New Delhi: Companies looking to portray a ‘green’ image without adequate proof will soon have to deal with a strict set of checks and balances.
The Centre will release the final rules on greenwashing (false or misleading environment-friendly claims) on Monday, seven months after the draft guidelines were issued, two people aware of the development said on condition of anonymity.
“These new guidelines will require all manufacturers, businesses, and organizations to provide verifiable evidence for any claims they make about selling eco-friendly or green products,” the first person cited above said, adding that violations will attract hefty penalties as per the provisions of the Consumer Protection Act 2019, which could include fines up to ₹1 crore or even involve imprisonment.
Starting Monday, companies cannot use generic terms such as clean, green, eco-friendly, eco-consciousness, good for the planet, minimal impact, cruelty-free, carbon-neutral, etc., without valid certification, the people cited above said.
They will also have to showcase a valid certificate in support of any environmental claim about things like carbon offsets, carbon neutral, compostable, degradable, non-toxic, 100% natural, ozone-safe and ozone-friendly, recyclable, refillable, renewable, etc.
Companies, individuals, or organizations would have to make their claims public—through advertisements, packaging, labelling, via QR codes, or through web links. “They will have to get their claims verified by the government or government-accredited certification agencies,” the first person added.
“The new guidelines will apply to all sectors, including consumer goods, the energy sector—a hotspot for greenwashing—real estate and construction, the automotive industry, and food and agriculture, among others,” the second person said.
Why the new rules?
The draft guidelines were released by the Central Consumer Protection Authority (CCPA) on 21 February for public consultation.
The new rules have been introduced to help consumers make informed choices about the products they are buying, especially because companies often exaggerate their environmental claims. From fashion to food, and energy to finance, companies are increasingly using green labels to attract eco-conscious consumers, often without substantial backing.
“If companies are using the term green for commercial purposes, it is just an eyewash,” said Gaurav Kumar Bansal, a Supreme Court advocate who specialises in environmental laws, adding that if products are not eco-friendly, the companies are deceiving consumers.
He cited the example of firecrackers that are sold as ‘green crackers’, pointing out that this is misleading, as green crackers are as hazardous to the environment as any other firecrackers.
“The certifying agency should also be accountable for issuing any fake certificates,” he said, adding that these certifications should come from government bodies, not private organisations.
Anup Garg, founder and director of sustainability consulting firm WOCE (World of Circular Economy) said that the proposed rules on greenwashing lay a strong foundation for ensuring transparency in environmental claims made by manufacturing companies.
“By mandating substantial evidence for marketing products as eco-friendly or emission-free, the guidelines act as a deterrent to misleading claims and help build consumer trust,” Garg added.
What about violations?
According to Section 24 of the Consumer Protection Act, the CCPA has the power to impose penalties, with fines of up to ₹50,000, which may escalate to ₹1 crore in cases of repeated violations.
And as per Section 21, which establishes penalties for misleading advertisements, first-time offenders may face fines of up to ₹10 lakh, while repeat offenders can incur fines of up to ₹50 lakh and possible imprisonment of up to two years.
Additionally, Section 40 protects the rights of consumers, allowing them to seek compensation for any damages or losses incurred due to violations.
Global parallels
There are examples of anti-greenwashing rules in advanced countries. For example, UK’s Competition and Markets Authority (CMA) has a Green Claims Code, which was introduced in 2021. Its mandate is to protect consumers from misleading green claims.
Then, the European Union’s (EU’s) Green Claims Directive requires companies to back up their voluntary green claims with life-cycle assessments and third-party verifications.
According to the European Parliament’s website, the European Commission had proposed this directive on 22 March 2023 to improve transparency and combat greenwashing. The European Parliament adopted its position on 12 March 2024, and the Council approved a general approach on 17 June 2024. Interinstitutional negotiations are set to begin soon, as per the website.
India’s regulations on green claims and greenwashing are similar to those in the UK and EU. All three focus on transparency and accountability in environmental claims made by companies.