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Economic Times
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Image Credit: Economic Times
Greenwashing rules push startups to reevaluate marketing and packaging strategies
- Startups in the consumer, food, and food-tech businesses are collaborating with law firms to ensure they are not breaking any eco-laws on product labels, packaging materials, and advertising content, amid shifting guidelines from the Central Consumer Protection Authority on greenwashing, a process of over-exaggeration or fabrication of environmental claims
- In October 2021, the CCPA released guidelines prohibiting companies from using terms like eco-friendly, sustainable, or natural without evidence, aiming to promote transparency
- The transparency guidelines may require some reinventing of ads or packaging, and third-party certifications or audits may be required
- The burden is also on companies to provide verifiable evidence when companies use eco-terms such as carbon-neutral or eco-friendly, which can no longer be jargon
- Startups using recycled materials are seeking advice on how to communicate the benefits without overstating their environmental impact, and those that use biodegradable materials are uncertain if they need to secure third-party certifications to support their claims
- Lawyers say that ensuring compliance will require some reworking of ads or product packaging, and that extending it to audio-visual ads will also be considered
- The guidelines differentiate puffery from false claims, suggesting that companies will benefit from the transparency, which will bolster customer and investor confidence
- Startups focusing on transparency and sustainability will have a competitive edge in attracting investment from investors
- The guidelines require companies to make material information easily accessible, via packaging and QR codes or URLs
- The extent of material information required to be disclosed is also causing confusion among startups, with many seeking advice on how to implement these disclosures
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