For many years the health and beauty industries have had to comply with legal restrictions relating to claims that extol the health benefits of a particular product or cosmetic. A similar approach is now being taken to advertisements that use such terms as "green", "carbon neutral", "environmentally friendly", "eco", "renewable" and "sustainable".

Concerns regarding climate change, fuel costs, scarcity and global warming influence the purchase choices that some consumers and businesses make. Different industries now focus more on the environmentally friendly aspects of their offerings when advertising. Care needs to taken when describing technology, products, services or processes, entities in "green" terms. These claims should not be used in a manner that is misleading, inaccurate and or that is not grounded in fact. Otherwise they may be seen to be engaging in what more cynical commentators have described as "green washing".

Those focusing on the "green" aspects of their services or products will need to be aware of the legal requirements of any "green" claims. Regulators such as the National Consumer Agency may take issue with advertising copy and competitors may also use the law to prevent certain advertisements being displayed or aired or to require changes to be made to them. Legal cases involving advertising can be publicly embarrassing, damage goodwill and the brand and of course can be costly for those involved.

The recent successful legal complaints in relation to Airtricity advertisements are a good example, illustrating the legal issues in this area. Airtricity ran a campaign which not only informed consumers that switching to Airtricity would help save "trees", "bunny rabbits", "our future" and "a lot of money", but which also described the electricity as "green electricity" and compared the offering to ESB and Bord Gais in environmental terms.

Bord Gais Energy, competitors of Airtricity in the Irish residential electricity market, successfully complained to the Advertising Standards Authority of Ireland (ASAI) about Airtricity the press and radio advertisements.

In addition to complaints which dealt with the manner in which price savings were highlighted, the Bord Gais complaints also concerned the use of the words "green electricity" in the Airtricity advertisement copy, and the claim that its offering was five times "more environmentally friendly" than that of Bord Gais.

Bord Gais argued that it was misleading to describe the electricity as being "green electricity". It pointed to the fact that only 79% of the Airtricity electricity is generated from renewable or "green" sources while 21% of its fuel mix was from fossil or "brown sources". Airtricity countered this argument with a detailed analysis of the use of the word "green" in Ireland, analysing both its colloquial use and its use in regulatory licensing regimes.

The ASAI upheld the Bord Gais complaint. The ASAI reasoned that as not all of Airtricity's electricity was derived from renewable sources, the unqualified claim that the electricity was "green electricity" was inappropriate.

The second aspect of the "green challenge" by Bord Gais was that the Airtricity advertisement claimed that the electricity was be five times "more environmentally friendly" than that of Bord Gais. This claim was based on the percentage of the Airtricity fuel mix made up of brown fuel when compared to Bord Gais'. Bord Gais claimed that the type of fossil fuel used by Airtricity to generate the non renewable portion was in fact more damaging and polluting than the fossil fuel used by Bord Gais to generate electricity. It complained that using fuel mix percentages to determine environmental friendliness is inappropriate and misleading. Instead it said that Airtricity should have used the amount of carbon per megawatt hour generated as a benchmark. Again this complaint was quite strongly countered by Airtricity, but to no avail.

The ASAI found that the claim that the Airtricity electricity was five times more environmentally friendly was not sustainable based on the facts and figures presented to it. However, interestingly enough for other advertisers out there, the ASAI did not go so far as to state that Bord Gais were right in asserting that comparisons must only be made using carbon emissions when measuring environmental friendliness.

Airtricity gave an undertaking to amend its advertising copy and has done so. Airtricity now describes itself as offering "greener electricity", on the basis that it is the "greenest" electricity supplier in the consumer retail market in Ireland. It also refers to itself as the "number one for renewable energy". The advertisement copy cites the reference to the fuel mix analysis which is carried out by the Commission for Energy Regulation in Ireland as the basis for its copy, and to the fact that it is subject to change. The references to the bunny rabbits, trees and money savings went unchallenged.

Although the ASAI is a self-regulatory body, its rulings are followed by the advertising industry in Ireland as general rule. The publicity that an upheld ASAI complaint gains in the press, and the deference shown to the rulings by the media that carry advertisements, means that the ASAI rulings generally hold sway.

In addition to the ASAI Code applied in the Airtricity case, mandatory legislation prohibits misleading advertising and could be used to similar affect. The Consumer Protection Act 2007 prohibits misleading advertisements and the making of false claims about goods or services to consumers. The European Communities (Misleading and Comparative Marketing Communications) Regulations 2007 prohibit traders from issuing marketing communications (a very broadly defined term covering all advertising) that are misleading. A marketing communication is misleading if it deceives or is likely to deceive a person in any way, including in relation to the nature of the product or the characteristics of the product. These Regulations also prohibit a range of comparative marketing communications, where traders provide information regarding their competitors' offerings when advertising. The Regulations give powers to a competitor to apply to the courts to require any offending marketing communication to be withdrawn or amended.

The differing views on how to approach product life cycle analysis, the merits of various fuel types and the affects of goods and services on the environment make "green" advertising a challenge for any advertiser. If done well it can be very successful in assisting a company to increase their market share. However, as with any type advertising, those highlighting their "green" credentials need to be very aware of the legal rules and restrictions that apply to these assertions.

For further information please contact Deirdre Kilroy.

September 2009.