Seen to be green

At a time of heightened environmental consciousness, using green catchphrases and identifiers can be tempting for companies to mislead consumers, writes Sunanda Bharti.

The need for action on the climate has many companies signalling a commitment towards saving the planet’s depleting environment. This has spread to the trademark (TM) system with businesses across the globe, including India, increasingly adopting “green trademarks”.

These trademarks are meant to identify eco-friendly goods and services, indicating the policy of a business towards the environment and also its commitment to corporate social responsibility (CSR) goals. Visually, green TMs usually contain a device using flowers, leaves, foliage, or similar earthy symbols and colours. For example, Indian trademarks like Biotique and Mamaearth have a green trademark. Their products are likely to lead to the presumption of an augmented environmental commitment on the part of the producer.

Section 135 of the Companies Act, 2013, mandates the constitution of a CSR committee for companies that have a turnover of INR5 billion (USD60 million) or more. They are instructed to allocate 2% of their net profit to meet environmental, health, educational and other mostly sustainable development goals.

Whether green trademarks are adopted by businesses with the stated aim to meet their CSR goals is, however, questionable. Scepticism is warranted, especially as in India registration of a trademark is not a prerequisite for its commercial use.

In the absence of any cross-check, which exists if one opts for registration, the presence of umpteen “green” trademarks pollute the market, compounding consumer confusion. One is left to wonder whether the trademark that has been projected as green lives up to its claims, or has been used as a strategy for exploiting consumers.

India has the chance to be among the leaders of the G20 in promoting global sustainability efforts. A crucial aspect of this would be to establish a common definition of what constitutes a green product or service, and dispel the present inconsistencies that confuse consumers. Until that is achieved, the present scenario can be broadly described under the following three categories:

(1) Green trademarks are meant to indicate that the goods so offered, or the services so rendered, under the concerned mark are environmentally friendly – that in the worst case, the damage being caused to the environment would be made good or offset in some way; for instance, Mamaearth’s promise of planting trees when its products are sold and recycling more plastic than the company uses.

(2) Green trademarks are expected to help consumers make an informed choice about the products they want to purchase and the cause they are willing to support.

(3) By using trademarks as a medium to project their image, companies and businesses seek to differentiate themselves from rivals.

The green race

According to an article by baskaranslegal.com, “there has been an increase in trademark applications combining the terms ‘eco’, ‘bio’, ‘e-’, ‘re’ and the like, as well as imagery of leaves, the Earth or the colour green, to indicate that the goods/services offered are eco-friendly.” It seems that there is a race among some brands to lure consumers through their “green” projections.

Internationally, the outdoor brand “Patagonia” is regarded as a leader in sustainable practices as a certified B Corporation (one that has been certified by B Lab, which is a non-profit company that measures a company’s social and environmental performance). It claims to give back 1% of sales revenue to preserve the environment.

Another outdoor brand, Decathlon, recently started reversing its name to read “Nolthaced” in some markets. The idea is to promote environment-friendly practices by encouraging customers to resell old or unused goods back to their stores so the company can repair the item and resell it. Decathlon chose to maximise the visibility of its approach using its well-known brand.

Going beyond the optics

Presently, businesses see an advantage in using expressions like sustainability and sustainable development to signal their concern and persuade consumers that they are engaged in efforts to fight climate change. False and deceptive claims may easily be made by trademark proprietors to capitalise on this green “wave”. Increasingly, only those who live up to the promises of their green trademarks will be allowed to project themselves as green, and those found to be misleading consumers may find themselves punished in the marketplace and, in time perhaps, in law.

Another term that is ripe for abuse is ESG, used in the world of investing and meaning environmental, social and governmental (concerns) that investors may look to before venturing their hard-earned cash. In practice, the triple bar has proved too high for some to reach and led to the satirical moniker of EHG – Eyewash-Hogwash-Greenwash – being applied.

The abuse of green labelling is termed “greenwashing” and appears to be widespread, extending even to household-name brands.

Problems to be resolved

An awareness problem that exists among businesses and consumers is the definition of what constitutes “green” – whether it implies that the product is made from recycled materials or is biodegradable, or that the business has a commitment towards reducing its carbon footprint, or that the business simply contributes a share of its profits/revenue to an environmental cause, or that it does a combination of all these and more.

In the absence of any clear directive, it would be unfair on the part of any legal system to expect full compliance. Likewise it is only natural, given the imperatives that face us all, for consumers to be at least somewhat swayed by what businesses claim. In India for instance, there is no national policy explaining the phenomenon and the responsibilities or legal implications that might go along with having a green trademark.

Across the globe, an unwritten policy is evolving but trademark authorities in the US, EU and China are beginning to take an increasingly strict view of greenwashing. Further moves, including legislation, are likely.

For now, two suggestions could help curb greenwashing in respect of TMs in India.

(1) A regulatory body overview. It is suggested that a specialised body be set up within the trademark registries to work closely with consumer forums and advertising standards councils to determine and then regulate the granting of green trademarks.

The Advertising Standards Council of India (ASCI) is a voluntary organisation that processes complaints about misleading advertising in general; it should add greenwashing to its agenda and review green claims made in advertisements.

Cogent and unequivocal guidelines should also be formulated for the use of green trademarks.

(2) Green trademarks and certification marks. An alternative is to insist on certification of green trademarks only. A certification mark is a mark of conformity, validity or assurance that indicates the product of the manufacturer rigorously complies with prescribed or accepted quality standards of production, as defined by an independent body. Additionally, a certification mark also indicates the materials of production used and the method or mode of manufacturing.

In general, although certification marks are trademarks, they would ensure a greater degree of regulation than a regular trademark would ever achieve. Objective and measurable parameters would be in place to govern the use of the concerned green trademark, and these can even be tightened over time as necessary.

In the EU, certification marks that regulate greenwashing include: (1) the EU Ecolabel, which was established in 1992 and is recognised even outside the EU. It has established itself as a voluntary label for certifying an independently-verified low environmental impact; and (2) the Carbon Reduction Label, which is a public commitment that the owner of the product or service has pledged to reduce its carbon footprint over the following two years. The standards need to be followed rigorously for the full life cycle of the product, up to its disposal. The certification must be undertaken again after two years, during which proof must be offered that real reductions have been made.

In India, in the context of environmental sustainability, GreenPro and Ecomark are the two marks that enable the consumers to identify eco-friendly products.

GreenPro is intended as a guarantee that the product is environmentally friendly throughout its life cycle. Ecomark is a certification mark issued by the Bureau of Indian Standards for products conforming to a set of standards aimed to minimise impacts on the environment.

So, how can the existing legal landscape can be used to attack greenwashing? The author asserts that a separate law is not needed to prevent greenwashing. There are sufficient legal provisions in various laws that normally prevail in any given jurisdiction, and that can be used to achieve the necessary regulation. These include:

(1) Consumer protection laws. The Indian Consumer Protection Act, 1986, section 2(r) defines unfair trade practice as one which, for the purpose of promoting the sale, uses or supplies of any goods, or for the provision of any service, adopts any unfair method or unfair or deceptive practice including the practice of making any statement, whether orally or in writing or by visible representation which: (i) falsely represents that the goods are of a particular standard, quality, quantity, grade, composition, style or model; and (ii) falsely represents that the services are of a particular standard, quality or grade.

Section 27 of the act suggests penalties as well, which may include imprisonment for a term between one month and three years, or a fine of up to INR10,000 or both.

(2) Trademark law provisions. In India, we have absolute grounds for refusal of registration under section 9 of the above-mentioned act. Analogous provisions existing in the trademark laws of countries, citing the grounds on which a trademark seeking registration ought to be refused, can be used to keep a check on green trademark applications. China is successfully using this strategy to refuse registration.

It is worth noting that, like India, China’s trademark law also prohibits the registration of deceptive trademarks. But there is a huge difference, as with China the registration of TM is compulsory, making it comparatively easy for the IP regime to regulate the usage of green TMs.

Fred Rocafort, lead attorney at Harris Bricken’s intellectual property practice in Seattle, says: “Green trademarks are running into red lights in China. Just about every application to register a mark that includes the word ‘green’ is being rejected. Rumour has it that concerns over greenwashing are to blame although, given the opaque nature of the application process, this cannot be confirmed.”

The rest of the world can learn from the hardline approach of the Chinese if the challenges thrown up by climate change are to get deserving attention. The US and the EU, however, have adopted a lukewarm approach – one that aims to achieve results by promulgating guidelines and issuing directives so that the businesses know what comprises misleading information/deception.

In India, the problems stem not from the absence of relevant laws and rules, but from the lack of awareness and sincerity in the blatant usage of green terms. For instance, most of the expressions signifying green – like “eco”, “clean energy”, “biodegradable”, “herbal”, “natural”, “sustainable”, “recyclable” etc. – can be taken as devoid of meaning, and should be refused registration. Whether such application is on the mind of the Trade Marks Registry is questionable.

The drawback is that these terms will continue to be used by unregistered trademarks. As was pointed out, in India, registration of trademarks is not compulsory. All that one can hope for in such regimes is to at least keep the registration environmentally healthy by refusing to grant monopoly over green terms and tags, unless the matter is covered by an exception.

Elaborating further, the above-mentioned terms may be refused on grounds of section 9(1)(b) as well; if they are used exclusively to designate the kind or quality of the good/service. They may even be taken as generic expressions under section 9(1)(c).

Likewise, under section 9(2)(a), a mark shall not be registered as a trademark if it is of such nature as to deceive the public or cause confusion. A green trademark that falsely projects the use of ecological and sustainable practices should be covered under this.

However, one needs to generate a TM ecosystem that ensures only the deserving manage to register green TMs. In the EU, the process has already started as the EU Intellectual Property Office has created an inventory of harmonised green terms. It has more than 85,000 acceptable green terms under the green EUTM category, which are accepted by all IP offices in the EU, as well as several non-EU countries.

With environmental issues looming large and many of them arising from unchecked consumerism, it is only logical and fair that businesses/trademark owners submit themselves to increased scrutiny in respect of their claims about limiting the damage that they do. If their product or service is advertised as being “greener”, they should be open to a trademark-cum-environmental audit.

Green trademarks should be promoted only if the environmental claim projected is supported by statistics and, ideally, recognised by a reputable standards authority.

SUNANDA BHARTI is a law professor at Delhi University.