ESG Enforcement Tracker

Key facts:

In June 2022, the Kleve Regional Court dismissed a claim for misleading commercial practices against a confectionery manufacturer regarding an advertisement claiming that the company had been producing all of its products “in a climate neutral way”. Similar claims were also brought against a jam manufacturer.

The claimant argued that the advert was misleading as consumers would understand it to be claiming that the manufacturing process itself was climate neutral. The defendant company did not dispute that its manufacturing process was not carbon neutral. Instead, it argued that, as confectionery production cannot be CO₂ emission free, the CO₂ produced was offset through support of climate protection projects.

The Kleve Regional Court dismissed the claim, emphasising that the target audience was a professional audience as the advert appeared in a trade publication. The court held that “climate neutral” is not synonymous with “emission-free” and that climate neutrality can be achieved through compensation (i.e. through support of climate protection projects). The court considered that it was sufficient that the defendant included a URL in the advert with information about how it offset its emissions.

This decision was appealed. In July 2023, the Düsseldorf Higher Regional Court dismissed the appeal but allowed a revision in order to provide guidance for adverts using the term “climate neutral”, since this topic had not previously been clarified by senior courts. The court explained that the average consumer would be aware that the term “climate neutral” can refer either to an avoidance of emissions or, alternatively, a balance of emissions by way of compensation. This is because the average consumer knows that products and services which cannot be produced or provided without emissions are also advertised as “climate-neutral”.

The Düsseldorf Higher Regional Court has since allowed an appeal to the German Federal Court of Justice in light of the fundamental importance of the subject matter.