Greenwashing: Why Unsubstantiated Environmental Claims Can Become Costly

Why environmental claims have become a risk

For years, a business has advertised “climate-neutral production” on its website. Behind it is a contract for offset certificates; emissions have not fallen. For a long time, this was common. Since fall 2026, such a claim has been prohibited toward consumers in Germany, and even in business-to-business sales it can be challenged as misleading. If you are unlucky, you receive a cease-and-desist letter from a competitor or association, with an undertaking to refrain and costs.

The guiding question is: Which environmental claims are risky today, whom do the new rules apply to, and how does a business check its own communication? To answer it, we first clarify the terms and the legal situation, look at how widespread unsubstantiated claims are, and present a thinking model that shows when communication becomes greenwashing. Then we weigh two responses to the risk and derive a checking procedure.

What is greenwashing, and what is an environmental claim?

Greenwashing refers to communication that makes a company, product, or service appear more environmentally friendly than it actually is. This can be a false statement, but also a true one that creates a false impression, for example by highlighting a small part and concealing the large one.

Legally, the issue is environmental claims: any statement, depiction, or label suggesting that a product or company has a positive or no impact on the environment or is less harmful than others. Two kinds are distinguished.

• Generic environmental claims such as “environmentally friendly,” “green,” “climate-friendly,” or “ecological,” which do not name a specific property.
• Specific environmental claims, which name a measurable property, for example “packaging made of 80 percent recycled material” or “power consumption 20 percent below the previous model.”

A third term is important: offsetting. This means compensating for emissions by buying certificates, for example from reforestation or climate protection projects. The emissions of your own business do not fall as a result. Precisely this distinction between reducing and offsetting is at the heart of the new rules.

What has applied legally since 2024 and 2026?

1. February 28, 2024: EU Directive 2024/825

   The EU adopts the directive on empowering consumers for the green transition, often abbreviated EmpCo. It adds several environmental claims to the prohibition of unfair commercial practices.

2. June 27, 2024: Federal Court of Justice ruling

   In the case of a confectionery manufacturer (case no. I ZR 98/23), Germany's Federal Court of Justice ruled that advertising with an ambiguous environmental term such as “climate-neutral” is only permissible if its meaning is explained in the advertisement itself. A reference to a website was not sufficient. Reducing and offsetting emissions are not equivalent, the court said.

3. February 2026: implementation in Germany

   The Third Act Amending the Act Against Unfair Competition (UWG) transposes the rules into German law.

4. September 27, 2026: application

   The new rules apply. According to the chamber of commerce in Halle-Dessau, there is no general sell-off period for existing stock.

5. November 2026: Green Claims Directive

   The planned directive with detailed substantiation requirements for environmental claims is not being pursued. The Commission announced its withdrawal in June 2025, and the work program of November 2026 provides for it.

Does this also apply in business-to-business sales? The list of practices that are always prohibited, the so-called blacklist, concerns conduct toward consumers. The general prohibition of misleading commercial practices in the UWG, however, also protects other market participants, i.e., business customers. And competitors can challenge a misleading claim regardless of whom it addresses. If you sell to businesses, you should therefore use the new standards as a guide, as Sustainability as a selling point also recommends.

How widespread are unsubstantiated environmental claims?

The new rules have a background. In 2020, the European Commission had environmental claims on products and in advertising examined and used the results to justify its proposal for a Green Claims Directive.

In their analysis of Directive 2024/825, Kuzior and Krawczyk (2026) refer to an EU-wide survey from 2022 according to which 56 percent of consumers had encountered misleading claims about alleged environmental properties. The authors see the new blacklist as a declaration of war on pseudo-environmental marketing and on buying labels from organizations that mainly confirm what the buyer wants to hear. The figures mostly concern consumer goods. For small and mid-sized firms, they mainly show how closely legislators are now watching the field.

The thinking model: the four types according to Delmas and Burbano

In 2011, the researchers Magali Delmas and Vanessa Cuerel Burbano presented a model that still shapes the discussion today. They classify companies by two questions: how good is actual environmental performance? And is it communicated positively? This results in four types.

According to this, greenwashing is not a problem of environmental performance alone, but of performance and communication drifting apart. A business with a mediocre environmental record that stays silent about it is not greenwashing. A business with a good record that exaggerates, on the other hand, can be. The authors describe external drivers such as pressure from customers and investors under unclear regulation, organizational ones such as incentives and coordination within the company, and individual ones such as overconfidence.

An analogy makes this tangible. A craftsman who promises “master quality” but works to an average standard loses trust as soon as the first customer looks closely. One who does good work and promises nothing gives away an opportunity. One who describes exactly what he does and proves it wins both: the order and the reputation.

Greenwashing does not begin in production but in the sentence that promises more than the evidence can carry.

Stay silent or substantiate? Two responses to the risk

The first response is often called greenhushing, staying silent out of caution. It is understandable, but rarely wise for suppliers. As ESG ratings and the article on sustainability in sales show, large customers and banks increasingly demand information. Those who stay silent sink to the bottom in these assessments.

A warning from research applies to both responses. For sport, Traberg, Orr, and Horbel (2026) expect that organizations may respond to stricter rules with new terms that continue greenwashing in a different form. Their conclusion: it is not enough to change communication; environmental practice itself must be verifiable with metrics and reports.

I therefore consider the second response the right one, with one qualification: substantiating means becoming specific. “We are sustainable” is risky and convinces no one. “Our power consumption per component fell by 12 percent from 2024 to 2025, here is the measurement” is permissible, verifiable, and valuable for a buyer.

The evidence check: test every claim before it goes out

From the thinking model, I derive a checking procedure that I call the evidence check. It brings performance and communication back into line by tying every claim to its evidence.

1. Collect claims

   Go through your website, brochures, packaging, quotation templates, email signatures, trade fair stands, and social media profiles and note every statement with an environmental reference, including images, colors, and labels.

2. Determine the type

   Classify each claim: generic, specific, label, offsetting, future promise.

3. Assign evidence

   For each claim, record which proof supports it: measurement, invoice, certificate, test report. Without evidence, the claim cannot be sustained.

4. Reword or delete

   Turn generic claims into specific ones, delete offsetting claims or describe them precisely as a contribution to a project, remove labels without a certification scheme.

5. Define the process

   Designate who checks new claims before publication, and store the evidence centrally.

Scope and limits

Greenwashing is a special case of a general problem: a business says more than it can prove. The same discipline applies to testimonials, references, and performance promises, as Testimonials and references describes. The portrait of Anita Roddick shows how closely values, advertising, and credibility are connected. If you are revising your website anyway, you should plan the evidence check right away, as in A website that brings inquiries.

The limits are clear. How courts will interpret the new rules is still open in November 2026, because they have applied for only a few weeks. Whether and how far the blacklist standards will radiate into business-to-business sales via the prohibition of misleading practices will become clear in case law. The model by Delmas and Burbano is a typology, not a measurement, and the EU figures come from a 2020 study mainly on consumer goods.

Conclusion: which environmental claims can become costly

To the guiding question: since fall 2026, the risky claims are above all generic environmental claims without recognized proof, climate claims based on offsetting, self-made labels, and future promises without a plan. Toward consumers they are prohibited; toward business customers, the general prohibition of misleading practices applies. According to Delmas and Burbano, greenwashing arises where performance and communication drift apart. The way out is not silence, but specific, substantiated claims.

The sober conclusion for a small business: an environmental claim is only worth as much as the evidence you can present on request.

• Collect all environmental claims on your website, in brochures, quotations, and signatures.
• Classify each claim as generic, specific, label, offsetting, or future promise.
• Note the evidence for each claim, or reword or delete it.
• Remove claims such as “climate-neutral” that are based on offsetting.
• Designate a person who checks new claims before publication.
• Have doubtful wordings checked by your chamber of commerce or a specialized law firm.