The new sustainability advertising code: lessons from one year of review by the advertising code committee

1. Introduction

Many companies are increasingly committed to sustainability. Many commercials and advertisements therefore highlight the sustainability benefits of a product or service or a company's efforts towards a 'greener' society. Such ads must comply with certain legal rules for advertising directed at consumers. In addition to this civil law framework and public law enforcement by the Netherlands Authority for Consumers & Markets (Autoriteit Consument & Markt or ACM, see also our blogs on ACM enforcement in 2022, 2023 and 2024), a set of rules has also been drawn up – by way of self-regulation – by companies that advertise products or services (to which we will refer as 'advertising companies'), united in the Dutch Advertising Code Authority. These rules for responsible advertising are set out in the Dutch Advertising Code (DAC).

So-called 'Special Advertising Codes' have also been drawn up for specific products and services, which apply alongside the DAC. Specific to 'sustainability claims' is the Sustainability Advertising Code (SAC), which came into force in February 2023. There are two types of sustainability claims. The first type are 'environmental claims', which suggest or otherwise give the impression that a product or activity has a positive, less, or no impact on the environment. The second are 'ethical claims', which give the impression that a company's production or activity has taken place according to certain ethical standards.

If an advertising company does not comply with the DAC or one of the Special Advertising Codes, consumers or other businesses can file a complaint about the relevant advertising with the Advertising Code Committee (ACC). The ACC works in alternating combinations and always consists of one representative per relevant industry (such as 'Advertising' and 'Retail'), as well as a chair who has experience as a judge. Following a filed complaint, the ACC rules on a contested advertisement's compliance with the rules of the DAC. In doing so, the ACC may recommend that the advertising company stop using the advertisement. As an additional 'measure', the ACC may issue a press release about its ruling. A ruling by the DAC may be appealed before the Appeals Tribunal (the AT). 

Rulings and recommendations by the ACC and the AT are not binding. However, recommendations do appear to be followed in general. ACC rulings are authoritative and are regularly in the news. An ACC ruling can also be a stepping stone to civil proceedings, in which claims may be partly substantiated on the basis of the ACC ruling. A consumer may choose (first) to file a complaint with the ACC because this procedure is relatively low-threshold and its costs are low compared to proceedings before the court. In principle, anyone can file a complaint. The procedure at the ACC is informal and it is not compulsory to be assisted by a lawyer.

In the first year since the SAC came into force, i.e. from February 2023 to January 2024, there have been 22 rulings by the ACC and the AT in which an advertisement has been tested against the SAC. In this blog, we address the lessons that can be drawn from an analysis of these rulings. We conclude with some key takeaways.

2. Background of the Sustainability Advertising Code

The SAC aims to encourage responsible sustainability advertising. It replaces the Environmental Advertising Code, which applied until 1 February 2023. The SAC stipulates that sustainability claims must be clear, specific and unambiguous, so that the average consumer is not misled. The code contains specific criteria that sustainability claims must meet, such as:

• Clarity and transparency (Article 3 SAC): advertisements must be clear and understandable to consumers, without vague or misleading terms. In addition, when communicating about sustainability ambitions, a company must make it clear that these are future goals and not the current situation.
• Substantiation with facts (Article 4 SAC): claims must be able to be supported by concrete and verifiable data and thus be demonstrably correct.
• Comparisons (Article 7 SAC): claims that consist of a comparison must clearly state the specific aspects between which a comparison is made and must pertain to objectively comparable products.
• Designations and symbols (Article 8 SAC): 'sustainability designations' and 'sustainability symbols' may be used only if their origin (e.g. the issuer of a label) is clear and there can be no confusion among consumers about the meaning of the designation or symbol.

3. Rulings by the ACC and the AT on the SAC

3.1 General observations

In the first year since the SAC came into force, 22 rulings have been issued under the SAC, 19 of which by the ACC and 3 on appeal by the AT. Complaints were dismissed in eight (first instance) proceedings.

An analysis of the rulings of the ACC (where we refer to "ACC" for brevity's sake, we mean both the ACC and the AT) shows that both bodies "stick to their last". They assess only the specific advertisement(s) to which the complaint relates, in order to then either issue a recommendation or not, and are not tempted to consider, for example, the rectification of an advertisement or the progress of an advertising company's progress towards becoming compliant with the DAC. In 2022, for example, the AT ruled that certain statements by Arla on its packaging were misleading. In 2023, a new complaint was filed against Arla, which was (partly) about it being slow to change its packaging. In its ruling, the ACC considered that assessing the progress of the compliance process did not fall within its competence.

3.2 Absolute claim vs. sustainability ambition

Article 4 SAC states that "absolute claims" must be demonstrably true. The ACC applies a strict test here. If a company unreservedly advertises a certain sustainability benefit or result, it must actually be beyond doubt that the claim is correct. Even great plausibility is insufficient. The burden of proof for the accuracy of the sustainability claim lies with the advertising company.

If a claim involves a sustainability ambition, the ACC applies a different test. If such a claim clearly involves an aspiration and not an absolute result (already achieved), the ACC tests whether there is a concrete and verifiable plan that should not be considered unrealistic in advance. Sustainability ambitions can, for example, be communicated by indicating that the company is "working hard" to achieve a certain goal, if there is actually a realistic plan underlying these statements. On that basis, the ACC rejected a complaint against an advert in the Volkskrant of "over 300 industrial companies and industries" in which they claimed to be "working hard" to "become drastically greener".

It is important to align the wording of the sustainability ambition with the degree of substantiation of the underlying sustainability plan. In a ruling by the AT against an advertisement by Primark, the AT considered that an absolutely formulated ambition ("By 2030, we will have halved our emissions") creates an expectation in the average consumer that it will be fulfilled. The more absolutely the sustainability ambition is formulated, the higher the requirements the ACC thus appears to place on the feasibility and substantiation of the underlying sustainability plan. 

3.3 No vague claims and comparisons

The ACC has made it clear in its rulings that sustainability claims must be worded accurately to avoid consumers getting a misleading picture of the advertising company's sustainability efforts. For example, in a ruling against Shell, the ACC considered that claims that a product's CO2 emissions are "offset" may be made only if the emissions are fully offset.

In addition, terms such as "cleaner", "greener" and "more sustainable" are not absolute claims, but comparative statements. The ACC states that such comparisons are allowed only if it is clear what the advertised product or service is being compared to. Moreover, the comparison must be based on 'essential characteristics' of the product or service. An example is that a bottle of hand soap may not be presented as 'more durable' than another brand of hand soap on the basis of the number of pumps of soap one extracts from a bottle; instead, the amount of active ingredient must be compared. 

3.4 The 'average' consumer

When the ACC talks about the average consumer in the context of sustainability advertising, it does not simply mean the average Dutch person. Instead, it is referring to a consumer with above-average focus on sustainability who (thus) adjusts his or her economic behaviour accordingly. This is the consumer specifically targeted by sustainability advertising.

An example is the ING ruling by the ACC (which tested an advertisement against the Environmental Advertising Code; the predecessor of the SAC). This ruling interpreted the 'average consumer' as the consumer who bases his or her choice of bank on the sustainability efforts of different banks. Thus, although the average Dutch person may not consider the sustainability efforts of banks as a decisive factor in choosing where to bank, the ACC considers the above-average sustainability-focused consumer, since it is precisely that consumer who is the target audience for sustainability advertising. 

This approach emphasises that sustainability claims should be not only accurate and substantiated, but also aligned with the expectations and understanding of the specific consumer group targeted by the advertising. This ensures that the advertising is fair and non-misleading to the target group most likely to be affected by the message.

3.5 Context matters, 'small print' does not

When assessing sustainability claims, the ACC looks at the statement as a whole, taking into account surrounding statements. This means that, for example, other Instagram posts or ads in the same campaign are also considered. The context is considered from the perspective of the average consumer, who will interpret the communication as a whole and will not consider each individual part.

According to the ACC, the average consumer cannot be expected to read the 'small print', such as – as the aforementioned Primark ruling shows – text displayed in a smaller font on a billboard in a shop. Therefore, all relevant information and context should be presented clearly and comprehensibly in the statement itself. Using a smaller font or hiding important information in footnotes could result in the ACC finding the statement misleading. 

3.6 Green power

Article 3 SAC stipulates, among other things, that sustainability claims may not be presented in vague terms. The explanation of the article states that terms that are open to interpretation, such as 'green', may be used only if it is made clear in the advertisement what specific interpretation the advertising company gives to the term. However, in the specific case of the claim 'green power', the ACC's rulings have consistently established that a company may advertise with this claim if it has certificates (Guarantees of Origin, GoOs) to prove that the power was generated using solar, wind, water or biomass. In that case, the advertising company does not have to explain the term 'green power' in the advertisement. It will be interesting to see whether the ACC will develop a similarly consistent approach in its rulings with regard to other sustainability claims as well.

4. Conclusion

The analysis of the ACC rulings in the first year of the SAC leads to the following takeaways for advertising companies that wish to communicate their sustainability efforts to consumers:

• The ACC tests absolute claims strictly; the advertising company must demonstrate that the claim is correct beyond any reasonable doubt. If a claim is phrased as an aspiration or ambition, the ACC tests whether there is a concrete, realistic plan to realise the ambition.
• Vague claims and comparisons should be avoided. It is therefore advisable to articulate sustainability claims accurately and precisely and, when making comparisons, to make it clear which product or service and which specific feature of that product or service is being compared.
• The 'average consumer' in the ACC's rulings on the Sustainability Advertising Code is the consumer who consciously aligns his or her economic behaviour with the sustainability of a product or service. 
• The ACC does not view an advertisement that is part of a campaign or website in isolation, but in conjunction with the expressions surrounding it.
• With regard to 'green power', the ACC's rulings show a consistent approach that this claim is deemed sufficiently substantiated if the advertising company has GoOs. In that case, the 'vague' term 'green' does not need to be further explained in the advertisement itself. It is possible that the ACC will also develop a consistent approach with regard to other claims.

We look forward to the further developments of the ACC's rulings under the SAC and will keep a close eye on them.