What is greenwashing? A guide to sustainable brand strategy

Background

A few weeks ago, I had the pleasure of hosting a World IP Day 2024 event which was dedicated to sustainability in the context of protecting Intellectual Property Rights (“IPRs”).

I talked to my audience about sustainability goals and about how important it is for you as business owners and brand managers across all sectors to be aware of the legal issues related to green branding and greenwashing. Today, I am sharing my thoughts on these topics in my article.

Green Branding

Sustainability is a value in itself, a credential, a goal and as such, it is being widely incorporated not only into long-term commercial strategies but also into branding by businesses across all sectors. With that come increased risks of claims and issues related to trade mark protection.

In 2020, the European Intellectual Property Office (“EUIPO”) received nearly 16,000 applications to register “green” EU trade marks, i.e.: marks that contain an element that may be associated with eco-friendliness, environmental sustainability, green colouring, etc. This amounts to 14% of all trade mark applications received by the Office in that year. For comparison, in 1996 there were just over 1,500 such applications.

The green branding boom continues predominantly because the public perception of sustainability and its importance has changed over the years. According to the research conducted by Dentsu International and Microsoft Advertising, over 90% of consumers are interested in brands that prioritise and are committed to sustainability, and over 50% of millennials and Gen Z consumers are prepared to pay more for goods and services originating from such brands. Conversely, businesses that fail to implement sustainability as part of their strategy are likely to face consumer backlash and a drop in profits within the next few years.

Green branding is therefore no longer the domain of businesses operating within renewable energy, recycling and environmental and climate change sectors traditionally associated with eco-friendliness by consumers. The bigger players in the green branding market include car manufacturers, transport businesses and, increasingly, retail, particularly in the fields of clothing and cosmetics.

What is Greenwashing?

In simple terms, greenwashing is a marketing strategy aimed at presenting a brand to consumers who care about the environment in such a way as to encourage them to purchase the relevant products or services. All is well until it turns out that the business behind the brand does not care about the environment or climate change to the extent suggested by its marketing and branding.

Is this a real problem? In short, yes, it is. In January 2021, the European Commission published its first greenwashing report which identified that 42% of websites they visited as part of their review included claims related to green credentials which were “likely false and deceptive and could constitute actionable claims for unfair commercial practices”.

The Risks

As a responsible brand manager or business owner, you usually want to register the key brand(s) as trade marks to make sure they are adequately protected against infringement. A trade mark that is not as green in reality as it holds itself out to be can be considered deceptive, and as such, it can be rejected by the UK Intellectual Property Office (“UK IPO”).

Moreover, the green/eco terms used as part of branding can be considered descriptive by the UK IPO, and rejected on that basis.

The astonishing figures I referred to above in terms of the number of green trade mark applications filed in recent years show that choosing the green branding strategy may be unwise also from the point of view of brand valuation and the risk of dilution. To put it simply, your goal is always to own a stand-out, distinctive brand. However, currently, it is more likely than not that your green brand will be surrounded by thousands of relatively similar-looking or sounding brands. This means that it will become less valuable to investors and more exposed to potential disputes with other brand owners. My recommendation would be to avoid introducing green branding as arguably, it is not worth spending significant marketing budgets on at present.

In terms of greenwashing, in the UK, the Competition and Markets Authority (“CMA”) has investigative powers related to claims made by businesses which includes sustainability claims. These have recently been applied by CMA against ASOS, Boohoo and Asda George with respect to certain clothing lines.

In May 2024, the Digital Markets, Competition and Consumers Act 2024 provided further new powers to the CMA, allowing it to directly decide whether consumer law has been broken and impose directions or substantial fines on businesses without resorting to court litigation.

Earlier in 2024, the EU approved the Green Claims Directive (formally known as the Directive on Empowering Consumers for the Green Transition, or DECGT) which, amongst others, banned greenwashing and the provision of other misleading product information.

It is anticipated that, pending the outcome of the upcoming parliamentary election in the UK, further legislative changes will be implemented in the UK to mirror the provisions of the DECGT. As such, the recommended course of action would be to cease any potential greenwashing marketing activities as soon as possible.

Conclusion

You may wonder: what can a business do to use its environmental credentials successfully as part of its wider branding strategy?

One of the recommended solutions would be to apply for permission to use so-called certification marks, such as “Fairtrade”, “Vegan” or “B-Corp”. Certification marks can be registered in the UK and in the EU and they provide a guarantee that the goods and services bearing them meet a certain defined standard or that they have a particular characteristic.

They are usually owned by trade associations, government departments or other bodies whose responsibilities include defining certain standards. The application criteria are publicly available. If you believe you meet the relevant criteria, you are able to apply for permission to use a certification mark in relation to your products and services.

Certification marks, due to their role and origin, are perceived as trustworthy by consumers and they can be used successfully as a badge of your business credentials alongside your main branding.

Otherwise, if the “green” element remains part of your branding strategy, a recommended approach would be to ensure that the brand itself and the associated marketing materials are accurate and that they do not overstate the green credentials of your business to minimise the risk of potential legal issues arising as a result.

If you have any queries related to the protection or enforcement of your Intellectual Property rights, please do not hesitate to get in touch with one of our experienced Intellectual Property lawyers.