Germany: Legal requirements for green claims in advertising for medical devices

On March 22, 2023, the Commission presented a draft for the Green Claims Directive (GCD). The directive is intended to enable consumers to make informed purchasing decisions based on reliable information by setting higher requirements for substantiation, communication, labeling and verification of "green claims". Since the EU regulatory approach does not further differentiate by product type, advertising for medical devices will also be affected. Environmental claims for medical devices such as "CO2 neutral," "environmentally friendly," or "recyclable" or corresponding pictorial representations will thus become significantly more complicated in the future.

How are environment-related advertising claims for medical devices currently regulated?

At present, environment-related claims are still subject to the general rules of EU Directive 2005/29 on Unfair Commercial Practices towards Consumers (UCP Directive) and EU Directive 2006/114 on Comparative Advertising. However, the EU directive does not contain any explicit provisions on environmental claims. Instead, the general principles of the prohibition of misleading statements in the German Unfair Competition Act (UWG) have so far applied to advertising with green environmental claims in Germany. However, given a study from November 2020, which revealed that more than half of the environment-related claims were not substantiated or were inadequately substantiated, the European Commission now felt compelled to establish binding standards for advertising with green claims at the EU level.

What does the Commission plan to implement with the new regulatory approach?

The proposed directive, together with the proposal for a directive to strengthen consumer interests already submitted in 2022, is intended to ensure the accuracy and transparency of environment-related advertising claims in the EU. Thus, consumers are to be given greater clarity and more certainty that something that is advertised as environmentally friendly is actually environmentally friendly. In particular, the GCD shall address the so-called "greenwashing". Only micro-enterprises (with fewer than 10 employees and annual sales of no more than EUR 2 million) are exempted from the proposal's obligations.

The core of the draft includes, in particular, far-reaching requirements for substantiating the environmental advertising claims made. In this respect, the proposal provides a large number of criteria that the methods used to demonstrate sustainability must fulfill. In addition to a mandatory EU legal framework, a voluntary EU legal framework is to be created for the assessment of sustainability. Furthermore, the entire life cycle of a product is to be taken into account and it is to be made possible for companies to make their environmental claims in accordance with the existing EU methods of the Product and Organization Environmental Footprint (PEF/OEF), which were developed by the Joint Research Center of the Commission on the basis of ISO standards. Furthermore, the proposed directive requires companies to provide impact information based on the Product Environmental Footprint Category Rules (PEFCRs) or Organization Environmental Footprint Sector Rules (OEFSRs) to enable a detailed calculation of the environmental footprint. Furthermore, the so-called "black list" of the UGP Directive is to be expanded to include new entries on environmental claims and sustainability labels. Claims about environmental protection and environmental claims about future environmental performance are also to be more closely scrutinized and monitored. According to the proposed directive, the misleading nature of a claim should in future also include the environmental and social effects, the durability and the reparability of the product as essential characteristics. Thus, it is envisaged that an environmental claim about future environmental performance will be considered misleading if it is made without clear, objective and verifiable commitments and targets, and without an independent monitoring system. Ultimately, along with the environmental claim, all related information should also be made available to the public via a web link, QR code or the like.

Furthermore, the focus lies on a pre-audit procedure, in which all explicit environmental claims have to be reviewed for their accuracy by an independent conformity assessment body before they are used. These accredited inspection bodies are to be introduced by the member states and - similar to the Notified Bodies in medical device law - issue special certificates of conformity that are then valid throughout the Union. In some cases, the requirements of medical product law and advertising law can even be certified by the same conformity assessment body.

Which rules apply to comparative environmental claims for medical devices?

Comparative environmental claims for medical devices will also be covered by the directive. Comparative environmental claims should only be permitted if

• the compared products or companies use the same methodology to evaluate their environmental performance,
• the data used for the comparative claim are generated or sourced in an equivalent manner,
• the most important stages of the value chain for all compared products or companies are taken into account.

For the medical device sector in particular, in addition to the already increased market access costs in the case of environmental comparative claims, further costs are likely to arise if comparative studies would have to be carried out in practice in order to be able to claim a comparative advantage.

Enforcement and collective legal action

To enforce the regulations, the proposal relies primarily on Member State oversight, as it has in the past. However, the proposal also provides that third parties who have a sufficient interest or whose rights are infringed can seek legal action. In addition, Directive (EU) 2020/1828 on environmental claims is to be included, so that collective legal enforcement action in the form of representative actions may be possible. In the event of violations of the requirements of the planned directive or the then national implementation, the consequences will be based on the applicable competition law. Competitors and associations such as the German Agency to Combat Unfair Competition (Wettbewerbszentrale) can therefore issue warnings to advertising companies and demand injunctive relief or compensation for damages. A further new development is the possibility of imposing a fine of up to 4% of annual sales in the event of infringements of the new environmental regulations. With regard to medical devices, it should be noted that in addition to the prohibitions from the UWG, the special prohibition of misleading statements from Art. 7 Regulation (EU) 2017/745 (MDR) applies. The prohibition of misleading statements from Section 3 HWG no longer applies in connection with medical devices.

Next steps

The proposal is currently the subject of numerous discussions at the European level. However, it is likely to take considerable time before it is adopted in the national legislative process and the directive is then transposed into national law. The Commission itself assumes a period of four years until actual application. However, in conjunction with the proposal for a directive to strengthen consumer interests, the GCD's proposal could lead to a radical change in environmental advertising for medical devices and pave the way for the industry to become a green economy in Germany and Europe. Only then will it become clear whether environment-related advertising claims for medical devices are economically viable at all. For one thing is certain: the implementation of the partially hypertrophic and bureaucratic regulatory proposal will increase costs for medical device manufacturers. It is also by no means the case that the competition law in force to date has proved to be a toothless tiger in the fight against greenwashing. On the contrary, misleading green claims in particular have been the subject of competition law jurisdiction for years.