On 27 June 2024, the German Federal Court of Justice (FCJ) handed down its eagerly awaited ruling on advertising with the term ‘climate neutral’ (case no. I ZR 98/23). This judgement is another in a series of decisions that have already dealt with the permissibility of advertising measures for ‘climate-neutral meat products’ (Oldenburg Regional Court, judgement of 16 December 2021, 15 O 1469/21), ‘climate-neutral jam’ (Düsseldorf Higher Regional Court, judgement of 6 July 2023, 20 U 72/22) and ‘climate-neutral bin liners’ (Schleswig Higher Regional Court, judgement of 30 June 2022, 6 U 46/21). Now, for the first time, the highest court has clarified the term ‘climate-neutral fruit gums’. Although the judgement provides companies with some clarity regarding the permissibility of advertising with ‘climate neutral’, some questions remain unanswered - especially in cases where not individual products but entire companies claim climate neutrality.

1. The facts of the case

The decision centred on an advertisement that appeared in the print edition of Lebensmittel Zeitung on 19 February 2021. The advert promoted confectionery with the statement ‘K* also tastes good for our climate’. Below this was the sentence: ‘Since 2021, K* has been producing all products in a climate-neutral way. Now also clearly visible on every bag!’ The advert also featured a label with the terms ‘climate neutral’ and ‘product’. A QR code in the advert made it possible to access a website with further information on the claimed climate neutrality. This website was operated by an ‘environmental certifier’, which provided the carbon footprint of the products and offered measures to offset CO2 emissions.

2. The decisions of the lower courts

Both the Regional Court of Kleve (judgement of 22 June 2022, 8 O 44/21) and the Higher Regional Court of Düsseldorf (judgement of 6 July 2023, 20 U 152/22) declared the advertising to be permissible under fair trading law, but with different justifications:

The Kleve Regional Court ruled that the term ‘climate neutral’ in the advertising was not misleading for a specialised audience. As experts know that climate neutrality can also be achieved through offsetting, the court did not consider the advertising to be misleading in accordance with Section 5 UWG old version.

The Düsseldorf Higher Regional Court emphasised that it is not only the accuracy of the information that is important, but also the potentially misleading effect on the consumer. The focus was placed on the average consumer, who could also recognise that climate neutrality is achieved by offsetting or avoiding emissions. The claim ‘climate neutral’ therefore did not give rise to any misunderstanding.

The Higher Regional Court of Düsseldorf also examined whether the lack of information on the type of climate neutrality was misleading by omission. It found that the consumer had a legitimate interest in being informed about the exact offsetting methods and that the provision of this information on the website of the environmental certifier was sufficient, as the spatial restrictions of a print advert had to be taken into account.

3. The decision of the FCJ

Following the plaintiff's appeal, the FCJ overturned the judgement of the Düsseldorf Higher Regional Court and amended the judgement of the Kleve Regional Court. The BGH prohibits the defendant from advertising with the statement ‘Since 2021, K* has been producing all products climate-neutrally’ and/or the label ‘climate-neutral’.

The decision only relates to the question of whether there is active misleading behaviour in accordance with Section 5 UWG. The FCJ left open the question of whether there is also misleading by omission in accordance with Section 5a (2) UWG (old version).

The BGH stated that special legal standards apply to environmental advertising claims, similar to those for health claims. Since the 1980s, the Senate has assumed that consumers favour environmentally friendly products. The BGH emphasised that environmental advertising particularly appeals to emotional areas, with most consumers having only a limited understanding of the scientific context.

It is therefore necessary to provide particularly precise information about the meaning and content of terms such as ‘climate neutral’. The advertising must clarify whether climate neutrality is achieved through CO2 avoidance or compensation. The BGH ruled that explanatory information on an external website is not sufficient if it is not directly integrated into the advertising.

4. Assessment, open questions and outlook

The decision of the FCJ provides more clarity on the conditions under which the advertising of products as ‘climate neutral’ is inadmissible. However, it remains unclear under which conditions ‘climate neutral’ advertising is permissible.

The BGH emphasised that environmental advertising must meet strict requirements, which was already indicated in the rulings of the court of first instance. The clarification that the term ‘climate-neutral’ can include both CO2 avoidance and CO2 compensation was also previously established. What is new is that the admissibility of advertising is now assessed exclusively in accordance with Section 5 UWG and no longer in accordance with Section 5a UWG, which also takes into account the geographical restrictions of the means of communication.

Companies should continue to ensure that environmental advertising meets the strictest requirements for clarity and transparency, especially when ambiguous terms such as ‘climate neutral’ are used. The FCJ has made it clear that the meaning of the term must be clearly explained in the advertising itself.

Finally, the question remains as to how far the legal requirements for ‘sufficient explanation’ in various forms of advertising - be it in print adverts, video adverts or on digital platforms - will extend. Further case law is expected in this regard.

Companies should also keep an eye on developments with regard to the EU Consumer Rights Directive (EmpCo) and the new ‘Green Claims Directive’. These could lead to even stricter requirements, particularly with regard to general environmental claims and their verifiability.