Spain - Sustainability claims and greenwashing
- Focus on promoting environmental education for sustainability to avoid greenwashing
- General advertising and competition laws, self-regulation and codes of conduct govern greenwashing in the absence of specific legislation
- National Security Market Commission (CNMV) promotes the development of a sustainable economy through its Activity Plans
What are the top three developments in Spain concerning green claims and the associated risk of greenwashing?
Greenwashing is a practice or marketing strategy used by some companies, aimed at showing their audience that they are environmentally friendly when presenting their products or services. The concept of greenwashing is used to describe a form of corporate malpractice which appears to be increasing. Whilst greenwashing is usually associated only with advertising and marketing activity, in reality it is related more generally to the organisation itself, its management, its ethics and its corporate social responsibility.
In Spain, there is a growing willingness to avoid this practice due to increased awareness and sensitivity around the issue. At the regulatory level, however, there is still a notable lack of regulation concerning green claims and the risk of greenwashing.
1. Focus on promoting environmental education for sustainability to avoid greenwashing.
At present, one of Spain's main objectives in terms of sustainability is to promote initiatives in the field of environmental education. To this end, on 21 January 2020, the Council of Ministers approved the Declaration of the Government in the face of the Climate and Environmental Emergency (Declaración del Gobierno ante la Emergencia Climática y Ambiental) through which they committed to approve an Environmental Education Action Plan for Sustainability (2021-2025). Likewise, Organic Law 3/2020, of 29 December, which amends Organic Law 2/2006, of 3 May, on Education (Ley Orgánica 3/2020, de 29 de diciembre, por la que se modifica la Ley Orgánica 2/2006, de 3 de mayo, de Educación), incorporates for the first-time explicit references to “Education for Sustainable Development and Education for Global Citizenship”, reflected in the Spanish Government’s 2030 Agenda.
There is a strong social influence relationship between sustainable environmental education and persuasive advertising communications which make environmental claims or which amount to greenwashing. However, there is currently no formal alliance or coordination between the media and communication and information agencies which have a significant impact on the public. This is why one of the main objectives of the recently approved Education Action Plan is to coordinate media and publicity to avoid greenwashing. As part of this, it is deemed necessary to develop strategic alliances in communication, to work with journalism and communications professionals, to create instruments that bring together information related to sustainability, and to combat the presence of untrue or erroneous messages in the media and social networks. The aim of Sustainable Environmental Education is to educate, prevent and avoid greenwashing at all costs.
2. General advertising and competition laws, self-regulation and codes of conduct govern greenwashing in the absence of specific legislation
Environment-related issues have become of greater interest to the general public in Spain. Accordingly companies have started to increasingly use them, directly or indirectly, as an advertising lure.
Although in Spain there is no specific legislation regulating the use of green claims by companies in their advertising, greenwashing is addressed in the general regulations, mainly the General Advertising Law and the Unfair Competition Law. These laws provide that any advertising which may be misleading to the public, i.e., that gives a message that does not conform to reality, is illegal advertising.
In 2007, Spain published the code of good practice “Hacia una publicidad responsable frente al cambio climático”, which required companies to be cautious when advertising by using green claims as a way of improving their image. However, it was only in 2009, at the initiative of the Ministry of the Environment and Rural and Marine Affairs, that a code of self-regulation on environmental claims in commercial communications was published. This code embodies the best practices already provided for in the 2007 code, and also set up a self-regulation regime for member companies using green claims.
Although the 2009 code is outdated, it led to the development of the Observatory for Responsible Advertising against Climate Change, an investigative body created through a collaboration between the organization ECODES (whose objectives are aligned with the 2030 Agenda and the UN Sustainable Development Goals) and the Ministry for Ecological Transition and Demographic Challenge. The main task of this observatory is to investigate market practices and provide recommendations to help mitigate greenwashing, thereby improving the advertising language related to environmental and climate change. As a result of the reports of this observatory, we expect that, in the short/medium term, new codes of good practice will be enacted and their use will be extended in Spain through their integration into the advertising regulation regime.
Although Autocontrol, the Spanish advertising self-regulatory body, has not published any specific code of conduct on green claims, it does have tools to restrict and monitor their use in advertising. In this sense, Autocontrol: (i) has a general code of conduct that requires advertising to respect the principles of truthfulness and relevance, and (ii) makes available to its members the so-called Advertising Jury, an extrajudicial body for the resolution of disputes, which has already ruled on some alleged instances of greenwashing.
An example of a resolution of the Jury in this matter concerns Honda (with its Accord model), whose advert was considered misleading as it failed to provide any information specifying why the advertised engine was described as "green". It was on this basis that the environmental group Amigos de la Tierra filed a complaint before Autocontrol for the advert to be withdrawn.
Therefore, although greenwashing is not specifically regulated in Spain, these practices, which are becoming increasingly frequent, do not escape the application of general advertising regulations.
3. National Security Market Commission (CNMV) promotes the development of a sustainable economy through its Activity Plans.
The CNMV is seeking to promote a regulatory framework for sustainable finance based on clarity, reliability and comparability of information, in order to avoid greenwashing risk in the finance sector.
The CNMV is committed to the development of a stable financial system that contributes to fostering a more sustainable economy, and the redirection of capital flows towards investments that facilitate the sustainable development of the Spanish economy. To this end, the CNMV is contributing to the implementation of the European Commission's Action Plan on Financing Sustainable Growth, updated in the Strategy for Financing the Transition to a Sustainable Economy, published in July 2021.
Therefore, to advance in this transition, the CNMV, through its Activity Plans, aims to implement a comprehensive and common regulatory framework, which enables companies and investors to make informed decisions and avoid the risk of greenwashing.
Thus, when presenting the 2023 Action Plan, CNMV Chairman Rodrigo Buenaventura pointed out that "in a particularly complex and changing environment, we want to combine the strengthening of supervision aimed at investor protection with the revitalisation of the primary securities market. Issues related to sustainability, fraud prevention and technological innovation will remain priorities".
As such, among the five strategic lines that will guide the CNMV's actions for the 2023 and 2024 financial years 1 , we highlight line 3 "revitalising the capital markets to promote growth and the transition to a sustainable economy", which defines as a priority the identification and monitoring of possible greenwashing practices.
Indeed, the CNMV considers it necessary to place special emphasis on the transparency and reliability of the information published by issuers on environmental and social aspects. For this reason, the CNMV will strengthen the monitoring and supervision of the information reported by issuers, also taking into account the obligations arising from:
- Act 11/2018, of 28 December, which amends the Commercial Code (Ley 11/2018, de 28 de diciembre, por la que se modifica el Código de Comercio),
- the revised text of the Capital Companies Act approved by Royal Legislative Decree 1/2010, of 2 July (el texto refundido de la Ley de Sociedades de Capital aprobado por el Real Decreto Legislativo 1/2010, de 2 de julio)
- Act 22/2015, of 20 July, on Auditing of Accounts, with regard to non-financial information and diversity, (la Ley 22/2015, de 20 de julio, de Auditoría de Cuentas, en materia de información no financiera y diversidad); and
- the recent Act 7/2021 of 20 May on climate change and energy transition (Ley 7/2021, de 20 de mayo, de cambio climático y transición energética), which requires companies to report on how they integrate the risk arising from climate change into their activity.
Finally, the CNMV will monitor the implementation by investment services, companies and fund managers of the new European regulations on sustainability, in particular those derived from the Sustainability Disclosure Regulation 2 , and will transmit the appropriate guidelines to the Spanish finance sector.
