BGH Climate-Neutral Advertising Ruling

The BGH climate neutral advertising ruling in brief

In the BGH climate neutral advertising ruling of 27 June 2024 (I ZR 98/23), the Federal Court of Justice held that advertising with an ambiguous environmental term such as "klimaneutral" (climate neutral) is generally only permissible if the advertisement itself explains which specific meaning applies. Explanations outside the advertisement, for example on a website reached through a QR code, are not sufficient.

The court found that the term can be understood both as a reduction of emissions in the production process and as mere compensation through offsetting, and that the two are not equivalent, because reduction takes priority over compensation from a climate protection perspective. The court's press release No. 138/2024 summarises the decision.

The decision set a strict standard for environmental claims in Germany even before the EU's new rules against greenwashing took effect. Since 27 September 2026, the amended Unfair Commercial Practices Directive, implemented in the German Act against Unfair Competition (UWG), goes further and prohibits claims that a product has a neutral, reduced or positive impact on the environment in terms of greenhouse gas emissions where the claim is based on offsetting. Together, the case law and the new rules have fundamentally changed how companies can communicate about climate performance.

Facts of the case

The defendant, a German confectionery company, manufactures fruit gum and liquorice products sold in food retail, kiosks and petrol stations. In a trade journal for the food industry, it advertised that "since 2021 [the company] produces all products climate neutral", with a logo showing the term "klimaneutral" and referring to the website of a climate partner. The production process was not in fact carbon neutral; the company supported climate protection projects through the partner. The Centre for Combating Unfair Competition (Wettbewerbszentrale) sued for an injunction, arguing that readers would understand the claim as meaning that production itself was climate neutral.

The Regional Court of Kleve (judgment of 22 June 2022 – 8 O 44/21) and the Higher Regional Court of Düsseldorf (judgment of 6 July 2023 – I-20 U 152/22) dismissed the claim. The appeal court reasoned that readers of a trade journal understood "climate neutral" as a balanced carbon footprint that could be achieved through avoidance or compensation, and that the information on how neutrality was achieved, while material, was available via the partner's website, accessible through the QR code in the advertisement.

The holding of the BGH climate neutral advertising decision

The BGH reversed and granted the injunction and reimbursement of pre-trial warning costs. The advertisement was misleading under § 5(1) UWG. Based on the appeal court's own findings, readers of the trade journal, like consumers, could understand "climate neutral" either as a reduction of CO2 in production or as mere compensation. The claim was therefore ambiguous.

The court emphasised that in environmental advertising, as in health-related advertising, the risk of misleading consumers is particularly high and there is a heightened need for information about the meaning and content of the terms and signs used.

Where an ambiguous environmental term such as "climate neutral" is used, the advertisement itself must, as a rule, explain which specific meaning is intended. Explanatory information outside the environmental advertisement is not sufficient. An explanation was necessary in particular because reduction and compensation of CO2 emissions are not equivalent: reduction has priority over compensation from a climate protection perspective. The misleading statement was also relevant to purchasing decisions, because a product's supposed climate neutrality is of considerable importance to buyers.

The new EU rules on green claims

The Empowering Consumers for the Green Transition Directive (EU) 2024/825 amended the Unfair Commercial Practices Directive. Member States had to adopt implementing rules by 27 March 2026 and apply them from 27 September 2026. Germany has implemented the new prohibitions in the blacklist annexed to the UWG. Among them, no. 4c of the Annex to the UWG prohibits making a claim, based on the offsetting of greenhouse gas emissions, that a product has a neutral, reduced or positive impact on the environment in terms of greenhouse gas emissions. Such claims are now prohibited per se, without an assessment of whether they mislead in the individual case.

Further practices blacklisted by the directive, which Germany has implemented in the same annex, include generic environmental claims, such as "environmentally friendly" or "green", where the trader cannot demonstrate recognised excellent environmental performance relevant to the claim, environmental claims about the entire product or business when they concern only one aspect, and sustainability labels that are not based on a certification scheme or established by public authorities. The directive also tightened the rules on future environmental performance claims, such as "net zero by 2040", which require a detailed and realistic implementation plan with verifiable targets and regular independent verification.

What remains permissible

The combination of the BGH climate neutral advertising decision and the EU rules does not prohibit all communication about climate action. Companies can communicate specific, verifiable measures, such as reductions in production emissions achieved and measured, the share of renewable energy used or the carbon footprint of a product calculated by a recognised method, provided that the statements are accurate, clearly explained and not presented as overall neutrality. Claims about the company's support for climate projects remain possible if presented as contributions rather than as neutralisation of the product's footprint.

The explanation requirement set by the BGH also applies to other ambiguous environmental terms, such as "sustainable", "eco" or "CO2-reduced". If a term can be understood in different ways, the advertisement must make clear which meaning applies, with the essential information in the advertisement itself. For packaging, where space is limited, this requires careful design and early legal input in the design process and may favour more specific claims over general ones.

Corporate communication, reporting and the BGH climate neutral advertising standard

The BGH climate neutral advertising decision concerned a product advertisement, but its reasoning extends to corporate communication that serves to promote sales, such as statements on websites, in social media, in investor materials used for marketing purposes and in sustainability brochures. Statements about a company's climate targets and achievements are increasingly scrutinised for consistency with mandatory sustainability reporting. Companies subject to sustainability reporting must disclose transition plans, emissions data and the role of carbon credits, and any marketing claim that goes beyond or contradicts those disclosures creates litigation risk.

Future-oriented claims deserve particular care. Statements such as "climate neutral by 2035" are only permissible under the new rules if they are backed by a detailed and realistic implementation plan with measurable, time-bound targets, allocated resources and regular verification by an independent expert whose findings are made available to consumers. Companies should align such claims with their science-based targets and reporting and avoid relying on offsets to make product-level neutrality statements.

Conducting a green claims review

A structured review helps companies adapt to the new environment. It typically includes the following steps:

1. collect all environmental claims across packaging, advertising, websites, social media, trade materials and sales presentations;
2. classify each claim: generic, specific, product-level, company-level, future-oriented, label-based or offset-based;
3. remove offset-based neutrality claims for products and generic claims that cannot be substantiated by recognised excellent environmental performance;
4. substantiate remaining claims with documented evidence and recognised calculation methods;
5. ensure that ambiguous terms are explained in the communication itself;
6. check sustainability labels against the requirement of certification schemes or public authority labels;
7. set up an approval process for new claims involving legal, sustainability and marketing teams.

The review should also cover claims made by retailers, distributors and influencers on the company's behalf, as companies can be liable for advertising they initiate or control. Supply agreements with customers that require sustainability claims should be aligned with the new rules.

Enforcement and risk

In Germany, misleading environmental claims are enforced mainly through civil injunction proceedings by competitors, business associations such as the Wettbewerbszentrale and consumer associations, which are active in this field. Injunctions can require the withdrawal of products from shelves or the reprinting of packaging, and contractual penalty clauses in cease-and-desist undertakings create further exposure. Since the EmpCo rules took effect, blacklisted claims can be challenged without proof of a misleading effect, which makes enforcement easier. Sanctions under consumer protection law for widespread infringements add a further layer of risk for companies operating in several Member States. Companies should also expect more scrutiny of sustainability reporting, which must be consistent with marketing claims.

Cross-border campaigns and the EU framework

Because the new prohibitions derive from an EU directive, similar rules apply across all Member States, which helps companies running pan-European campaigns. National enforcement cultures still differ, however. Germany's system of private enforcement by competitors and associations, combined with quick preliminary injunctions, makes it one of the most active jurisdictions for green claims disputes. Campaigns that pass review elsewhere may still be challenged in Germany, and German courts apply the strict explanation requirement developed in the BGH case law to claims that are not on the blacklist.

The European Commission had also proposed a separate Green Claims Directive that would have required prior substantiation and verification of explicit environmental claims. The legislative process on that proposal has stalled, and companies should not rely on it being adopted. For now, the UWG as amended, the case law and the general prohibition of misleading practices form the relevant framework. Companies should monitor developments at EU level, including any revival of the substantiation proposal, but build their compliance on the rules that already apply.

How TRW & Co helps

We advise companies on environmental and sustainability claims in advertising, packaging and corporate communications. We review claims against the case law and the new blacklist, help develop compliant communication strategies, draft responses to warning letters and defend clients in injunction proceedings. Our work connects with our commercial and sustainability reporting practices; see also our notes on green claims after EmpCo, net zero claims and offsets and unfair competition law. Please contact us to review your claims. This briefing is general information and not legal advice.