Sustainably marketed products are experiencing significant demand, with green-labelled products accounting for nearly half of the growth in demand for consumer packaged goods in the US between 2013 and 2025. This demand has led many companies to use vague buzzwords such as ‘carbon-neutral’ and ‘net-zero’ without adequate substantiation. Instead, they often rely on offsetting, which involves purchasing carbon credits from distant projects. This practice is under increasing scrutiny as carbon projects often fail to meet robust quality standards and can deter companies from pursuing genuine in-house emissions reductions.

The end of greenwashing impunity in Europe

Litigation in Europe is being driven by active claimants and a judicial willingness to uphold their cases. The Unfair Commercial Practices Directive (UCPD) has created a uniform legal framework across the EU. Guidelines developed in 2017 require that green claims must be “clear, specific and unambiguous” and must not include “aspirations of future environmental efforts,” a point particularly critical for claims relying on carbon credits with uncertain long-term impacts.

Swedish court rejects compensation-based ‘net-zero’ claims

In 2022, the Swedish Market Court delivered a landmark ruling against dairy producer Arla for its “net zero climate footprint” label. The court found that the inconspicuous use of the word “net” created a false impression that the products had no climate impact. It rejected Arla’s argument that organic consumers would understand the nuances of compensation, noting the average consumer lacks the expertise to comprehend such claims. Arla was ordered to discontinue the advertising or face a SEK 1 million penalty. The court also held that claiming emissions are compensated through carbon credits over a 100-year period is unverifiable and inadmissible.

German courts draw the line on nature-based offsetting

A 2025 German ruling found Apple culpable of misleading advertising for its “CO2 neutral” Apple Watch. The court focused on the project’s short duration in Paraguay, which could not guarantee mitigation until 2050. Apple faced fines of up to 250,000 euros for non-compliance. Notably, the court rejected the effectiveness of “buffer pools,” aligning with research that suggests these pools structurally underestimate risks and remain undercapitalised. Earlier, in 2022, TotalEnergies was successfully sued after the court found that forest protection projects cannot negate greenhouse gas emissions from heating oil.

KLM case: halting offsetting in the aviation sector

In 2024, the Amsterdam District Court ruled that 15 out of 19 contested advertisements in KLM’s “Fly Responsibly” campaign were misleading. The court found that the “CO2ZERO” programme created a false impression that the negative effects of air travel could be easily erased. It underscored that environmental benefits from reforestation are inherently uncertain and overstated the programme’s capacity to compensate for aviation emissions.

A final whistle for carbon neutrality claims: the Qatar FIFA World Cup 2022 case

The Swiss Fairness Commission ruled in 2023 that FIFA engaged in misleading advertising by presenting the 2022 Qatar World Cup as “carbon-neutral”. Investigations found that FIFA significantly underestimated emissions from stadium construction and purchased credits covering less than one-third of its own estimated carbon footprint. FIFA was ordered to discontinue these unsubstantiated statements.

United Kingdom: from advertising scrutiny to stronger consumer enforcement

The UK’s Advertising Standards Authority (ASA) has investigated several high-profile claims, including Shell’s “Shell Go+ Loyalty Scheme”, which suggested customers could “drive carbon-neutral”. Lufthansa and Qatar Airways also faced rulings for omitting information about the reliance on offsetting. The adoption of the Digital Markets, Competition and Consumers Act 2024 (DMCCA) has significantly strengthened enforcement, allowing for fines of up to £300,000 or 10% of global turnover for serious infringements.

Australia: enforcement builds pressure on misleading claims

Australian regulators, ASIC and the ACCC, have identified greenwashing as a significant priority. ASIC successfully brought proceedings against Vanguard and Mercer for deceptive ESG claims. In 2025, EnergyAustralia settled a landmark lawsuit by agreeing to phase out its “Go neutral” product and clarify that offsets do not undo the harm of burning fossil fuels. This fallout led major entities like Telstra and Australia Post to withdraw from the government-backed Climate Active scheme, which is expected to close by mid-2027.

The greenwashing enforcement landscape in the United States

The US landscape remains fragmented, partly due to the reliance on FTC Green Guides that have not been substantively revised since 2012. While a 2024 case against Danone regarding Evian bottled water was dismissed after the court found reverse-label explanations sufficient, other cases are proceeding. A lawsuit against Delta Air Lines was allowed to proceed in 2024, potentially lowering procedural barriers for consumers. Additionally, Tyson Foods and JBS USA have agreed to settlements regarding their net-zero ambitions.

Europe’s “empowering consumers for the green transition” directive: a proper first step

The Empowering Consumers for the Green Transition Directive (ECGT) prohibits product-level climate claims based solely on offsetting. It becomes gradually enforceable from 27 September 2026, with fines for widespread infringements set at a minimum of 4% of annual turnover. While product-level claims are banned, company-level claims will be assessed on a case-by-case basis under the UCPD.

Recommendations

Carbon Market Watch recommends that policymakers ban all offsetting claims, establish meaningful penalties to deter non-compliance, and update antiquated regulatory frameworks. Companies are urged to abandon offsetting-based marketing and invest in genuine internal decarbonisation, maintaining a clear hierarchy between in-house reductions and external climate action through a “contribution model”.