Green Marketing - Challenges with Net Zero Claims

As consumers are becoming more conscious about their environmental footprint when purchasing goods or services, there is an increasing commercial value for companies to advertise themselves as environmentally friendly by, for example, making environmental claims about their goods or services. An environmental claim is defined as a claim which suggests or otherwise creates the impression in a commercial communication, marketing or advertising that a good or service has a positive impact on the environment or is less damaging to the environment than competing goods or services.

The relationship between the Swedish Marketing Practises Act (MPA) and environmental claims is currently a point of discussion in Sweden. In 2022 and the beginning of 2023, several judgements and decisions have been delivered by the Swedish Patent and Market Courts and Reklamombudsmannen (a self-regulatory organisation for advertising in Sweden) regarding the legality of such claims.

In 2 February 2023, the Swedish Patent and Market Court concluded that Arla Foods’ (a dairy company) wide-spread use of the claim “net zero climate footprint” on its milk packages was a misleading and unfair marketing practice. Consequently, the court imposed a prohibition under a conditional fine on Arla Foods not to use this or other similar claims in advertising.

Arla Foods argued that the climate emissions caused by the production of the dairy product in question were fully off-set by climate credits that the company bought from organisations which took climate compensatory measures, such as planting trees and preventing deforestation, and that the net zero-claim therefore was accurate. According to Arla Foods own calculations the net zero-result was achieved 100 years from the occasion the omissions.

The court initially ruled that the average consumer attached most attention to the part “zero climate footprint” of the claim as the word “net” was written in another colour and in a lesser font size and placed alongside the expression “zero climate foot print”. Thereafter the court concluded that the claim suggested that the dairy product in question did not affect the climate at all or at least that the climate footprint caused by the product was compensated for completely.

The court pointed out that it was troublesome that the calculations referred to a result which was achieved only after 100 years from the emission occasion, as this timeframe is so wide that no living being can overview it. Even though Arla Foods had a margin for uncertainty factors in its calculations, the court meant that it was unfeasible to draw any firm conclusions that the net zero-result would actually be achieved after 100 years. Hence, the court held that Arla Foods had failed to substantiate its claim, that it was misleading and constituted an unfair commercial practice.

In sum, the Arla-judgement shows that environmental claims are assessed strictly by the Swedish Patent and Market Courts and that companies which make such claims must be able to substantiate them with robust and reliable evidence. Companies cannot simply make environmental claims and rely on the fact that they take climate compensatory measures, such as planting trees, which off-sets the goods or services climate footprint far in the future.

Co-author: Andreas Salehi