‘Greenwashing’ guidelines in India: What they mean for organisations

With evolving focus and awareness, organisations these days are seeking to spell out their commitments towards ESG. This brings to the forefront a set of complexities and challenges around greenwashing, i.e., incorrect claims relating to sustainability features of the products/services. ‘Greenwashing’ can now have significant ramifications as companies are being called out to demonstrate their public positions or statements with supporting facts.

India has recently taken a quantum leap in this direction, and in October 2024, the Consumer Protection Authority (CPA), India introduced the ‘Guidelines for Prevention and Regulation of Greenwashing or Misleading Environmental Claims, 2024’ to promote accuracy of environment-related disclosures and prevent greenwashing.

Globally, the European Union, the Financial Conduct Authority (FCA) - United Kingdom, etc., have introduced anti-greenwashing measures, requiring the companies to make all sustainability-related claims fair, clear and correct.

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What do the guidelines state?

1.

The Guidelines for Prevention and Regulation of Greenwashing or Misleading Environmental Claims, 2024 have defined the term ‘greenwashing’ as a deceptive or misleading practice, which includes concealing, omitting or hiding relevant information by exaggerating, making vague or false statements, using misleading words, symbols, imagery or any unsubstantiated environmental claims, etc.

2.

The Greenwashing guidelines in India prohibit companies/advertisers/service providers from using any generic words like ‘green,’ ‘clean,’ ‘sustainable,’ ‘natural,’ ‘recyclable,’ etc., without having adequate evidence substantiating the claim. They also mandate that environmental claims be supported by accessible evidence based on independent studies or third-party certifications, along with adequate disclosures.

3.

The guidelines promote transparency and adequacy of disclosures by the companies and advertisers to prevent any inaccurate or false claims in a bid to lure customers into buying products/services. In case of contravention of the guidelines, the Central Consumer Protection Authority (CCPA) has the authority to levy penalties under the Consumer Protection Act, which includes a fine ranging between INR 10 lakh and INR 50 lakh depending on the repetition of the offences and criminal liability, including imprisonment of two to five years.

With the implementation of these guidelines, it is becoming increasingly crucial for organisations to ensure that their ESG commitments are genuine and can be substantiated.

What can your organisation do to address risks and ensure compliance with these regulations?

In the absence of a formal programme, an organisation can be susceptible to allegations of greenwashing, which is an important business risk. This risk can arise from actions internally and also from sustainability malpractices within the value chain, involving incorrect disclosures by upstream and downstream partners. To comprehensively ensure compliance, every organisation must consider the following:

Every organisaton should reassess its policies involving sustainability claims across its products, services and stakeholder communications and include necessary amendments in their contracts, communications, procedures, etc.

Organisations should maintain an up-to-date repository of all the backups, certificates and reports substantiating the sustainability statements and claims made by them. Such repositories are essential not just from a regulatory perspective but to be showcased to all stakeholders as evidence of the company’s commitment to its ESG objectives especially around governance.

Starting 2022-23, the Security Exchange Board of India (SEBI) introduced the Business Responsibility and Sustainability Report (BRSR) for the top 1000 listed entities. For the top 250 listed entities, the requirement to report under the BRSR core has also been subsequently extended to its value chain. In both these cases, it is essential for organisations to ensure that the data being reported to regulators and other stakeholders is accurate.

Similarly, for all the claims that the company makes in relation to its products and operations in its advertisements, sustainability reports, etc., it should consider getting them verified through an accredited independent party and even obtain reasonable assurance, wherever required.

Organisations could also consider International Organisation for Standardisation (ISO) certifications like ISO: 14001 (environment management systems) or ISO: 45001 (occupational health and safety) to reflect best standards/practices. This will not only prevent them from furnishing incorrect information to the regulators or stakeholders but also instil confidence about the genuineness of claims made in relation to the products or services.

Conclusion

The launch of these guidelines on greenwashing clearly intends to hold organisations accountable for their statements with public and business implications in case of ethical shortfalls. Organisations need to proactively consider risks of intentional and/or inadvertent misstatements in their ESG and sustainability posture and communication and mitigate these by having a proper strategy.

Introduction of ‘Greenwashing’ guidelines in India

Introduction of ‘Greenwashing’ guidelines in India

What they mean for organisations

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