Introduction

In the Netherlands, the ACC handles complaints from consumers and businesses on alleged misleading advertisements. Consumers and businesses are increasingly reaching out to the ACC with complaints about sustainability advertising; the number of complaints in which the word "sustainable" appears have increased sharply over the past five years.² A misleading sustainability claim may already exist if absolute terms such as "environmentally friendly", "green", "good for the environment", "zero CO2" and "clean" are used in advertisements without sufficient substantiation. Moreover, the number of complaints directed at sustainability claims is only expected to increase. This increase may also spill over to proceedings in courts. Court proceedings, where a largely similar legal framework applies, can result in greater legal consequences.

Advertisers should therefore be aware of the existence and powers of the ACC and the rules applicable to sustainability advertising. Advertisements with sustainability claims carry risks and advertisers should take into account the possibility of consumers, as well as competitors or other third parties, filing a complaint with the ACC. In this blog, we briefly explain what the ACC is, what its powers are and what the regulatory framework is for sustainability advertisements in particular.

The ACC

What is the ACC?

The ACC (Reclame Code Commissie in Dutch), is a private organisation that enforces the Dutch Advertising Code ((DAC), in Dutch: Nederlandse Reclame Code). The DAC contains rules for advertising in the Netherlands that must be observed by every advertiser. The DAC was created with the help of businesses and consumer organisations and is a form of industry self-regulation.

The ACC does not enforce the DAC on its own initiative, but reviews complaints filed by individuals, companies and other third parties when they believe that an advertisement violates the DAC.

What is advertising and who is an advertiser?

Advertising is defined in article 1 of the DAC: An advertisement is "any public and/or systematic direct or indirect commendation of goods, services and/or ideas by an advertiser or wholly or partly on its behalf, with or without the help of third parties." An advertiser is "an organisation or a person other than a consumer." The DAC is not applicable to announcements that in no way contain an element of recommendation (the ACC cites a company providing information about opening hours as an example) or announcements about a good, service or idea where there is no enticement or exertion of influence by the advertiser in any way.

As evidenced by the above, the terms advertising and advertiser are broadly defined. Advertisements from an organisation or person who is not a consumer will therefore quickly fall within the scope of the DAC.

What are the powers of the ACC?

The ACC handles complaints from consumers and businesses about advertisements submitted through a complaint form. If the complaint is declared admissible and not dismissed with a chairman's dismissal, the complaint is dealt with in proceedings. Generally, the complaint is then forwarded to the advertiser. The advertiser is given the opportunity to respond to the complaint in a statement of defence. Subsequently The ACC may also give the complainant and the defendant the opportunity to present their replies or rejoinders. Finally, an oral hearing follows. A procedure before the ACC can then end in three ways:

• If the ACC considers the complaint unfounded, it will be rejected.
• If the ACC considers the complaint has (partial) merit, it leads to a "recommendation" to the advertiser to refrain from the advertisement in question.
• If the advertisement only promotes ideas (and thus no services or goods) and the ACC considers the complaint has (partial) merit, the ACC gives a "non-binding opinion".

If an advertiser does not follow the ACC's recommendation, this will be posted on the Advertising Code Foundation's website and the advertiser will be marked as "non-compliant". The ACC can then notify the Authority Consumer and Market (ACM), which may decide to take enforcement measures. The ACC itself has no further powers to enforce its rulings and cannot impose any other type of sanction. In the majority of cases, the advertiser complies with the ACC's recommendation and is marked "compliant" on the ACC's website.

What are the rules applicable to advertisements?

The DAC contains a general section containing rules applicable to any type of advertising. Some of those rules are based on provisions from the Unfair Commercial Practices Act as laid down in articles 6:193a-193j of the Dutch Civil Code. Those rules provide, for example, that:

• Advertisements should comply with the law, truth, good taste and decency;
• Advertisements should not unnecessarily offend or pose a threat to mental and/or physical health;
• Advertisements should not appeal to feelings of fear or superstition without reason;
• Advertisements should not be unfair, including in any case misleading and aggressive advertising; and
• Advertisements should be clearly recognisable as such, also taking into account the audience it is intended for.

Besides the general part, the DAC also contains so-called 'Special Advertising Codes' that provide specific rules on certain topics. These include, for example, rules on advertisements for alcohol, gambling or advertisements aimed at children.

Sustainability Advertising Code

One particular Advertising Code that has received more attention recently is the Sustainability Advertising Code. This code contains strict rules on advertisements which contains sustainability claims. Sustainability claims include both environmental and ethical claims. An environmental claim is a claim that suggests, or gives the impression, that a product or activity has a positive, less or no impact on the environment. An ethical claim creates the impression that a company's production or other business activity has taken place according to certain ethical standards. These claims must not be misleading.

To determine whether sustainability claims are misleading, the following circumstances are important:

• Sustainability claims should be presented in a clear, specific, accurate and unambiguous way.
• Sustainability ambitions (e.g., a company's sustainability targets) should be clearly recognizable as ambitions and should not paint too positive a picture of the sustainability results achieved and yet to be achieved.
• All sustainability claims must be demonstrably correct. This burden of proof lies with the advertiser.
• Where sustainability claims relate (almost) exclusively to certain specific components of the advertised products, this should be clearly expressed.
• A comparative sustainability claim should clearly state between which (aspect of the) advertised product or company on the one hand and which (aspect of the) product or company on the other hand the comparison is being made.
• The origin of sustainability designations and sustainability symbols should be sufficiently clear.

Since, according to the explanatory notes to the Sustainability Advertisment Code, many sustainability terms have no clearly defined meaning, the sustainability claim will have to make clear what specific definition the advertiser gives to certain sustainability terms. It is important that words like "sustainable", "environmentally friendly", "animal-friendly", "green" and "good for the environment" will quickly be understood as absolute sustainability claims by the average consumer.

There are strict rules for such absolute sustainability claims. The advertiser must be able to guarantee that the claimed result is achieved. According to the explanatory notes of the Sustainability Advertising Code, for most products it will not be possible to prove that they are absolutely sustainable, i.e., that all aspects associated with the production, distribution, delivery, storage, consumption or disposal of products are environmentally and ethically sustainable. For this reason, great caution is recommended with regard to such absolute claims. 

Because many advertisers (often also unwittingly) use absolute sustainability claims without adequate substantiation or a specific definition of the terms used, the ACC regularly upholds complaints lodged against them. There are numerous examples of rulings on sustainability claims finding their way to the press.

Closing remarks

Given the broad scope of application of the DAC, statements made by a company or organisation promoting goods, services or ideas will often qualify as advertisements. This creates the risk of a complaint being filed by a consumer who feels misled by a particular statement. This risk is greater for sustainability claims, which are subject to strict rules included in the Sustainability Advertising Code. This has resulted in a considerable – and steadily rising - number of complaints every year. This increase will most likely not stop, and could also be seen as an indication for a potential increase of similar claims that will be filed in court. Moreover, this expected further rise in claims, is also fueled by the fact that companies are expanding their sustainability initiatives and are naturally keen to tell consumers about those initiatives.

Although the ACC has no further powers to enforce compliance at the DAC, a ruling by the ACC could cause negative publicity and lead to possible further investigation by the ACM. The ACM can use its administrative powers and even impose fines. In addition, a complaint which has merit can serve as a 'stepping stone' for starting civil proceedings in which, for example, consumers or competitors can seek a ban on certain advertisements, or even claim damages suffered as a result of the misleading advertisement (which is not straightforward to substantiate). Advertisers would therefore do well to be aware of these developments and examine their sustainability claims (and their substantiation) carefully. In the communication about all new sustainability initiatives and targets it is essential to consider the wording used and the substantiation thereof.

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Read in Dutch.

1 A Dutch translation of this article can be found here.

2 A search on the Advertising Code Committee's website on the word "sustainable" yields 13 rulings for 2019. In 2024, up until the date of this blog, the same search yields 34 rulings.