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Complexity of creating environmentally responsible brands

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Rachna Bakhru of RNA Technology and IP Attorneys discusses how companies are focused on green marketing and how brands are winning consumer trust

India’s Prime Minister Narendra Modi announced at the 2021 United Nations Climate Change Conference, COP26, that by 2030, India would increase its non-fossil energy capacity to 500 gigawatts (GW), fulfill 50% of its energy requirements from renewable sources, reduce its carbon intensity of an economy by 45%, and reduce total projected carbon emissions by 1 billion tonnes.

Environmental issues are now mainstream and integrated into government and business decision-making. The millennials stand up for the change and factoring in the environmental issues in their purchase decisions. As a result, the past few years have seen consistent consumer demand for sustainable products.

Today's markets are flooded with products that claim to be eco-friendly, sustainable, or natural, which are unsupported with further information. At times these are too good to be true, e.g. companies are claiming net-zero or carbon neutral.

A claim of ‘carbon neutral’ usually means a business has offset its emissions by investing in projects that reduce environmental harm in other ways. These trade-offs are often not as simple to achieve as companies project.

Measuring the value of carbon offset projects is a complex structure. Then there are businesses making claims such as ‘made from 100% recycled material’, ‘we eliminate deforestation in our supply chain’, ‘waste to energy recycling’, without corroborating information and with no framework in place to check these tall claims.

Greenwashing

Greenwashing can profoundly affect consumer and investor confidence in green products and environmentally responsible firms.

In the process, they are creating a general environment of distrust with stakeholders reluctant even to reward genuine companies working towards environmentally friendly performance.

In the absence of specific consumer guidelines, to address greenwashing claims, the consumer must do their research to determine the genuineness of such claims. For the average consumer, it can be challenging to assess which companies are taking meaningful steps to combat climate change. There is a dire need for regulations or green guides to regulate environmental claims in this scenario.

India's trademark laws

The Trademarks Act does not bar anyone from registering the words 'carbon neutral', 'zero carbon' 'net zero' or 'sustainable’.

A search in class 9 of the Indian trademarks registry database that covers technology goods, computer hardware, and software show several registrations of the terms mentioned above.

These should not have been granted in the first place because these words describe the characteristics of the goods/services. Furthermore, these terms can deceive the public or cause confusion. Registrations of these words somewhat are accreditation or endorsement for the consumer that the company’s claims are genuine.

The Trademarks Registry should issue guidelines to exclude such terms from being granted registration and refuse statutory rights to private businesses.

Consumer Protection Act, 2019

The Consumer Protection Act (CPA)'s objectives are primarily to protect the rights of consumers, prevent unfair trade practices, ensure that no false or misleading advertising is made of any goods or services, and overall prevent violation of consumer rights.

The CPA benefits the consumers to raise their objections against selling defective goods, failure to provide services as agreed, and false claims. There are no specific provisions or guidelines that address false environmental claims.

Advertising Standards Council of India

The Advertising Standards Council of India (ASCI) is an independent body responsible for self-regulation in advertising by its members and ensuring the protection of the interest of consumers; it requires advertisements to conform to its Code for Self-Regulation. Thus, as per regulation, publicity should be legal, decent, honest, truthful, and not hazardous or harmful while observing fairness in competition.

Further, the Indian courts have ruled in some comparative advertising cases, holding that the producers must make legitimate claims in their advertisements and not mislead the consumer.

However, clear guidelines on green advertising or environmental claims would help address the issue and discourage companies from making such claims while retaining consumer confidence. Depending on the need of the hour, the ASCI periodically frames guidelines to manage false or misleading advertisements emerging in the new age, e.g. ASCI has recently released guidelines for advertising virtual digital assets, influencer advertising on digital media, COVID-19 advertising advisory, online gaming, etc. aimed at protecting consumer interests while balancing business needs.

It is time that ASCI releases a guideline for green claims to emphasise their importance to the advertisers and businesses. Along the lines of food labels, the companies should be asked to explain their eco claims in detail, supported with evidence.

It would be useful to provide companies with a straightforward checklist to confirm that their advertisements are clear, accurate and supported with evidence. Further, the CPA needs an amendment to include provisions related to green claims. Also, a guide for the consumers to understand the green terminology will help them make informed decisions.

Here to stay

The green movement is here to stay, which will hopefully help secure a better environment for our next generation.

While companies will continue to focus on green marketing, they must walk the talk to win consumer trust and do good for the planet. The brands need to understand that consumers today look for authenticity.

It is time for a green ecosystem with transparency and genuine interest in minimising the environmental impact. Only then will there be a win-win situation.

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