By: Advait Sharma and Bhadra Anil*

Introduction

The most surprising facet of the human race is that Man sacrifices his health to make money and then sacrifices money to recuperate his health. These words of the Dalai Lama describe, in essence, the current relationship of humankind and the environment. While decades of battles to create environmental awareness have reached its zenith, the need for sustainable products is in demand. As per the recent survey by PDI Technologies, 77% of Gen Z consumers in the US are inclined to pay more for environmentally sustainable products, acting more than every other generation.

Around the end of 2022, when the concept of Environment, Social, and Governance (ESG) was enjoying its primacy in the corporate sphere and within the environmental activist fraternity, the stole the limelight with the introduction of the new phenomenon of Greenwashing. The issue emerged when Sembcorp was accused of exaggerating the environmental benefits and faking its green promises while selling coal-fired power plants in India. The roots of the concept of “greenwashing” are often traced back to the journalist and environmental activist Jay Wester Wield, who used this term in one of his essays about how a hotel chain urged its customers to reuse bathroom towels to reduce environmental emissions in the guise of cutting the laundry costs. He later defined it as “a method of increasing profits rather than genuinely engaging in environmental activities”.

Similarly, the recent lawsuit against H&M, a fast fashion game, claims that the company is deceptively capitalising on the growing segment of conscious consumers with their extensive marketing scheme to greenwash the products and present them as environmentally and sustainably produced. With the increasing demand for sustainability, Companies are under pressure to appear “green” to attract investors, which has made them resort to misleading advertising or marketability regarding environmental concerns. show that 79% of green claims made in advertisements in India are misleading or exaggerated; greenwashing is not just a marketing issue but a legal, economic, and ethical concern.

The Regulations

The juncture where regulations and companies meet is always in conflict. For that matter, Greenwashing is not always blatant fraud; instead, it falls into the grey zone due to its lack of clear definitions, the usage of vague terminologies, and selective disclosure. What would be classified as a sustainable product is not standardised in regulations. Terms like “green”, “Eco-friendly”, and “biodegradable” are all used without proper scientific proof. Companies even highlight small sustainable initiatives while hiding environmentally harmful practices. Therefore, it becomes imperative to understand how different jurisdictions address the concept.

The United States regulates these misleading claims through the Guide for the Use of Environmental Marketing Claims, which regulates the environmental attributes of a product, package, or service in connection with the marketing, offering for sale, or sale of such item or service to individuals. While this comprehensive guide has prohibited misleading greenwashing, it lacks enforceability. Firstly, guidelines prohibit broad and non-specific claims like “eco-friendly”, but it does not specify a methodology or standard for verifying overall environmental concerns. Secondly, it only requires green claim customers. Lastly, the inconsistencies in creating a certifying authority also mark a significant setback.

The European Union’s Green Initiative also lacks a transparent methodology. The directives do not give a uniform assessment criterion. For instance, a clothing brand can claim its products are “sustainable” based on a self-guided carbon footprint. Another brand can use different parameters, even though the former and latter are in the same competitive market, giving rise to confusion. Hence, both companies can legally justify their claims, making it difficult for consumers to compare products reliably.. Further, the inconsistencies with the penalties also create a lack of enforcement.

While the West has been unsuccessful in addressing this, India has another story to be told. The Consumer Protection Act (CPA) does not expressly address the phenomenon of greenwashing; section 2 (47) defines unfair trade practices as a trade practice which promotes the sale, use or supply of any goods or the provision of any service, adopts any unfair method or unfair or deceptive practice. Efforts have not been less, with the RBI and SEBI taking proactive measures to regulate the realm against greenwashing through its   “Framework for acceptance of Green Deposits” and Dos and Don’ts relating to green debt securities to avoid occurrences of greenwashing, respectively. While not addressing it directly, the Advertising Standards Council of India (ASCI) ’s Code for Self-regulation mandates that all claims must be supplemented with transparent factual evidence. This mandate extends to environmental claims as well. It further strengthens its stands with ASCI’s guidelines for celebrities to know about whatever they endorse. These guidelines acted as a pillar of regulation until 2024 came into action, bringing further clarity and enforcement mechanisms. In order to make these regulations under one umbrella in the power conferred under the CPA, the   (New Guidelines) were enacted in October 2024.

Analysis of The New Guidelines

The Central Consumer Protection Authority (CCPA) introduced the New Guidelines to address the much-needed void in the regulation of greenwashing. In this section, we shall analyse this new law.

Firstly, the Guidelines define “Greenwashing” as any deceptive or misleading practice, including concealing, omitting, or hiding relevant information by exaggerating or making vague, false, or unsubstantiated environmental claims. Moreover, using misleading words, symbols, or imagery emphasises positive environmental aspects while downplaying or concealing harmful attributes. Therefore, the act addresses and defines the concept more inclusively and descriptively.

Secondly, Section 3 of the Guidelines which dealt with the applicability of the statutes, states that it applies to – a) all environmental claims; and b) a manufacturer, service provider or trader whose goods, product or service is the subject of an advertisement or to an advertising agency or endorses and whose service is availed for the advertisement of such goods, product or service. This is a positive step in consolidating ASCI’s previous guidelines and the CCPA Act’s regulation of factual misrepresentation under a unified framework.

Thirdly, the most novel introduction of the legislature through these Guidelines is the concept of environmental claims. The act further prohibits engaging in greenwashing and misleading environmental claims. It also mandates that such claims be well substantiated with adequate disclosure. The mandate of substantial environmental claims puts up these obligations. First, that all Generic terms such as ‘clean’, ‘green’, ‘Eco-friendly’, ‘eco-consciousness’, ‘good for the planet’, ‘minimal impact’, ‘cruelty-free’, ‘carbon — neutral’, ‘natural’, ‘organic’, ‘pure’, sustainable, regenerative or similar claims shall not be used without adequate, accurate, accessible qualifiers, substantiation, and adequate disclosure. Second, while using technical terms like Environmental Impact Assessment (EIA), Greenhouse Gas Emissions, and Ecological Footprint, one shall use consumer-friendly language and explain the meaning or implications of technical terms. Thirdly, all environmental claims shall be supported by accessible, verifiable evidence based on independent studies or third-party certifications.

Recommendations

Amid the surge towards greener business standards, India is positioned at a juncture where effective regulation, coupled with transparent corporate conduct and trustworthy technological mechanisms, is essential. In light of recent global examples, including the hardship faced by the EU and the US despite having guidelines, India requires a certifying authority to check the corporation’s violations. Even with the New Guidelines, addressing this persistent issue is impossible. Eco-labels are a viable option, termed third-party certifications, ensuring that a product or service meets specific environmental standards. Without specified authorities and methodology to be adopted, consumers may fall victim to deceptive claims, undermining efforts towards true sustainability. Therefore, transparency and disclosure must be addressed while dealing with these deceptive and misleading claims.

Additionally, Blockchain technology, which uses a decentralised digital ledger system by ensuring immutable and verified records, could act as one of the non-biased and non-influenced tools against greenwashing, thereby ensuring transparency, traceability and accountability claims across all industries. It can be integrated into the business system via a 4-step process, which is as follows: Initially, an immutable supply chain tracking system is to be built, and every step of the production process is recorded on a blockchain ledger. Each transaction gets a timestamp and cannot be altered, ensuring that companies cannot fabricate sustainability claims later. This data collection will then be embedded into blockchain-based smart contracts, automatically verifying whether a company meets sustainability standards before making a claim based on predefined environmental conditions. Consequently, companies will upload the reports on sustainability, carbon footprints, and third-party certification to a selected decentralised blockchain platform, which will be publicly accessible and cannot be altered or deleted. Upon satisfying the predefined condition, the smart contracts, which are self-executing blockchain programs, will tokenise carbon credits embodying the right to emit a specified amount of carbon dioxide into digital assets, ensuring every credit is genuine, traceable, and not double-counted. It will prevent companies from buying fake carbon offsets to greenwash their emission. In addition to the same for specific industries with a range of products, companies for every product can attach a QR code or digital sustainability passport, allowing consumers to scan and verify their entire lifecycle. Thus, by integrating Blockchain, consumers can trust businesses’ sustainability claims, making genuine eco-friendly practices the new standard across industries.

Conclusion

The rise of environmental consciousness has led to the formation of a coin which, on the one side, steered businesses over the globe to adopt greener practices and, on the other side, has given birth to the menace of greenwashing—a sophisticated form of consumer deception. India’s proactive stand with the New Guidelines has laid the groundwork for greater corporate accountability and has bridged the regulatory gap that plagued earlier frameworks. However, regulation alone is not a panacea. The path demands a culture of transparency backed by legislative will and technological innovation to dismantle greenwashing and truly empower consumers. Only then would India evolve from rules to a reliable and evidence-based sustainability model.

*Advait Sharma and Bhadra Anil are law undergraduates at the National University of Advanced Legal Studies, Kochi. The author(s) may be contacted via mail at advaitsharma1770@nuals.ac.in and bhadraanil1765@nuals.ac.in, respectively.