensify, greenwashing has come under significant examination across various sectors in India. The growing awareness of environmental issues is instrumental in influencing consumer choices, leading to the rise of "greenwashing” - a deceptive strategy that entails exaggerating or misrepresenting environmental pledges. This practice not only misleads consumers but also undermines genuine sustainability efforts and distorts market competition, states a research article on “Greenwashing Understanding Among Indian Consumers and Its Impact on Their Green Consumption”.
The Guidelines
As per the draft guidelines on greenwashing generic terms such as “eco-friendly”, “green” must be substantiated with evidence. Usage of technical terms such as greenhouse gas emission, Environment Impact Assessment etc., would mandate a full disclosure through a QR code or link on the packaging. The evidence must be easily accessible in the public domain and must not contradict relevant environmental claims. For specific claims such as ‘carbon offsets’, ‘carbon neutral’, ‘compostable’, ‘degradable’, ‘free-of’, ‘non-toxic’, ‘100 per cent Natural’, ‘Ozone-Safe’ and ‘Ozone-Friendly’, and similar assertions must be supported with disclosures. They must be supported with credible certification, reliable scientific evidence and an independent third-party verification.
For any comparative environmental claim that compares products with each other the claims must disclose exact aspects that are being compared. Any favorable data supporting the claims must not be selective. Violations of these may lead to imprisonment for two years and a fine of up to Rs 10 Lakh. Upon repeating such violations, the manufacturer or the service provider could face up to 5 years of imprisonment and a fine of Rs 50 lakh.
Curbing greenwashing also falls under the purview of the Trademarks Act,1999. Brands use trademarks to project labels as “herbal”, “clean” etc., and the Act disallows registration of trademarks which solely contain green words to describe the quality of a product.
However, trademark registry has at times allowed such labels owing to oversight. This has led to instances of violation. In 2023 the Securities and Exchange Board of India (SEBI) approved a regulatory framework for ESG rating providers regarding compliance, review and disclosures. This is seen as a critical step in the direction of curbing greenwashing. Following SEBI’s circular, the Reserve Bank of India (RBI) also delineated the concept of greenwashing. It suggested measures to mitigate concerns related to greenwashing by directing funds from 'green deposits' through third-party verification and assurance, as well as impact assessments. This is seen as a critical strategy for maintaining consumer trust and demonstrating the authenticity of commitments to environmentally sustainable practices.
Continuing Challenges
The current regulatory frameworks have been instrumental in putting in place frameworks within which disclosures around sustainability–related products must be made. These are still early days. Being a sustainable business helps companies to position themselves in the larger narrative of responsible and ethical business. Greenwashing often becomes a quick ticket to that. A robust legal framework which has deterrence built into it can help address greenwashing. It can also help curb cases of ‘greenblushing’. ‘Greenblushing’ refers to hesitance around declaring products as “green”, less it leads to misrepresentation and backlash.