Concerns over ‘Greenwashing’ are gaining traction in India, now.

Recently, the Advertising Standards Council of India (ASCI) came out with proposed guidelines to bring transparency and accountability in environmental claims-based advertising. The draft guidelines will be open for public consultation till December 31.

With consumers getting more environment conscious and wanting to pick eco-friendly, environment friendly, sustainable products that leave low or zero carbon footprint, companies are racing to come out with such products.

Be it a oil refiner or a coal miner, all are talking about taking the path of ‘green’, “sustainable” and “zero carbon footprint”. In such a situation, chances of making false or inflated claims through advertisements are also high. It is this context that the ASCI came out with draft guidelines. But is it late in the day?

“Greenwashing is just about gaining traction in India. The harm has surely been done by many already, but it is never too late. I do believe this is a cautionary note. Always good to have a set of guidelines . Let the advertiser beware!,” says Harish Bijoor, Business & Brand-strategy Specialist & Founder, Harish Bijoor Consults Inc.

The draft guidelines have a clear focus on various green claims, including positive impact on environment, carbon offset, and biodegradable claims. It states that claims such as ‘environment friendly’, ‘eco-friendly’ ‘sustainable’, and ‘planet friendly’ must be substantially substantiated.

Besides other guidances, regarding carbon offset claims, the draft guidelines state that advertisers must disclose if the time span of the emission reduction. Ads also cannot make carbon offset-related claims of emission reduction that is required by law.

What is the trigger?

“Trend is the trigger: While there is no specific, immediate trigger, the guidelines are timely and respond to the increase in greenwash cases. Such cases are on the rise globally. Cases where green claims are exaggerated keep coming to light and are likely to spike if there are no checks and balances,” says Neha Kumar, Head, South Asia Programme, Climate Bonds Initiative — an international not-for-profit organisation that works on sustainable finance and promotes integrity as a driver to scale up the market.

“To some extent, it is a natural by-product of the overall increase in the green theme whether related to products or projects or their financing. In the last seven years, there has been 73 per cent growth in the eco-friendly product market, a study by TerraChoice, a global marketing company shows,” she says adding that, “At the same time there has also been a surge in false pro-environment claims being made by companies across sectors such as electric appliances, automotives, aviation, foods, cosmetics and fuel.”

She said some companies emphasise the “greenness” of their products without disclosing the necessary caveats, adding “Many prominent financing institutions make net zero claims while continuing to expand their financing of fossil fuels. I’d say that the ASCI guidelines development is a good one, as consumer interest and access to credibly safe, green and affordable goods and services should very much be a part of the green transition,” she adds.

“Some of the consumer aspects are covered in the Business Responsibility and Sustainability Report aka India’s mandatory ESG disclosure guidelines by SEBI which are also included as part of disclosure requirements for companies raising green finance from the market. It requires disclosures to be made on certain parameters like the number of consumer complaints on unfair trade practices, advertising, etc.,” Kumar adds.

Consumer complaints

Narasimha Reddy Donthi, Public Policy Expert and Climate Action Campaigner, feels that the trigger could probably be complaints from consumers.

He says: “From the guidelines, it appears that motivation seems to have come from international business responses on climate change. Advertising industry in India seems to be responding to some of the concerns raised on climate change arising out of consumption and need to transform the products.”

“Irrespective of the motivation, it is a welcome move by ASCI, simply because advertisements have a deeper impact on consumption patterns than imagined. Sometimes ads set the pattern of consumption,” he observes.

However, these guidelines do not refer to legal standards or norms at all, he pointed out. “In the past, complaints about advertisements crossing norms were countered with the argument that they are within the limits (legal frameworks as applicable). Advertisements deal with a range of products, which harm consumers health, environment and ecology. This harm may not be apparent immediately and possibly unlinked with the product/ service directly,” he says.

Also, ASCI is talking about carbon offset claims, the mechanism itself is at a very nascent stage, he said adding “Scams have been highlighted about these claims. It is better to put a cap on such claims, until there is clarity in such mechanisms.”

But will ASCI’s move deliver results?

“It will have a positive impact as integrity is central to the growth of the green market. And we need this market to grow as well as green finance market to grow. SEBI’s circular on Dos and Don’ts of greenwashing is also a response to check the false claims in the financing of green projects. Clear cut definitions and robust third-party assurance will be key,” Kumar says.

“Internationally, in many cases of action against greenwashing, companies and financial institutions have said that the way regulations are interpreted legally can be damaging to the market. As litigations rise, companies might become hesitant in taking the necessary steps for greening their businesses.”

So, quick resolution of such cases will also be important as risk of reputational loss could impact companies’ market share. Clearly, it is a step in right direction as at stake is companies’ reputation. But, the success will depend on implementation and interpretation.

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