Italy's first greenwashing case between corporates
In a landmark decision, an Italian Court has upheld a company's request for an interim injunction against a competitor, ordering it to stop making "vague, false, and non-verifiable green claims"
The case was brought before the local Court of Gorizia in Friuli-Venezia Giulia by Alcantara S.p.A., a manufacturer of a micro-fiber product used in the automotive sector, against Miko S.r.l., one of its main Italian competitors who markets a suede-like microfiber product, described by Miko to the public as having many green features.
Alcantara argued that Miko's "green claims" constituted an act of unfair competition under Article 2598, §3 of the Italian Civil Code in the form of misleading advertising as defined in the Unfair Commercial Practice Directive no. 2005/29/CE (implemented in Italy by Legislative Decree no. 145/2007), alleging that the claims were vague, false, non-verified or non-verifiable. On that basis, Alcantara requested an interim injunction preventing its competitor from continuing to make such environmental claims.
The "green claims" made by Miko included statements such as "made of recycled polyester", "environmentally friendly”, “natural choice”, “eco-friendly microfiber”, “the first and only microfiber that guarantees environmental sustainability throughout the productive cycle”, “the first sustainable and recyclable microfiber”, “100% recyclable”, “100% recyclable at the end of its lifecycle”, “reduction of energy consumption and GHG emissions by 80%”, “reduction of carbon footprint through polyester recycling”, “absence of harmful substances”, “use of non-harmful dyes”, and “use of neutral and non-toxic dyes”.
The Court ruled that these statements were vague, generic, false, and non-verifiable and needed to be immediately removed from any website, social media platform, tv advertisement, magazines, and other promotional material. The Court also ordered Miko to publish the Court's decision on its website for 60 days.
The issue of greenwashing
The decision is particularly noteworthy because the Court specifically discussed the unfair competitive advantages to be gained from greenwashing given today's heightened awareness of environmental issues, commenting that the ecological virtues claimed by a company or for a product can influence the average consumer’s purchasing choices.
To pass the unfair commercial practices test, the Italian Court applied the guidelines issued by the European Commission ("Guidance on the implementation/application of directive 2005/29/EC on Unfair Commercial Practices", dated 25 May 2016), which provide that green environmental statements must be clear, true, accurate, not misleading, and based on robust, independent, verifiable, and generally recognized evidence, which must consider updated scientific findings and methods. The burden of proof rests on the trader, which must show evidence as to the accuracy of any factual claims in relation to a commercial practice.
According to the Court, Miko's "green claims" did not meet these requirements.
The first case of greenwashing between companies
This is the first time that an ordinary civil court in Italy has ordered a business to stop making "green claims" at the request of one of its competitors.
Previously, decisions in Italy about greenwashing have been issued by the Italian Competition Authorities (the "AGCM") or Italy’s Advertising Standards Authority (the "IAP"). These decisions followed investigations by the AGCM or IAP pursued at the instigation of consumer associations which led only to the imposition of fines. Indeed, the very first case addressing greenwashing in Italy was against ENI S.p.A. and conducted by the AGCM, which imposed on the company the highest possible fine of 5 million euros for using misleading advertising messages in its sales promotion campaign for "Eni Diesel+" fuel. The AGCM's decision was appealed by Eni before the Administrative Court of Lazio, which in November 2021 confirmed the misleading nature of the environmental claims employed in the "Eni Diesel+" campaign and, consequently, the fine imposed.
The Gorizia decision could signal the extension of greenwashing cases beyond the realm of consumer protection investigations, becoming a battleground between competing businesses. This could prove particularly attractive to businesses which can demonstrate that they have lost market share to greenwashing competitors, given the Directive contemplates that damages can also be awarded in such cases.
Could similar cases be brought in other European jurisdictions?
The attention on greenwashing is currently very high, as consumers increasingly seek to buy environmentally sound products.
In January 2021, the European Commission and national consumer authorities (Competition and Markets Authority and The Netherlands Authority for Consumers and Markets) released the results of a survey focusing for the first time on greenwashing. The authorities found that in 42% of the 344 websites examined there was reason to believe that the green and environmental claims made may be false or deceptive and could therefore potentially amount to an unfair commercial practice under the Unfair Commercial Practices Directive (see, https://ec.europa.eu/commission/presscorner/detail/en/IP_21_269).
As the Italian Court decision is based on the Unfair Commercial Practice Directive no. 2005/29/CE, the case could have potential transactional implications for companies in other European jurisdictions applying the Directive. Indeed, the reasoning underpinning the decision follows interpretative guidance given by the European Commission in its guidelines released in 2016, which specifically applies the principles set out in Articles 6, 7 and 12 of the Directive to environmental and green claims. Conversely, absent similar provisions sanctioning unfair commercial practices and a parallelism been the cases, the Gorizia decision could have less straightforward implications for non-EU countries.
If the approach upheld in the Gorizia case spreads elsewhere, corporates – and not just consumer activists or watchdog authorities – will have a very simple tool to use against competitors making environmental claims about themselves, their products or their services, should the green image they portray not correspond to reality.