11.5 Summary

Common denominators across the various definitions of greenwashing are the following:

A key factor is a market presence that creates the impression of sustainable practices or attributes for investors or clients (investor perspective) or uses such claims to gain an unfair competitive advantage (market perspective). 

To qualify as sustainable from a Swiss perspective, compatibility with a generally recognized sustainability goal or a contribution to implementing such a goal are the minimum requirements. In both cases, this falls short of the EU standard, however. 

Greenwashing is deemed to have occurred when the impression created is not adequately reflected by reality or “basic” standards are not met. 

This is the case, for example, if

• a corresponding strategy does not exist;

• the strategy is not implemented;

• it does not cover all activities; 

• it only focuses on reducing sustainability risks or optimizing financial performance; 

• stated impacts cannot be measured or verified; 

• stated claims are too vague or non-transparent; 

• target achievement is not reported on.

Specific examples based on typical cases are provided by international advertising regulations and the related practices of the Swiss Fair Trading Commission.

Legal risks of greenwashing include:

The provision of incorrect or misleading information and the withholding of information in the sustainability report are subject to prosecution. 

Greenwashing in the aforementioned sense constitutes unfair competition in certain circumstances and as such can result in legal action under civil or criminal law. The State Secretariat for Economic Affairs (SECO) is one body that initiates criminal proceedings of this kind. The non-governmental Swiss Commission for Fairness offers a decision-making practice for evaluating greenwashing as unfair competition. 

If sustainability claims can affect investors’ investment decisions, the requirements of ad hoc publicity (breaches of which are penalized by SIX) and insider trading law and the ban on market manipulation (which are penalized by FINMA and the Office of the Attorney General) must be complied with. Furthermore, such claims must be harmonized with any prospectus or key information document, subject to the threat of liability and prosecution.

After all, in the event of a loss, both the company and its managers in Switzerland and abroad risk the consequences of liability. Ultimate responsibility for sustainability-related communications therefore lies with the members of the board of directors and executive management, who can become liable for damages if they breach their organizational, reporting, and due diligence obligations.

As far as greenwashing prevention goes, it is not sufficient for it to merely address marketing – it must integrate all communication and management processes within the company and the value chain to ensure that sustainability-related statements are based on a sustainability strategy that is put into practice transparently and verifiably.

Despite all the bureaucracy, however, it is also crucial not to lose sight of the ultimate objective: the long-term prosperity of the company and its environment.