EU bans misleading sustainability claims to curb greenwashing: Can Asia follow suit?

The members of the European parliament (MEPs) are adapting a new law banning greenwashing and misleading product information. As such, a number of problematic marketing habits related to greenwashing will be added to the European Union's (EU) list of banned commercial practices.

These include banning the use of general environmental claims such as "environmentally friendly", "natural", "biodegradable", "climate neutral" or "eco" without first being able to show proof. The use of sustainability labels will also be regulated. In the future, only sustainability labels based on official certification schemes or established by public authorities will be allowed in the EU. 

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The directive will also ban claims that a product has a neutral, reduced or positive impact on the environment, as well as products with unfounded durability claims, prompts to replace consumables earlier than strictly necessary and presenting goods as repairable when they are not. 

The ban seeks to protect consumers from misleading marketing practices and to help them make better purchasing choices. It also aims to make product labelling clearer and more trustworthy.

While this is a huge step forward in the EU, will these standards be able to successfully make its way eventually to Asia and if so, what would that look like in a local context?

What about greenwashing in Asia?

Sustainability reporting is now mandatory in territories such as China, India, Japan, South Korea, Hong Kong and Singapore. However, a report by professional services firm EY in December 2022 found that while more companies now disclose environmental, social and governance (ESG) data, following through with action remains an issue.

"Without question, countries such as Singapore's business-friendly environment, lack of clear regulations around environmental claims, weak environmental NGOs and timid mainstream media have meant that brands are free to make whatever green claims they want," said Robin Hicks, deputy editor of Eco-Business said.

"Low consumer awareness of what greenwashing is and why it is a problem has meant brands can get away with greenwashing, which is often unintentional. Culturally, there is less push back against greenwashing in Asia as there are in other countries. There is a general sense that businesses and the government can be trusted to make genuine green claims," he added. 

Agreeing with him, sustainability professional and content creator Qiyun Woo said that the EU's proposed ban provides a "very interesting framework" for marketers and consumers to think about marketing sustainability and follow though action especially when it is an industry prone to greenwashing.

Woo added that this is especially since there have been many instances where even those familiar with sustainability still struggle to tell if a product is being greenwashed.

"It’s easy to spot blatant greenwashing incidents but there are also so many small instances where even I, someone very involved in the sustainability scene, can’t tell if it’s considered greenwashing or not," Woo added. "Good intentions are always welcomed, but it gets tricky when it’s what justifies a marketing outcome that potentially could cause harm to the cause such as confusion or disillusionment."

True enough, a 2023 study by the Competition and Consumer Commision of Singapore (CCCS) found that the most common form of greenwashing in online marketing is unsubstantiated claims.

According to the study, 51% of online product claims were found to be vague, with insufficient elaboration or details to support the claims.

In addition, the study also found that 14% of the online product claims use technical language that make it difficult for consumers to understand or verify the claim.

"There are many guides out there already to help marketers and brands avoid greenwashing," Woo said, adding:

What’s needed is regulation, and also internal hard lines of what people are willing or not willing to say.

Implementing greenwashing controls in Asia

Currently, some countries across the Asia Pacific region such as South Korea and Hong Kong have implemented fines, tightened advertising codes of conduct and called out greenwashing advertisements. 

Just last week, the Australian Association of National Advertisers implemented a code to ensure that advertisers and marketers apply rigorous standards when making environmental claims and to increase consumer confidence to the benefit of the environment, consumers and industry. 

Such codes and regulations can be applied in Asia, for as long as they're clearly communicated and properly enforced, said Hicks.

"To regulate against greenwashing properly, you would need an organisation with more teeth than a self-regulatory industry-backed body to look into serious cases," added Hicks. 

There are still many brands that are walking a thin line on greenwashing in Asia.

Implementing a greenwashing ban, according to Hicks, come in a few stages, starting with a precedent that would serve as a warning to others to avoid misleading consumers with spurious or vague green claims. 

This is especially when there are plenty of brands such as energy and fossil fuel brands that claim to be environmentally friendly. 

Alternatively, Asia can always look to its neighbours to find out the next steps in successfully implementing a rules or regulations on environmental claims.

"It's worth looking at how Australia's draft rules on environmental claims work as a model that might work elsewhere around the region," said Hicks.

Additionally, it is worth looking into existing frameworks and laws. Currently, CCCS has developed a set of tips to help consumers better understand environmental claims and make more informed purchasing decisions. These tips should be followed by marketers too, said Shufen Goh, principal and co-founder of R3 and president of the Association of Advertising and Marketing Singapore.

"This is an opportunity for marketers to take a step back, assess their ethics and approach to marketing, and review the way they position their brands," said Goh.  "Consumers today want the truth, and showing effort in honesty will help consumers view brands in a more positive light even if they have not fully reached their environmental, social and governance goals," she explained.

"In this era of cancel culture, brands need to stay grounded on authenticity, and any claims that can be misconstrued as greenwashing is best avoided as the risk outweighs the benefits," Goh added. 

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