ESG Enforcement Tracker

Key facts:

A court ruled that a drugstore chain, dm-drogerie markt (DM), may no longer market its own brands as “climate neutral” or “environmentally neutral”, following a claim brought by the NGO Environmental Action Germany (Deutsche Umwelthilfe).

The Regional Court of Karlsruhe ruled that there was insufficient evidence to substantiate dm’s claims, noting that a consumer had insufficient information to understand in what way the product was “climate neutral”.

DM had relied on a third party, ClimatePartner GmBH, to support its climate neutral claims. The alleged compensation paid for product-related greenhouse gases emitted by ClimatePartner-certified projects included a forest protection project in Peru.

The court analysed in detail whether the claims of climate neutrality could be achieved through forest protection using CO2 certificates, and raised important questions over whether such climate protection projects could withstand scientific and sociological scrutiny.

The court found no evidence of a wilful attempt to mislead, but ruled that, when viewed objectively, the claims were misleading. This has been reported as an important greenwashing case in the retail sector.